In conversation with Sir Richard Branson

Building an empire: Speaking with the founder of the Virgin Group, Sir Richard Branson, and Virgin’s former MD for Japan Mike Inman, Hassan Butt discusses brand extensions and the ethos of an entrepreneurial business in this exclusive interview

This interview originally appeared alongside the feature 'Stretch of the imagination.' Click here to read the full article.

- Expanding a brand to various platforms and geographical locations is a challenge, how does Virgin cultivate understanding of its audiences and cultures?

Richard Branson: From our first ventures, like our music stores and record label, to our airlines and space tourism companies, we have approached business development proactively and opportunistically. We always look for openings where we can surprise and delight customers by offering something truly different. We approached the Japanese market in exactly the same way. We found there were many similarities between Japanese culture and Virgin – a strong family focus and a belief that if you treat your employees right, they will treat your customers right and sustained profits will follow. Japanese customers were also used to buying products from many different businesses under one brand. This meant we were able to expand quickly across different sectors starting with our airline and then launching megastores, cinemas and cafes – all under the Virgin name.

Mike Inman: When I arrived there the intention was to open a Megastore and then take it from there. The cost of entry such as real estate was so prohibitive that we needed a partner and found that in Marui, a large fashion department store chain who had an interest in Virgin and music. We wanted to do things differently, even from stores in the UK at that time and worked closely with the French operation. The idea was to create a classic style atmosphere (marble, glass, steel, high ceilings etc.) and add a stage, DJ booth, listening spots. We also wanted to sell both Japanese and foreign artists which was not done there at that time. Initially, this was frowned upon by our partners and it took some persuasion.

The store was a big success and this gave Virgin a reputation, helped by Richard’s frequent visits and through the media we gained a reputation for doing things differently.

For me that is what Richard’s philosophy for brand extension was all about. If there is an opportunity where things can be done better for the consumer and you have the right talent to take it to market, don’t be put off by the nay-sayers as in more cases than not people will vote with their feet and wallets.

- When Virgin first extended to a different platform, away from records, what did you think the results would be?

Branson: From my first day as an entrepreneur, I’ve felt the only mission worth pursuing in business is to make people’s lives better. That’s why I started Student Magazine at the height of the Vietnam War, to give a voice to my generation who were against the war. It’s also why we’ve been disrupting the airline business for more than 30 years, and why we continue to bring change to many other industries, from mobile communications to hotels and space travel. We’ve learnt that success in one area tends to lead to success in other fields, and so our success has been sustained. We built up an extensive network of relationships, and now entrepreneurs and companies often approach us with ideas for partnerships that will help them to start a new business, or to attract new customers.

- How did you ensure that extension into different sectors didn’t dilute the Virgin brand?

Branson: Our marketing team defined our brand purpose with this pithy one-liner, “Don’t just play the game, change it for good.” That challenge will help us keep our energy and focus for many years to come. We’ve always remained true to our brand and this has enabled us to move into many different sectors. One of the tried- and-true methods of building a business is by offering such useful products and terrific service that you disrupt the local market, winning customers away from your competitors. We work to make a difference in people’s lives and balance profit with the needs of customers, communities and a focus on sustaining the environment.

- What have been the greatest challenges and successes faced during any of the Virgin Group’s numerous brand extensions?

Branson: The times you get something wrong are the times you learn an invaluable lesson. We’ve had some failures such as Virgin Cola. We felt confident that we’d smash our way past Coca-Cola and Pepsi but declaring war on Coke was madness. We weren’t prepared for the size or ferocity of Coca-Cola’s response, which included steep increases in their marketing budget and pressure on distributors not to work with us.

There were some positives though. It was a great learning experience for our team, Virgin seemed to win over a lot of the American public, which certainly made things easier when we launched subsequent businesses there, including our airline. Perhaps the biggest positive to come from Virgin Cola, however indirectly, was the launch of Innocent Drinks. Co-founder Adam Balon, a former employee of Virgin Cola, was inspired by his experience and later started selling his own smoothies with a couple of friends. He created one of the most purposeful drinks brands in Britain before selling to Coke.

Failure is a necessary part of business, so it’s incredibly important for all entrepreneurs and business leaders to know when to call it a day, learn from their mistakes, and move on, fast.

- Have brand extensions been an essential component of the success of the Virgin brand?

Branson: Brand extensions are an essential part of the Virgin brand. The most satisfying aspect of starting a business is creating something that’s going to make a positive difference in the lives of others – something that you can be proud of. This belief has helped us launch many different businesses. We knew very little about marketing or branding when we started Virgin Records, back in 1972. We simply formed the business around our personal values, and went from there. Virgin’s success can be attributed to a lot of different things, however this was the best decision we ever made. The defining factor that has kept us in business, for more almost 50 years has been the strength and reputation of the brand.