Virgin - Brand Extension or Brand Dilution?

Branson responded to criticisms of Virgin's brand extension strategies by arguing that Virgin looked at long-term growth and not short-term profits. On the issue of dilution of brand equity, he said, "The key to making sure the Virgin name stays fresh and successful is obviously not to overdo it, and to make sure any product we apply it to is really going to go in there and shake up the industry it is in. So we are really only working with products that we think can grow into global billion dollar businesses within five years."

Meanwhile, problems with various Virgin businesses continued into the 21st century. Virgin Clothing was closed in 2000 and Virgin Cosmetics posted a loss of £6.7 million for the financial year ending March 2001.

After the terrorist attacks in the US in September 2001, Virgin's airlines businesses suffered from the global slump in the industry. Virgin Rail was also expected to become a problem when the subsidies from the UK government that were making the venture profitable ceased...