Marvel’s
value proposition consists of three parts. The first is “monetizing the content
library by licensing characters for use with media products…as well as other
consumer characters” (pg. 2). The second is creating long-term value for their
characters by planning their careers. The last part is “quality and consistency
in the publishing division” (pg. 2).

Marvel has
different customers for each and even within each of its three divisions, comic
books, toys, licensing and movies. Comic books target males primarily from 13
to 23 years old but could extend to mid-30s once the readership is established.
Some would buy as a collectible while others buy like a book or magazine. The
primary target for toys is boys from 4 to 12 years old. Adults who had action
figures growing up would also buy the toys for collecting or store of value
purposes. Licensing and movies have multiple target customer segments. For
example, licensed toys and footwear would target boys whereas video games target
male adults.

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Comic books
are a cheap and convenient form of entertainment for consumers. Once a reader
develops an interest in it, they will go back to purchase the new issue, and
this slowly becomes a habit. Readers may also buy merchandise such as
character-themed clothing, accessories, and toys because they have developed
such a deep connection with the characters in the books and it slowly becomes
part of their lifestyles. Because of this gradual development of interest in
the characters, when the movies that star those characters are released, they
become very popular and successful, like Spider-Man. Comic books play a very
significant role of introducing, joining, and building the consumer with Marvel
and it also leads to the popularity of their other channels such as toys and
licensed products. The publishing division has the highest gross profit margin of
over 50% in 2002, 2003, and 2004 Q1 (see Appendix). This ratio indicates that
Marvel is efficient in its production process and it has an excellent financial
health. Since this division has the lowest costs, it is best used to introduce
new concepts. However, as technology advances in the future, the need for books
would decrease because there will be cheaper and more convenient forms of
entertainment. Marvel needs to start planning for the gradual decrease of comic
books consumption and anticipate for the future. For example, Marvel can
publish their comics online, so people can quickly and easily access them from
home.

Toys are
products that bring the characters in the comic books to life. Toys such as
action figures are targeted towards boys because they easily get attracted to
characters and want to be like the characters. For example, the Spider-Man Dual Action Web-Blaster
allows kids to be like Spider-Man with superpowers. Action figures also appeal
to adults because of their interest in the characters from the comic books. The
toys division is vital for Marvel because it brings consumers even closer to
the characters which would increase the interest in Marvel characters. Children
of all generations will purchase toys because there is nothing that can replace
the feeling of having a physical toy to play with. This division has the lowest
operating profit margin and gross profit margin which means that this sector is
least profitable for Marvel. However, toys also have the lowest operating
expenses ratio meaning that it costs the least portion of net sales to operate.
Since Marvel’s toys are manufactured under Toy Biz Inc. and licensed to other
companies, Marvel has a low risk if a line is unsuccessful.

Licensing
and movies are essential for attracting new consumers who may not have read
Marvel’s comics book in the past. This division targets the people who prefer
to see things in action rather than in reading, children because they are
unable to read at that age or die-heart Marvel fans from their comics. Movies
also allow Marvel to reach a broad audience at once. After people have seen a
Marvel movie or played a video game and starts to build interest in it, they
may buy the comic books and toys. Ultimately, all three divisions are
interconnected. This unit has the highest operating profit margin. This means
that over 73% of revenue is left after operating expenses are deducted (see
Appendix). However, there is also high risk because of the high costs. Since
movies cost millions of dollars to produce, it is crucial to only produce and
release movies that have well-established characters and storylines.

Spider-Man
was first released in the early 1960s as graphic novels. Customers built
interest in Spider-man slowly through the comic books and gradually grew as
more issues were being released. Spider-Man was so successful as a movie in
2002 because of this developed customer base. The success of Spider-Man is an
example of the adoption process. The five stages of this process in
chronological order are awareness, interest, evaluation, trial, and adoption.

Like
humans, characters have a set character life because consumers will eventually
lose interest in Spider-Man when newer, cooler characters are introduced.
Rather than allowing the competitors to attract the consumers, Marvel should
gradually cut back on Spider-Man’s appearance and create new or develop lesser
known characters. They should only develop quality Spider-Man products over
quantity which reinforces Marvel’s value of building long-term value. Marvel
will also be able to retain their existing customers and attract new consumers.

Marvel can
develop the lesser known characters periodically individually or in a group like
how they developed Spider-Man. Marvel can insert advertisements before and
after Marvel movies to raise awareness of the minor characters. To slowly build
interest, they can introduce minor characters into the comic books with Spider-Man
and these characters can gradually play more prominent roles. It is best to
build interest through comic books because they have a low cost and risk of
publishing. If it is not successful, Marvel can easily take it off the market.
To allow consumers to evaluate this new comic book series, Marvel can conduct
surveys to see if consumers like these new characters. Marvel could also send
free copies to loyal readers or bloggers for them to evaluate the product.
After evaluation, Marvel can launch a new line of books that consists of these
new characters playing major roles independently or partnered with a well-known
character like Spider-Man for readers to try. Since many readers may be
reluctant to try this new line, they can offer it as a package with the
existing series at a low cost. Finally, if this series is successful, Marvel can
release this series continuously through comic books, licensed products,
movies, and toys.

Because
more children are becoming interested in Marvel through the movies and toys,
Marvel should expand its publishing division to also publish children books. They
can publish story and learning books (ex. Numbers). Children books would also
appeal to adults because books allow children to learn to read and other
important concepts. Children would be willing to read Marvel books because they
involve their favourite characters. This also widens Marvel’s customer base for
its publishing division. Since publishing is the division with the lowest
costs, if children books are unsuccessful, they can always cancel it.

From
Exhibit 4a, all the movies released to date are rated PG-13 or R. Marvel can
produce some movies that are G or PG, so adults can bring their children to see
the movies together. Since movie production has high costs and risks, Marvel
can first evaluate market performance of the children books and toys. An
alternative can also be a children’s TV show that involves Marvel characters.
If successful, this could increase sales of toys and publishing.