Marvel Enterprises

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Marketing Strategy 8050 Marvel Enterprises, Inc. Case Writing by Xiaodan Dong February, 2008 Marvel Enterprises, Inc. (b) Why was Marvel’s turnaround so successful? Would you characterize that success as a fluke? Or do you view it as sustainable? Why? How? Marvel’s success is not a fluke because its business model is sustainable. Marvel’s new strategy monetized the content library by licensing characters for use with media products. During an era in which mass media is very important in peopl
  Marketing Strategy 8050Marvel Enterprises, Inc. Case Writing byXiaodan DongFebruary, 2008  Marvel Enterprises, Inc. (b) Why was Marvel’s turnaround so successful? Would you characterize that success asa fluke? Or do you view it as sustainable? Why? How?Marvel’s success is not a fluke because its business model is sustainable.Marvel’s new strategy monetized the content library by licensing characters for use withmedia products. During an era in which mass media is very important in people’s life,only one media tool, publishing, is not strong enough to expand Marvel’s influence toconsumers. Comic books can target a very limited market, mostly composed of maleteenagers and young adults from 13 to 23 years old. It is very difficult to expand thistraditional market. After many years of development, this market has matured and is verystable. Meanwhile, people have been more exposed to movies, televisions, and videogames, which more effectively influence people’s consumption behavior than do comic books. All these media modes are able to reach more consumer segments than traditionalcomic-book publishing. Marvel’s potential to develop increased dramatically when itsmarket expanded to broadcast media. Other consumer products, such as toys, worked inconjunction with media products, these two kinds of products reinforced each other.Marvel’s market expansion developed in both a comprehensive and intensivemanner. Marvel emphasized long-term value in its new management strategy. They planed “career” for each of their characters. For example, Spider-Man’s career over thenext five years is to have two more movies, DVDs, toys, a video game, and a promotionwith Burger King. The intensive “career plan” extend character’s life and can have eachcharacter penetrate into people’s lives by media on a long term basis.2  The third main strategic dimension is to ensure the quality of the content whichfeatured Marvel characters. Creation and consistency in characters and stories meaneverything for Marvel. Before Marvel’s turnaround, the low publishing market share wasmostly due to a lack of quality control. When efforts were put into improving creativityand fine artwork, the publishing business was rejuvenated and the market share increased.The publishing business provides the primary support for both licensing and toys.Marvel’s success will sustain, because the products lives are extended with well- planed “career”, and the market is expanded with thriving licensing and toy businesses.Investment in quality can enhance the product’s competitive ability in terms of both product life and market expansion. Great potential exists in each aspect of Marvel’smarket.(c) How important are each of Marvel’s three divisions – Comic books, toys, andlicensing – to its past and future performance?The comic book business was Marvel’s core in the past and earned almost allrevenue. Comic books were so important for Marvel that its market share determined if Marvel would live or die. That is why Marvel went bankrupt in the mid-1990s, whenmismanagement caused a huge drop in comic-book sales. After Marvel turned around,comic-book publishing was important as a primary business, but not a core business.Since 1997, Marvel’s financial performance in comic-book industry has been very stableand the annual sales totaled around 300 million every year. While comic book revenueshould continue to be stable, its percentage will decrease in the future as Marvel’s other  businesses grow.3  Licensing was only a small part of Marvel’s overall revenue in the past. Marvel’slicensing was mostly concentrated within the comic-book industry, selling the publishinglicense to some book-related businesses or some toy merchants. After Marvel took advantage of broadcast media, such as movies, television, and video games, its licensing become the largest division and collected the majority of the profit for the company. In2003, licensing accounted for 70.5% of the gross profit (See Appendix A Figure 1).Licensing profit had a much sharper increase from 2000 to 2003 than the other two businesses (See Appendix A Figure 2). In the future, licensing will keep increasing andits percentage of revenue will grow, especially if the management adopts a strategy of capitalizing on it.In the past, the toy business was just an annex of the publishing industry. Littleeffort was invested in toys which were not even mentioned strategic plans. Now the toyindustry is the second-highest profit maker in Marvel, generating over $20 billion in salesin 2003. The toy business is very promising in the future. However its percentage inrevenue will still remain stable or slightly decrease, just as publishing will do, becauselicensing has such a strong possibility for growth. In addition, while the toy industrycompetition is too fierce to permit further achievements.(d) To what extent is Marvel’s success due to only one character, Spider-Man? How canMarvel develop its lesser-known characters?There is no doubt that, to a great extent, Marvel’s success since the 1960s is dueto Spider-Man. However, during the 1990s, the company declined despite such asuccessful superhero. “Exploiting” strategy by significantly increasing the number of 4
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