Marvel Enterprises Case Study Analysis

Marvel Enterprises Case Study Submitted by Julia Covello...

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Marvel Enterprises Case Study Submitted by: Julia Covello Student Number: 1000736153 Course Code: RSM 251 L101
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Marvel Enterprises Case Study Analysis Issue Statement As Marvel Enterprises continues operations, they face a growth challenge between overcoming their over reliance on their well-known character such as Spider- Man by promoting second tier characters or expanding their own media production instead of their traditional licensing agreements. Analyzing Marvel will provide insight as to whether owning the media channels or developing less popular characters will be a profitable risk for the company. Situational Analysis Company: Marvel was founded in 1939 and is one of the largest developers of fictional characters in the entertainment business; they have the oldest and most recognizable collection, ranging from Spider Man to The Hulk. After emerging from bankruptcy six years ago, Marvel has a reported $300 million in sales and a market value of $2 billion in 2003, creating enormous amount of market power for the company. Marvels success is derived from operating in three different media industries, creating characters that resonate with the consumers and little capital investment. Marvel’s characters such as Spider-Man became popular due to the vulnerable nature and story lines that appealed to all generations. Though theses characters create strong consumer loyalty for the company, lesser-known characters were not as successful. For example, the Punisher had little success compared to Spider-Man, since the story line did not appeal to the consumers. Therefore, if Marvel continues to capitalize on theses well-known characters this potentially poses a problem if consumer preference changes.
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Marvels strong brand awareness contributed to its operational profits in three industries including licensing, comic books and toys. Marvel is the only company to develop fictional characters for each industry giving the company a competitive advantage and increased profitability. Since 2001 the company has not had a net loss (Exhibit 1), meaning they are properly positioning their products to their targeted consumers. Marvel also uses its industries to their advantage through indirect advertising, for instance to promote a film they will introduce a toy with script lines to force the consumer to be aware of the characters, creating demand to watch the film. They have a large advertising budget of $40 million, which helps promote their products, but theses industries are saturated with competition so Marvel needs to continue to find ways to diversify. Their profitability not only comes from operating in three industries, by also having little capital investment. Limiting their capital investment means the company has the freedom to create and test new characters without bearing all the risk. For example in the toy business if their product fails the company does not take a substantial loss. The licensing segment is the largest industry for Marvel in 2003 ( Exhibit 1).
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