Strategic Marketing Issues for Virgin Case Study

Introduction

Adored, respected, and coveted by customers and global organisations alike, Richard Branson’s Virgin brand symbolises one of the most captivating phenomena of the business environment in contemporary times.

From its humble beginnings in the 1970s, Virgin has gone against all odds in the competitive business environment to create over 200 companies worldwide with interests in diverse products and services, including but not limited to planes, trains, finance, beverages, music, mobile phones, online gaming, cars, wine, publishing, resort clubs, and even bridal wear (Kotler & Keller 650).

The present report uses a case study approach to analyse Virgin’s strengths, weaknesses, opportunities and threats, establish its uniqueness in being a socially responsible and sustainable company, examine the pros and cons of its “green” message, as well as discuss important issues related to the company’s holistic marketing strategy.

SWOT Analysis

Strengths

1. Strong brand name – the Virgin name is the third most respected brand in Britain, not mentioning that the brand is well recognised in international business environments (Kotler & Keller 650) and has become a household name (Kets de Vries 9).
2. Stable and growing capital base – available literature demonstrates that the over 200 companies under the Virgin brand name had a combined revenue of over €11.5 billion (about $16.2 billion) in 2009 (Kotler & Keller 650), with projections demonstrating that the revenue base has continued to grow over the years.
3. Diversified portfolio – trendy and highly visible products and services spanning across diverse business interests, leading to substantial economies of scale (Kets de Vries 9).
4. Flamboyant Branson personality – The CEO of Virgin is “a genius at promoting his company through his daring personal exploits” (Kets de Vries 9).
5. Worldwide business operations
6. Operational excellence and minimal integration, implying that companies under the Virgin flagship are more flexible and hence more competitive when compared to others.
7. Technical capability and infrastructure
8. Elaborate marketing expertise using strategic publicity stunts (Kotler & Keller 650).

Weaknesses

1. Possibility for brand dilution – It is generally felt that the Virgin Group is currently covering too many businesses in diverse areas of the economy, hence the possibility for brand dilution (Kotler & Keller 650).
2. Too loose supervision practices and informal management structure due to Branson’s “friendly, egalitarian, non-hierarchical, family-like atmosphere in all of his companies” (Kets de Vries 9).
3. Consumer confusion about identifying with the Virgin brand name due to the introduction of too many companies.
4. Image challenges for the company due to its immense expansion and a mixture of diverse businesses in distinctively dissimilar market sectors.
5. Weak financial structure and dependency on the Branson personality

Opportunities

1. Expansion opportunities particularly “in markets with underserved, overcharged customers and complacent competition” (Kotler & Keller 650).
2. New market entry in overseas markets particularly in the developing and emerging markets due to the advantage of strong brand recognition.

Threats

1. Intense competition
2. The virgin group is not a leading brand or a market leader in any of its businesses; the brand may have international acclamation, but some of the group’s products and services are not internationally recognised (Kets de Vries 10).
3. The Virgin Group has been criticised for not introducing new innovations, but rather creating a product similar to an already existing product and selling it at a hugely discounted price, implying that the group has merely followed its competitors rather than acting as a trailblazer (Kets de Vries 11).

Issues of Social Responsibility and Sustainability

Today, more than ever before, corporate social responsibility and sustainability have become a mantra for corporate success as firms the world over grapple with the short-term and long-term effects of their marketing strategies (Karna, Hansen, & Juslin 848-849).

Indeed, according to available marketing scholarship, “effective internal marketing must be matched by a strong sense of ethics, values and social responsibility” (Kotler & Keller 629).

These authors argue that social responsibility demonstrates a firm’s resolve to abide by a code of serving people’s interests before their own, becoming more environmentally friendly and practicing other higher-order corporate social responsibility activities, including rising customer expectations, growing employee objectives and ambitions, tighter government legislation and pressure, investor attention on the social criteria, enhanced media scrutiny, as well as shifting business procurement practices.

Elsewhere, it has been reported that there is no alternative to sustainable development within organisational settings as the component has increasingly gained currency in aligning firms to engage in activities that meet the needs of the present without unduly compromising the capacity of future generations to meet their own needs (Johan, Joffre & Simon 212-213).

From the case study, it is clear that the Virgin Group is unique in its quest to become a socially responsible and sustainable company, in large part because of the strategies it employs toward becoming socially responsible and sustainable.

For example, instead of dealing with shallow corporate social responsibility activities such as sponsoring community football tournaments, the company has created a not-for-profit foundation called Virgin Unite, which is charged with the broad responsibility of addressing global, social, and environmental challenges using an entrepreneurial approach (Kotler & Keller 650).

In such a setup, a group of scientists, entrepreneurs, innovators, and environmental supporters consult openly with the Virgin Group about what it needs to undertake on a grassroots and global level with the view to aligning the businesses and the social sector together and providing an avenue for business to act as a force for good.

The Virgin Unite concept demonstrates that business has duties to society and that corporations should be judged not just on their economic success, but also on their non-economic criteria (Lantos 596).

Branson not only cares about Virgin’s customers and the impacts his vast business interests have on people and the planet but also prioritises corporate responsibility and sustainable development as critical in assisting his network of companies to act in a socially responsible manner and minimise their carbon footprint (Kotler & Keller 650).

This line of thought is supported by existing literature which suggests that, in their quest to become both socially responsible and sustainable, companies must demonstrate economic responsibilities (e.g., satisfy customers with goods and services of real value, earn a fair return on investor funds, create new wealth, create new jobs, promote innovation), legal responsibilities (e.g., comply with the law and play by the rules of the game), and ethical responsibilities (e.g., respect people’s moral rights, avoid harm or social injury, and do what is right, just and fair) (Lantos 596-597).

Additionally, the Virgin Group has categorised its core businesses into eight socially responsible and sustainable groups, with each of the groups expected to do remarkably good things in its industry as well assist in the alleviation of bad things related to the category (Kotler & Keller 650).

It is reported by these authors that the Virgin Wines category, for example, endeavours to make purchases only from small farms and promotes responsible drinking, while the Virgin Games category encourages responsible gambling and assists in the identification and alleviation of gambling addiction.

According to existing literature, the incorporation of corporate social responsibility and sustainable development to the marketing strategies of firms make the two concepts to become a source of competitive advantage and a key determinant in the adoption by firms of critical management practices, including environmental management, quality management, sustainable logistics, the loyalty effect, reputation, corporate ethics, and talent management (Bouglet, Joffre, & Simon 213).

Lastly, Virgin is unique in its quest to be a socially responsible and sustainable company in terms of implementing the components in each of the companies under the Virgin flagship with the view to enabling people enjoy healthy and fulfilling lifestyles whilst substantially reducing the negative impacts that the Virgin-branded companies may have on the world (Kotler & Keller 650).

Upon the realisation that “consumers have a higher expectation of brands and want to know what they are doing for the world” (Kotler & Keller 629), Virgin has done much to meet its social responsibility and sustainability obligations, hence the company can be referred to as a Firm of Endearment that actually spends less on marketing as a percentage of sales yet proceed to earn immense profits because customers who are deeply satisfied with the company’s social responsibility and sustainability practices do most of the marketing (Kotler & Keller 630).

Pros and Cons of Virgin’s “Green” Message

After the realisation that Virgin Aviation represents 7 million of the 8 million tonnes of CO₂ the Virgin Group emits into the environment each year, Richard Branson “announced that all dividends from Virgin’s rail and airline businesses will be invested into renewable energy initiatives to tackle emissions related to global warming” (Kotler & Keller 651).

The effort, according to these authors, “has evolved into the Virgin Green Fund, which invests in renewable energy opportunities from solar energy to water purification and is estimated to reach $3 billion in value by 2016” (Kotler & Keller 651).

Additionally, the Virgin group propagates the “green” message by not only establishing the Earth Challenge to award $25 million to any individual or group who develops a safe, long-term, commercially viable avenue to remove greenhouse gases from the atmosphere, but also ensuring that the airline’s brand new fleet is one of the most fuel and carbon efficient fleets being operated worldwide.

One of the underlying advantages of these “green” initiatives concerns the fact that Virgin will continue to attract more customers and enhance their satisfaction levels, which in turn will facilitate the productivity and performance of the company.

Available literature demonstrates that contemporary consumers have become increasingly environmentally conscious and most of them like to be associated with socially responsible and sustainable companies (Karna et al. 850).

Another advantage of the perceived Virgin’s green message concerns the fact that the company will increasingly use fewer resources to market its products and services as much of the marketing is undertaken by its loyal customers.

Here, it is important to define green marketing as “the process of planning, implementing, and controlling the development, pricing, promotion, and distribution of products in a manner that satisfies the following three criteria:

1. customer needs are met,
2. organisational goals are attained,
3. the process is compatible with ecosystems” (Baverstam & Larsson 1).

Consequently, it is safe to argue that customers are more likely to become loyal and satisfied, hence market the products and services provided by Virgin through positive word of mouth and other channels when their needs are successfully met using a methodology or process that is compatible with ecosystems.

Another advantage of Virgin’s “green” message entails amassing a reputable orientation among consumers and other players in the industry.

Evidence demonstrates that companies that use the earth’s resources and systems in a sustainable manner are always carried in high esteem than companies that do not (Baverstam & Larsson 2), and that consumers are integrating their concern for the environment into their purchasing behaviour (Mendleson & Polonsky 4), implying that a company’s reputation cultivated on the basis of practicing effective environmentally sustainable practices will go a long way in influencing consumers to purchase more from such a company.

Indeed, the Virgin Group’s thrust to take into consideration sustainability in the business decisions though the various “green” initiatives highlighted in this report is both noble and remarkable and will go a long way in ensuring a high company’s reputation and standing in the society.

Still, Virgin’s “green message particularly in the Virgin Earth Challenge initiative will go a long way in facilitating technological advancements that will, in turn, enhance sustainability and welfare of mankind.

It is reported in the literature that “the Earth Challenge [will] award $25 million to any person or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere” (Kotler & Keller 651).

Technological advancements and sustainability through green marketing and other green initiatives can allow companies the opportunity to become competitive, not mentioning that they can facilitate firms to reposition existing products without product composition, modify existing products to be less environmentally harmful, as well as modify the entire corporate culture to ensure that environmental concerns are integrated into all operational aspects (Mendleson & Polonsky 4).

At the human welfare level, the facilitation of technological advancements through Virgin’s green initiatives is instrumental in not only ensuring effective deployment of available resources while ensuring the needs of future generations are taken into consideration, but also in guaranteeing a future whereby people will have the capacity to enjoy healthy and fulfilling lifestyles while considerably minimizing the negative impact of their activities in the world (Kotler & Keller 651).

Among the cons of Virgin’s “green” message, some quarters may generally feel that the green initiatives being implemented by the company undermine the profit-seeking purpose of the firm, resulting in wastage of shareholders’ money.

Additionally, critics may argue that Virgin may not have the capacity to implement important business initiatives in key areas such as research and development (R&D) if the company continues to commit huge sums of money to its “green” initiatives (Kotler & Keller 629).

Another disadvantage of Virgin’s “green” message is predicated upon the fact that the company’s green or sustainability programs may be focussed on the short-term rather than on the long-term.

Available literature demonstrates that many companies are unable to break even in their sustainability initiatives due to their focus on short-term goals and results informed by the need to make immediate profit, establish contractual relationships, or guard against high levels of competition (Karna et al. 850).

Lastly, it can be argued that some of the Virgin Group’s “green” initiatives are neither inclusive nor aligned with the most critical needs of customers in line with a holistic marketing approach.

For example, although Richard Branson’s Earth Challenge seems ambitious, action-oriented and collaborative in its promise to award $25 million to any individual or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere (Kotler & Keller 651), it nevertheless fails to align itself with the most critical needs and environmental concerns of contemporary customers, such as pollution by industries, substandard products and services, greening supply networks and ensuring sustainable use of resources, among others.

In my opinion, the company is in line to progress its sustainability programs such as the Earth Challenge though it has such a negative environmental impact on the world (via air and rail) owing to the fact that it has taken substantial efforts to reduce its carbon footprint and also invested a lot of resources in coming up with alternatives to reduce the negative environmental impact arising from its activities.

The company is not only consciously aware of its contributions to environmental degradation but has also attempted to come up with interventions to address the situation, implying that it does not view sustainability programs as an impediment to the profit-seeking behaviour as demonstrated by other companies.

Virgin’s Holistic Marketing Strategy

Available marketing scholarship demonstrates that “the Virgin Group’s core businesses include retail operations (a chain of megastores in Australia, Britain and Ireland, continental Europe, Hong Kong, Japan, North America, and South Korea), hotels, communications (video games, book publishing, radio and television production), and an airline” (Kets de Vries 9).

Such a broad range of businesses requires a holistic marketing strategy which not only demand Virgin marketers to engage in a host of carefully planned, interconnected marketing practices aimed at substantially satisfying a broader set of constituents and objectives, but also to consider a wider range of effects of their actions (Kotler & Keller 621).

These authors are in agreement that, now more than ever before, marketing professionals must not only think holistically and employ creative win-win solutions to balanced conflicting demands but must also develop fully integrated marketing programs and meaningful relationships with a range of constituents.

Conversely, Virgin marketing professionals must perform all the right things inside their organisation and put into consideration the wider ramifications of their actions and activities in the marketplace (Kotler & Keller 623).

It is reported in the literature that “marketing no longer has sole ownership of customer interactions; rather, it now must integrate all the customer-facing processes, so customers see a single face and hear a single voice when they interact with the firm” (Kotler & Keller 623).

Such an integration of all customer-facing processes, in my view, will be beneficial for the Virgin Group as the company attempts to address the issue of brand dilution in its marketing strategy.

Available management scholarship demonstrates that “company responsibilities are often divided into economic, social, and environmental categories similar to the categories proposed in the popular concept of sustainable development” (Karna et al. 849).

Although the Virgin Group has well established social responsibility and sustainability programs across its various areas of operation, it needs to integrate these components into its holistic marketing strategy with the view to making unified business decisions related to ethical values, compliance with legal requirements, and respect for people, communities and the environment.

Indeed, as acknowledged in the literature, “corporate social responsibility and sustainability have become a priority as organisations grapple with the short-term and long-term effects of their marketing” (Kotler & Keller 621).

It is evident from the many social responsibility programs and sustainability initiatives undertaken by Virgin that the company has embraced this new vision of corporate enlightenment; however, it needs to fully integrate the concepts in its holistic marketing strategy so that the components serve as the very core of what the company does.

Such an orientation, in my view, will not only attract more customers and ensure that customers are always satisfied with the company’s product and service offerings, but will also transform the customers to become active marketers for the company due to its quest to work with employees, their families, the local community and society at large to enhance quality of life.

Additionally, Virgin needs to allow its marketers to not only achieve a larger influence in the organisation, incessantly generate new innovations and endeavour for customer insight by treating customers diversely but appositely, but also to create their winning brands more through performance than promotion, and to go electronic and win through the creation of superior information and communication systems (Kotler & Keller 643, 646).

To accomplish these changes and become really holistic, according to these authors, it would be the function of Virgin’s senior management to train the company’s marketers on a new set of skills and competencies in customer relationship management (CRM), partner relationship management (PRM), database marketing and data mining, contact centre management and telemarketing, public relations marketing, brand-building and brand-asset management, experiential marketing, integrated marketing communications, as well as profitability analysis by segment, customer, and channel (Kotler & Keller 646).

Lastly, Virgin’s holistic marketing strategy also needs to be sufficiently market-focussed and customer-driven, not mentioning that Virgin marketers need to fully understand their target markets as well as define and monitor existing competitors.

The company must develop effective strategies not only to manage relationships with stakeholders but also to find and exploit new business opportunities. Overall, for Virgin’s holistic marketing strategy to become a success, the company must be organised for effective and efficient marketing, not mentioning that it must make optimal use of technology to improve its processes (Kotler & Keller 647).

Conclusion

This report has undertaken a SWOT analysis for the Virgin Group, established its uniqueness in being a socially responsible and sustainable company, examined the advantages and disadvantages of the company’s green message, as well as discussed underlying issues related to the company’s holistic marketing strategy.

From the findings, it is clear that Virgin has a lot of strengths and opportunities, but needs to develop strategies to deal with brand dilution and intense competition in the marketplace.

Some of the reasons provided to justify Virgin’s uniqueness in its quest to be a socially responsible and sustainable company include demonstration of a strong sense of ethics, values and social responsibility, strategies employed toward becoming socially responsible and sustainable, care for people and planet, as well as categorization of core businesses.

The report has also comprehensively discussed the benefits and drawbacks of Virgin’s “green” message as well as recommendations for Virgin’s holistic marketing strategy. These recommendations are critical in ensuring that Virgin remains competitive and honours its social responsibility and sustainability obligations in the increasingly turbulent times characterising today’s business environment.

Works Cited

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Kets de Vries, Manfriend F.R. “Charisma in Action: The Transformational Abilities of Virgin’s Richard Branson and ABB’s Perey Barnevik.” Organisational Dynamics. 26.3 (2008): 7-21. Business Source Premier. Web.

Karna, Jari, Eric Hansen and Heikki Juslin. “Social Responsibility in Environmental Marketing Planning.” European Journal of Marketing. 37.5/6 (2003): 848-871. Emerald. Web.

Kotler, Philip and Kevin Keller. Marketing Management. 14th ed. 2012. Upper Saddle River, NJ: Prentice Hall. Print.

Lantos, Geoffrey P. “The Boundaries of Strategic Corporate Social Responsibility.” Journal of Consumer Marketing. 18.7 (2001): 595-630. Emerald. Web.

Mendleson, Nicola and Michael Jay Polonsky. “Using Strategic Alliances to Develop Credible Green Marketing.” Journal of Consumer Marketing. 25.2 (2005): 4-18. Emerald. Web.