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.

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 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.

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 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

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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.”

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 Appendix A

Figure 1. Marvel's Gross Profit in Three Divisions*

200000
180000
160000
140000
120000
Profit

100000
80000
60000
40000
20000
0
Publishing Toys Licensing
Division
*Adapted from Exhibit 2 of Elberse, A. (2005). Marvel Enterprises, Inc. In M.
Mantrala, M. (Ed.), Marketing 8050 (p. 130).

Figure 2. Marvel's Gross Profit Change in Three Divisions

(2000-2003)*
200000
180000
160000
140000
120000 Publishing
Profit

100000 Toys
80000 Licensing
60000
40000
20000
0
2000 2001 2002 2003
Year
*Adapted from Exhibit 2 of Elberse, A. (2005). Marvel Enterprises, Inc. In M.
Mantrala, M. (Ed.), Marketing 8050 (p. 130).

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 Figure 3. The Second Half Year Revenue for Four Titles (2003)*

1400000
1200000
1000000
Revenue

800000
600000
400000
200000
0
Amazing Spider- Ultimate Spider- Punisher The Fantastic Four
Man Man
Titles
*Adapted from Exhibit 5 of Elberse, A. (2005). Marvel Enterprises, Inc. In M.
Mantrala, M. (Ed.), Marketing 8050 (p. 133).

Figure 4. Marvel's Movies in the US Market and the World Market*

900
800
700
600
Box Office

US
500
World
400
300
200
100
0
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Movies
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*Adapted from Exhibit 7 of Elberse, A. (2005). Marvel Enterprises, Inc. In M.

Mantrala, M. (Ed.), Marketing 8050 (p. 135).

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 Appendix B

Reference

Elberse, A. (2005). Marvel Enterprises, Inc. In M Mantrala (Ed.), Marketing 8050

(pp. 117-136). Columbia, MO: University Bookstore.