By Alexandra Radius
Anyone in business has to answer the following questions almost every day. How can we grow our business? How can we increase sales? How can we maintain or lower expenses? One way of responding to these questions is brand extension.
Virgin is a good example; a recent independent study has shown that the UK public voted Virgin as their most admired brand with 23% of the votes. (Sony came second with 21% of votes)
Virgin's revenue comes from a variety of businesses: airlines, megastores, mobile phones, music label, trains, cosmetics, wines, money - just about everything! In the UK, Virgin even owns a modelling agency and two nightclubs.
Why does Richard Branson keep launching so many different operations? The Virgin website even solicits proposals for new business ideas. With new technology and media opening up even more possibilities for diversification, what's next? Virgin social networking?
In France, to increase brand awareness, Virgin has just bought out a radio and TV station (we already have the mobile phones, megastore and drinks). But while it's a new way to communicate and talk about the Virgin brand, I'm not sure this strategy works so well in France because the company simply doesn't have the same market penetration as it does in the UK.
Of course, the greatest danger of too much diversification is the possibility of a negative impact on core brand values, leading to confusion in customers' minds. Also in a diversified company, the objectives of some sub-brands may conflict with those of others.
In my opinion, in France, Virgin may have to refocus on basic corporate communication activities to increase consumer loyalty before spreading itself too thinly with multiple products.
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