Not Virgin Territory

February 15, 2008

In a January 5 interview with Collin Levy for the Wall Street Journal, Virgin Group CEO Richard Branson was quite candid about one of his rare product failures, Virgin Cola.

When the soft drink first entered the United States market, Virgin launched it with an advertising stunt that saw Branson driving a tank down New York City’s Fifth Avenue and “blowing up” a Coca-Cola sign in Times Square. While this escapade garnered lots of attention, it wasn’t enough to guarantee Virgin Cola the success that had been predicted in the targeted market. Branson as much admitted Virgin Cola’s defeat in his interview when he acknowledged that Coca-Cola was a more formidable competitor than he had anticipated. As he explained, “Coke had the advantage of being a good brand, and since we had a good brand, too, our drinks were about the same. We just couldn’t differentiate our product from Coke’s.”

If a successful business like Virgin Group and its sharp executive Richard Branson can occasionally stumble, that experience should serve as a cautionary example for other business groups, especially in a faulty economy. Simply resting on the laurels of a strong brand may not be enough to assure success, particularly when a new product or service is introduced into an established market. As Branson and Virgin learned, unless a product is sufficiently distinctive, all the brand recognition in the world and all the tank parades down Fifth Avenue are not likely to lead to an economic triumph.

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