Marvel’svalue proposition consists of three parts. The first is “monetizing the contentlibrary by licensing characters for use with media products…as well as otherconsumer characters” (pg. 2). The second is creating long-term value for theircharacters by planning their careers.
The last part is “quality and consistencyin the publishing division” (pg. 2).Marvel hasdifferent customers for each and even within each of its three divisions, comicbooks, toys, licensing and movies. Comic books target males primarily from 13to 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. Theprimary target for toys is boys from 4 to 12 years old. Adults who had actionfigures growing up would also buy the toys for collecting or store of valuepurposes.
Licensing and movies have multiple target customer segments. Forexample, licensed toys and footwear would target boys whereas video games targetmale adults.Comic booksare a cheap and convenient form of entertainment for consumers. Once a readerdevelops an interest in it, they will go back to purchase the new issue, andthis slowly becomes a habit. Readers may also buy merchandise such ascharacter-themed clothing, accessories, and toys because they have developedsuch a deep connection with the characters in the books and it slowly becomespart of their lifestyles.
Because of this gradual development of interest inthe characters, when the movies that star those characters are released, theybecome very popular and successful, like Spider-Man. Comic books play a verysignificant role of introducing, joining, and building the consumer with Marveland it also leads to the popularity of their other channels such as toys andlicensed products. The publishing division has the highest gross profit margin ofover 50% in 2002, 2003, and 2004 Q1 (see Appendix). This ratio indicates thatMarvel is efficient in its production process and it has an excellent financialhealth.
Since this division has the lowest costs, it is best used to introducenew concepts. However, as technology advances in the future, the need for bookswould decrease because there will be cheaper and more convenient forms ofentertainment. Marvel needs to start planning for the gradual decrease of comicbooks consumption and anticipate for the future. For example, Marvel canpublish their comics online, so people can quickly and easily access them fromhome.Toys areproducts that bring the characters in the comic books to life.
Toys such asaction figures are targeted towards boys because they easily get attracted tocharacters and want to be like the characters. For example, the Spider-Man Dual Action Web-Blasterallows kids to be like Spider-Man with superpowers. Action figures also appealto adults because of their interest in the characters from the comic books. Thetoys division is vital for Marvel because it brings consumers even closer tothe characters which would increase the interest in Marvel characters. Childrenof all generations will purchase toys because there is nothing that can replacethe feeling of having a physical toy to play with. This division has the lowestoperating profit margin and gross profit margin which means that this sector isleast profitable for Marvel. However, toys also have the lowest operatingexpenses 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 othercompanies, Marvel has a low risk if a line is unsuccessful. Licensingand movies are essential for attracting new consumers who may not have readMarvel’s comics book in the past. This division targets the people who preferto see things in action rather than in reading, children because they areunable to read at that age or die-heart Marvel fans from their comics. Moviesalso allow Marvel to reach a broad audience at once. After people have seen aMarvel movie or played a video game and starts to build interest in it, theymay buy the comic books and toys.
Ultimately, all three divisions areinterconnected. This unit has the highest operating profit margin. This meansthat over 73% of revenue is left after operating expenses are deducted (seeAppendix). However, there is also high risk because of the high costs. Sincemovies cost millions of dollars to produce, it is crucial to only produce andrelease movies that have well-established characters and storylines.
Spider-Manwas first released in the early 1960s as graphic novels. Customers builtinterest in Spider-man slowly through the comic books and gradually grew asmore issues were being released. Spider-Man was so successful as a movie in2002 because of this developed customer base.
The success of Spider-Man is anexample of the adoption process. The five stages of this process inchronological order are awareness, interest, evaluation, trial, and adoption. Likehumans, characters have a set character life because consumers will eventuallylose interest in Spider-Man when newer, cooler characters are introduced.Rather than allowing the competitors to attract the consumers, Marvel shouldgradually cut back on Spider-Man’s appearance and create new or develop lesserknown characters. They should only develop quality Spider-Man products overquantity which reinforces Marvel’s value of building long-term value. Marvelwill also be able to retain their existing customers and attract new consumers.
Marvel candevelop the lesser known characters periodically individually or in a group likehow they developed Spider-Man. Marvel can insert advertisements before andafter Marvel movies to raise awareness of the minor characters. To slowly buildinterest, they can introduce minor characters into the comic books with Spider-Manand these characters can gradually play more prominent roles. It is best tobuild interest through comic books because they have a low cost and risk ofpublishing.
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 conductsurveys to see if consumers like these new characters. Marvel could also sendfree 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 thesenew characters playing major roles independently or partnered with a well-knowncharacter like Spider-Man for readers to try. Since many readers may bereluctant to try this new line, they can offer it as a package with theexisting series at a low cost. Finally, if this series is successful, Marvel canrelease this series continuously through comic books, licensed products,movies, and toys. Becausemore children are becoming interested in Marvel through the movies and toys,Marvel should expand its publishing division to also publish children books. Theycan publish story and learning books (ex. Numbers). Children books would alsoappeal to adults because books allow children to learn to read and otherimportant concepts.
Children would be willing to read Marvel books because theyinvolve their favourite characters. This also widens Marvel’s customer base forits publishing division. Since publishing is the division with the lowestcosts, if children books are unsuccessful, they can always cancel it. FromExhibit 4a, all the movies released to date are rated PG-13 or R.
Marvel canproduce some movies that are G or PG, so adults can bring their children to seethe movies together. Since movie production has high costs and risks, Marvelcan first evaluate market performance of the children books and toys. Analternative can also be a children’s TV show that involves Marvel characters.If successful, this could increase sales of toys and publishing.