Dr Susan Bridgewater*

Dr Susan Bridgewater*

The Virgin Rrand You bought the record, you drank the cola, you took the aeroplane to New York. Richard Branson's Virgin empire is more than a casual assortment of consumer goods; in marketing terms, it is a whole way of life. But Branson's baby boomers are about to grow up. With all the pre­publicity of ;i Hollywood film premiere, Virgin is set to enter its least glamorous market: the personal equity plan. 1

Ask any member of the Virgin Direct team why Richard Branson was inter­ ested in the financial services market and you wil! get the answer 'If an

industry needs "sorting out", Richard Branson is interested in doing so.' The brand image of good service, good value for money and challenging the status quo has led Richard Branson's Virgin Group to diversify into a variety of seemingly unrelated sectors. If the customers' needs could be met better, then there is a challenge for the Virgin brand. In the words of Jayne­Anne Gadhia, operations director of Virgin Direct:

The Virgin brand is about taking on the rest of the industry. It is a brand with personality. Richard Branson is seen by the public as a customers' champion, who is allowed to question how to do things better and differently.

Virgin Direct

In March 1995, the Virgin Group set up a joint venture with Norwich Union to enter the financial services market using the telephone as its distribution

method. On entry into the market, Virgin stated its aims: to advertise itself as the friendly face in a world of financial cowboys.

The combination of easy­to­understand products and low initial charges will soon be applied to pensions and life insurance, where

public faith has been shaken by accusations of mis­selling and over­ charging. 2

The Virgin Personal Equity Plan (PEP) was Richard Branson's attempt to attract new customers into a market that he felt to be overcomplicated. With its initial product, Virgin made innovative use of index tracking, a technique of investment which shadows the performance of die All Share stock market index, rather than using fund managers who pick and choose the companies

in which they invest. At the time of its launch this was the lowest­priced PEP, with no entry and exit charges. 3 By July 1997, Virgin Direet managed

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over £1 billion on behalf of its 200,000 customers and the Virgin Growth PEP had established itself as the UK's most popular PEP. Virgin's entry into

this market forced established firms to review their charges and brought a number of other non­financial ­services firms into the 'no­frills' sector.

Building on its early success, in June 1996 Virgin launched life insur­ ance, health and critical illness plans and, on 1 November 1996. entered the pensions market. The introduction of these new, more complex financial products was a significant step. Virgin's PEP products were initially sold on an execution­only basis; customers made their own decisions about the suit­ ability of the product based on the information provided. With a core product

range in place. Virgin Direct introduced a service to advise customers about the best financial choices for their own particular circumstances. Although it is early days to judge the sueeess of the move into life insurance and pensions,

Virgin received 6,000 phone calls a day during the launch of its pensions and has over twice die industry conversion rate from interest into purchase.