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 people’s life, only one media tool, publishing, is not strong enough to expand Marvel’s influence to consumers.
Comic books can target a very limited market, mostly composed of male teenagers and young adults from 13 to 23 years old. It is very difficult to expand this traditional market. After many years of development, this market has matured and is very stable. Meanwhile, people have been more exposed to movies, televisions, and video games, which more effectively influence people’s consumption behavior than do comic books. All these media modes are able to reach more consumer segments than traditional comic-book publishing.
Marvel’s potential to develop increased dramatically when its market expanded to broadcast media. Other consumer products, such as toys, worked in conjunction with media products, these two kinds of products reinforced each other. Marvel’s market expansion developed in both a comprehensive and intensive manner. 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 the next five years is to have two more movies, DVDs, toys, a video game, and a promotion with Burger King.
The intensive “career plan” extend character’s life and can have each character penetrate into people’s lives by media on a long term basis. The third main strategic dimension is to ensure the quality of the content which featured Marvel characters. Creation and consistency in characters and stories mean everything for Marvel. Before Marvel’s turnaround, the low publishing market share was mostly due to a lack of quality control. When efforts were put into improving creativity and 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’s market. (c) How important are each of Marvel’s three divisions – Comic books, toys, and licensing – to its past and future performance? The comic book business was Marvel’s core in the past and earned almost all revenue.
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, when mismanagement 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 stable and the annual sales totaled around 300 million every year. While comic book revenue should continue to be stable, its percentage will decrease in the future as Marvel’s other businesses grow.
Licensing was only a small part of Marvel’s overall revenue in the past. Marvel’s licensing was mostly concentrated within the comic-book industry, selling the publishing license 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. In 2003, 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 and its 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. Little effort was invested in toys which were not even mentioned strategic plans. Now the toy industry is the second-highest profit maker in Marvel, generating over $20 billion in sales in 2003. The toy business is very promising in the future. However its percentage in revenue will still remain stable or slightly decrease, just as publishing will do, because licensing has such a strong possibility for growth.
In addition, while the toy industry competition is too fierce to permit further achievements. (d) To what extent is Marvel’s success due to only one character, Spider-Man? How can Marvel develop its lesser-known characters? There is no doubt that, to a great extent, Marvel’s success since the 1960s is due to Spider-Man. However, during the 1990s, the company declined despite such a successful superhero. “Exploiting” strategy by significantly increasing the number of titles stretched out consumers’ interest. Marvel’s new CEO, Peter Cuneo, restructured the company with negative assets and turned the company around.
Spider-Man was resuscitated in comic-book sales. In the Publishing Division, Marvel’s 64. 7% revenue was from Spider-Man among the top famous titles in the second half year of 2003 (See Appendix A Figure 3). In the movie box office revenue, Spider-Man collected 33. 75% revenue in the US market and 37. 2% in the world market among Marvel’s eight titles movies, ranking the first (See Appendix A Figure 4). Spider-Man has gained great achievements, since the company turned around. However, Marvel’s success is not due to only one character.
According to figure 3 and figure 4, other lesser-known characters, such as the X-Men and Fantastic Four, have also contributed to the company’s success. The entertainment market is difficult to predict. Consumers’ interests for media products are notoriously fickle. It could be very risky to continue to infuse resources to Spider-Man. Spreading limited resources to lesser-known characters helps the company reduce risk. Marvel needs to shift their focus to lesser-known characters which have great potential to be popular with wider public.
Integrated marketing communication can be a very useful strategy to promote lesser-known characters by using prominent characters. For example, the Fantastic Four can be guests in Spider-Man’s comic-books or movies. When lesser-known characters and Spider-Man are presented to people as “Marvel’s Superheroes”, lesser-known characters can be promoted by the fame of prominent characters. As Marvel’s previous CEO Peter Cuneo (2003) said, “this is about converting Spider-Man fans into Marvel fans. ”