Marvel Enterprises Inc. Case free essay sample

Cuneo also wondered if Marvel should venture past is current business operations to invest in content creation, rather than licensing the rights to others to do so. Marvel is currently competing in a red ocean, attempting to exploit existing demand and outperform its rival competitor, DC Comics, vying to obtain a greater market share. In order to do this Marvel should consider creating two divisions of character development. The first will focus solely on maintaining popularity and profitability of well-known characters such as Spiderman, while the second will focus exclusively on developing lesser known characters. This will allow Marvel to uphold the reputations and sales of its most profitable characters, while also bringing its unknown ones to superhero status. It is also recommended that Marvel stays true to its production of only publishing and toys, instead of expanding into other areas of content creation. Marvel’s lack of expertise in other areas may lead to lower quality products, inefficient production, and expensive sunk costs that will be lost regardless of the product’s success. Rather than investing in creating new supply chain operations, it is recommended that Marvel invest in digitalizing the Marvel Universe in accordance with growing consumer technological trends. Why Digital Media? Marvel’s comic books are targeted at male teenagers and young adults between 13 to 23 years old, with an extended readership established within adults in their mid-30s. Its toy division is targeted towards a younger sector, primarily aimed at boys from 4 to 12 years old. Young adults constantly utilize technology and online media tools, and the children are growing up in a day and age where digital technology is an integral aspect of everyday life. In order to continue effectively reaching these consumers, Marvel must take a digital approach in its future. Ever-evolving technologies are increasingly empowering consumers and altering the dynamics of effective advertising and marketing strategies. These changes are redefining how products are sold, created, consumed, and tracked. In order to succeed in this innovative market, Marvel will have to be responsive to these dynamic changes, adjusting its strategies in accordance with technological trends and the impacts they have on consumer behaviours. Today’s consumers seek customization of their digital experiences, combining a variety of media tools to satisfy their preferences. A recent MTV study showed that the average adolescent is a media multi-tasker, constantly accessing a variety of media tools simultaneously, consuming 30 hours of media and entertainment in one day. To maintain Marvel’s leadership in this marketplace, it is essential to digitalize operations and gain a time slot in its consumers’ 30 hour days. By doing so, Marvel will be able to effectively connect with its consumers. Implementation: Digitalizing the Marvel Universe Marvel can digitalize its operations though technological innovation. Its operations will transition from analog to digital distribution platforms through a three phase process: digital formatting, technology integration, and transformation. Media and entertainment has been almost entirely transferred to digitally compatible formats such as MPEG, DVD, and CDs. Offering products in these formats increases channels of accessibility to consumers. Marvel needs to adapt to this trend, and begin selling digitalized versions of its comic books in Portable Document Format (PDF), allowing users to read them on the computer and easily purchase them online. This will save Marvel manufacturing and printing costs, while also offering a sustainable and environmentally-friendly product. In the next step, it is important to enhance the digital formats through technological integration. Following the increasing online shopping trends, Marvel needs to develop its own official online store to sell its products. The website will offer users a variety of updates including new releases, discounts, and comic book signings, as well as forums which will act as an online marketplace for users looking to buy or sell products. In the last stage, transformation, Marvel needs to take this digital transition one step further, creating a virtual-reality, superhero universe as an extension of its website. This online community will include character specific profiles and interactive games, allowing consumers to connect with their favourite superheroes, sharing their emotions and experiences. There will be profiles for the majority of Marvel’s known and unknown characters, including a summary of their background, interests, powers, relationships, and statistics. Users can browse the profiles of their favourite characters, or they could also use the Create Your Own Superhero application and make their own profile. Consumers seek customization, and this application gives them complete design control, allowing the creation of their ideal superhero. Marvel can even host competitions online, in which the winner’s avatar will be featured in a comic book. The games will allow consumers to use their personalized superhero to interact with fellow cyber travelers, express their personality and experience superpowers for themselves. This online community can also act as a form of customer relationship management for Marvel, collecting â€Å"individual purchasing information to improve its ability to understand and respond to customer desires and buying patterns. † Marvel can obtain demographical information from consumers through registration processes, and then begin cool-hunting, following their movement throughout the website to analyze trends and purchasing behaviours of particular market segments. Understanding its consumers enables Marvel to develop targeted campaigns to increase marketing effectiveness and will be especially important when developing Marvel’s lesser known characters in order to raise awareness and create a fan base. Implementation: Developing Lesser Known Characters Marvel’s large content library is home to over 4,700 characters, which means there are plenty of profitable opportunities ahead of them. However, as the majority of them are relatively unknown, Marvel will have to be strategic in the way it launches each one. As was previously stated, Marvel can analyze trends through its online superhero community to determine which characters will be able to most effectively connect with audiences, and prove most profitable. Once it is determined which character to launch, it is recommended that Marvel continue with its long term development strategy of devising a personalized, five-year career plan for its characters, including an outlined storyboard and marketing plan. Throughout these five years, Marvel should take advantage of the popularity of its well known characters by integrating lesser known ones into their comic books and online platforms through guest appearances. If consumers see that these new characters are being associated with some of their favourites, they may be more inclined to purchase these new products. Marvel could even unite several of its most profitable characters with some lesser known ones, into one power team, standing up and fighting together. The use of digital media and the online superhero community provides a wider variety of channels to reach the consumer. When launching a new character, they can have promotional advertisements on the website and other online platforms. Users could even have the opportunity to play the games with that superhero as their avatar. This will allow them to familiarize themselves with the character and its powers allowing them to feel more involved with the superhero’s experience. Various other digital promotions could also be ensued such as product giveaways, signed comic books or movie premier invitations to stimulate interest and awareness of the characters. The Future of Marvel Marvel is a thriving corporation, whose success has been greatly due to its remarkable understanding of its consumers’ preferences. Digitalizing the Marvel Universe will allow an even closer connection with its consumers, creating an intimate bond with them and giving Marvel insight into the popularity of its characters and which lesser known ones to develop. By following the recommended strategies Marvel will be able to extend its reputation of a sustainable, iconic brand that will last for generations to come. Question Analysis: Marvel Enterprises, Inc. ___________________________________ Question 1: In your view, what strategic direction should Marvel Enterprises’ Vice Chairman Peter Cuneo and his colleagues pursue? Why? How? There are two main predicaments that Peter Cuneo and his colleagues are trying to decide upon. First being how to most effectively use its library of characters, and secondly, whether to expand into more capital-intensive activities in the value chain for its entertainment products. Marvel can either continue to focus on a small set of its most popular characters or shift their focus to a larger set of lesser-known characters with the potential to become the next world-wide phenomenon. Continuing to capitalize on the strength of a select few characters is not a sustainable strategy, as there is no way to tell the lengths to which their popularity will persist. Marvel’s vast content library provides it with endless opportunities to develop lesser known characters, but this also runs great risks as these characters are generally unknown. It is recommended to take a cooperative approach, marketing its known characters to a lesser extent, and shifting the excess resources to developing new characters. Many consumers associate big superheroes like Spiderman and X-men with Marvel, and this brand recognition is crucial, but not many of its characters have actually achieved â€Å"superhero† status. By appropriately allocating resources to both sets of characters, Marvel will be able to create new profitable superheroes, improving revenues and brand equity in the long term. Secondly, Marvel must decide whether to expand operations, creating a wider variety of content or remain faithful to their current business model. Marvel currently has the capital required to invest in costly ventures such as making its own movies rather than licensing its rights. Already involved in the scriptwriting process, ensuring the reputation of the character is upheld, Marvel could produce the films themselves, yielding even higher returns. However, the production processes for these activities are quite complicated, and by entering into them without full knowledge or experience, the profitability of these ventures is questionable. The quality of the products may not be on the same level as those created by companies with experience and the very costly production fees will be sunk regardless of whether the products are successful not. Marvel’s limited experience in different sectors proves these new ventures to be very risky. Instead, Marvel should continue to focus on what it is known for, its comic books and toys, and should allocate the excess funds that would have been devoted to these expansions, to the development of its lesser-known characters and digitalizing the Marvel Universe. Question 2: 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 recovery was most certainly not a fluke; in fact, its success was largely due to the sustainable nature of its clever turnaround strategy through monetizing its content library, building long term careers for each character and ensuring quality of licensed products. Marvel’s first key focus was to monetize its content library by licensing characters for use in media products. Over the last decade, the exponential growth of technology has increased channels of information and media distribution, making it essential to utilize more than just one media tool (publishing) to expand Marvel’s influence to consumers. Comic books were aimed at a rather limited market of males between the ages of 13 to 23, and without the use of multiple products, expanding past this traditional market would be quite difficult. However, by licensing character rights through the use of movies, video games, and other consumer products, Marvel will be able to more effectively reach a wider variety of consumers. Having an assortment of goods available in different product categories also reinforces the sales of one another, as there is a high likelihood that if consumers truly enjoy a movie, they will also be interested in the coinciding video games or comic books. The second dimension involved is developing long-term value for each of Marvel’s prominent characters. Marvel focused on building its characters’ future careers rather than focusing on their short-term success. Individual five year plans were devised for each of the main characters to establish direction, credibility, and to ensure sustainable growth. For instance, â€Å"Spiderman’s career over the next five years†¦includes two more movies, DVDs, toys, a video game, a promotion with Burger King, and so on. † The third strategic element was to retain control over the creative process, ensuring that any content featuring Marvel characters would be of high quality and emphasizing consistency between the characters and their stories. Well-known artists and writers were hired to lead Marvel’s creative efforts in their publishing division, as comic books were their initial source of credibility and it was necessary to re-establish that integrity to rejuvenate their arket share. By associating products of high quality, creativity, and originality with their characters, consumers will subsequently attach similar values to the Marvel brand itself, increasing its sustainable competitive edge in the long term. Marvel’s turnaround strategy was successful due to the improved management of assets, focusing on re establishing quality and credibility rather than the former model of rapidly increasing the number of titles published. They shifted their focus to emphasize quality over quantity, and in turn, developed a sustainable business model. There is and will always be a large market for comic books, and by licensing their character rights, they now also have the ability to gain market share in a variety of other product categories as well. Question 3: How important are each of Marvel’s 3 divisions (comic books, toys, licensing) to its past and future performance? Marvel’s publishing business is a key aspect of the company’s performance. Established in the 1930s, Marvel’s sole focus was on publishing comic books, and its great success in this industry has allowed Marvel to gain credibility and integrity as a corporation. Since 1997, the comic book industry has been very stable, with total U. S. retail sales of approximately $300 million per year. Marvel had a 40% market share, 5% higher than its biggest competitor: DC Comics. In recent years the net sales of Marvel’s publishing have been increasing; however, as of 2003, these sales accounted for only 21. 08% of Marvel’s total sales and 14. 54% of its gross profit; making publishing the lowest financial contributor of the three divisions. Nevertheless, it is still crucial to Marvel’s future performance, because what it lacks in financial contributions, it will make up for in its influence on brand equity. Marvel may be yielding greater returns in other divisions, but its publishing sector is essential to sustaining its reputation and loyal consumers, as comic books are what Marvel is known for and what it should stay true to. Marvel’s toy division has been a significant division in the past, and will continue to be in the future. In 2001, 10% of Marvel’s net revenue was due to the line of toys sold in relation to the first Spiderman movie alone. Net sales have been inconsistent over the past few years, but these differences may be due to the timing of movie launches associated with the products or due to tough competition (Hasbro, Mattel, and Bandai). By 2003 the toy division had become Marvel’s second most profitable sector, yielding 24. 5% of total net sales and 14. 91% of gross profits. This division is also very important to future growth and performance, not only financially, but also in terms of drawing in young children as new consumers, introducing them to the realm of superheroes and to the Marvel universe. Marvel’s licensing division has also been very important to its success, licensing its characters to a variety of media outlets including movies, television programs, and video games, and seeking the best licensing partners in all major product categories. â€Å"Product licensing of cartoon and fantasy characters†¦is proving so lucrative that some companies are even designing characters†¦for the express purpose of licensing them. † Marvel didn’t have to go to this extent, but this trend did allow Marvel to successfully monetize its content library. By 2003, Marvel had signed 128 new licensees, guaranteeing income of $348,000 – a 148% since 2000. This sector was also Marvel’s most profitable division, making up 54. 42% of total net sales and 70. 54% of gross profit. Looking to the future, Marvel’s large collection of characters implies that these revenues will continue to grow, as there are many opportunities to license unown characters. Licensing its characters into an assortment of media categories also enables Marvel to expand its product range and influence a wider variety of consumers and improving brand equity. Question 4: To what extent is Marvel’s success due to only one character, Spiderman? How can Marvel develop its lesser known characters? Without a doubt, Spiderman is Marvel’s most popular character, greatly contributing its success. The first Spiderman motion picture was the highest grossing film of 2002, generating revenues of $404 million domestically and $822 million worldwide, and that was just the beginning. The Spiderman character has consistently thrived in every market he has been placed into including video games, movie sequels, collectibles and toys. However, during the 1990s, the company struggled and went bankrupt despite such a successful superhero. Spiderman is a popular and marketable asset, but individually, he was not enough to rescue Marvel from its ominous downfall. The success or failure of a corporation is not solely dependent on a single employee, but rather on a large network of employees working together. Similarly, Spiderman is not solely responsible for Marvel’s success, but rather a well-rounded portfolio of characters building off of one another and working as a team. Marvel prides itself in its extensive content library and the endless possibilities the future holds for its lesser known characters. In order to develop these unknown characters, Marvel must continue with its strategy of formulating a long-term, individualized, career plan for each character it prepares to launch. In addition, Marvel should utilize its well-known characters to promote its lesser known ones, through guest appearances in comic books or television shows, stimulating curiosity and interest. As was previously mentioned, when it comes to launching new characters, emphasizing quality is more effective than quantity. Marvel should only focus on a couple characters at time, until they are successfully integrated into and identified with the Marvel Universe. Marvel can even take this one step further by uniting several of its popular characters with a few lesser known ones in a single comic book or motion picture. The revenue these characters produce individually is astounding, but who knows what they could accomplish together.