The Marvel Way Restoring A Blue Ocean Case Solution

2. Problem Definition

Marvel survived several phases and emerged as victor during difficult times. Currently it is doing well but the worst part is not going to last longer. Eventually there is a chance that competitors will imitate or they might come up with a unique idea which could affect bottom line of Marvel. Marvel cannot become complacent and assume that its position as a leader will remain constant indefinitely. The blue ocean eventually turns into red ocean (Safak, 2018). This is the problem which needs to be resolved either by tapping new areas, a search for new blue ocean or improvising the one where Marvel is currently operating. Also, Marvel enters into businesses where it sees profit without evaluating it much. It hasn’t focused much upon its competitive advantage and value proposition. To differentiate itself from competitors it must define what it stands for (Henrard, 2020). 

3. Analysis

The case reveals that how following a blue ocean strategy reaps benefits in long term while staying in red ocean results in short term benefits and long term failure. Apart from that it signifies the importance of values, vision and strategy (Brantiau & Balanescu, 2008) over mere promises of profits or huge cash flow. Also, with the passage of time the taste of customers has shifted. The audience has grown and is tech savvy (Vogels, 2019). It looks for superior experience and with time Marvel has adjusted to it. From publishing comics in late 60’s it has become a billion dollar worth entertainment company launching videogames, movies and other digital videos etc for customers. But during this journey a lot of mistakes were made and later on rectified.

i. Blue Ocean Strategy and Marvel

Theoretically blue ocean strategy entails differentiation and operating at low cost while tapping new segments and markets by identifying new needs of customers (Blue Ocean, 2020). It is the point which competitor is generally unable to see and is highly risky. Such as entering into entertainment segment and owning its own studio was highly risky for Marvel. But combined with David Maisel’s vision and senior management approach to let new ideas flourish allowed Marvel to take such bold step. No doubt competitors would know such opportunity exist in market but the problem was who takes the lead. What if it turns out to be failure? For Marvel there was no other option than trying this idea. As it had to pay the debt or face bankruptcy again. 

ii. Red Ocean Strategy and Marvel

Red ocean strategy is when companies keep on competing in existing space with same products. It’s a race for survival (Blue Ocean, 2020). The sharks (companies) fight and there is a bloodbath. Marvel was in red ocean several times. When initially DC comics acquired distributor of comic book and limited the distribution of Marvel’s comic book. During that time Marvel had to take a decision either to let it sales go down or find new arena to boost it sales. At that time, it changed its target audience by changing the theme of its comics, making it more appealing to adult and teenagers. That was a blue ocean strategy. Again when Perelman acquired Marvel his strategy was focused on reaping short term benefits (making money), competing in existing market by altering mix of comic books, manipulating prices, changing distribution network, diversifying in wrong sectors and going public were all part of red ocean strategy.

4. Importance of Values and Strategy

Marvel’s story signifies that value takes lead over short term gains. For example, the offer of Carl Ichen was more than what owners of Toy Biz Issac Perlmutter and Avi Arad offered but public went with Toy Biz as they promised a sound long term vision and growth. Their strategy was more focused upon value innovation; to bring bigger change rather than value extraction. Under value innovation company identify areas where it can differentiate itself at low cost, similar to blue ocean strategy while under value extraction owners try to manipulate market for its own advantage (Hoefle, 2019). But remember this manipulation doesn’t last longer as stakeholders involved are not naïve and competitors doesn’t let company to continue doing such manipulation. Apart from Marvel several other businesses have followed value innovation strategy which multiplied their revenues. Such as Bert Claeys, a Belgian company introduced concept of Megaplex name as Kinepolis, when the cinema industry was going down and obsolete for customers who were moving towards videocassettes. The idea of Megaplex provided great experience to customer. This strategy differentiated Kinepolis from others (Mauborgne & Kim, 2004).

5. If Ichen had taken over this business:

If investor had allowed Ichen to take over business the condition would have been same as in Perelman’s case. His focus would have been entering into businesses where profit margins would have been high irrespective of the fact that whether that business aligns with company goals or not. Similarly, the focus on key asset of business, employees, shareholders interest would have been probably zero.

6. Next Step

Although Marvel is doing well at the moment it should remember that this situation is not going to last longer. Eventually the competitors will enter and will turn it into red ocean. So it has to strive to identify new areas. Even the aura of its characters will fade away if a new storyline, a further improvement is not added. With the passage of time the taste and age of audience is growing. To stay relevant, it has to tap and understand the psychology of today’s tech savvy audience and address their entertainment needs. The toy stores sales are growing but not at greater pace as videogames are giving it tough competition. The market of videogame is growing at the rate of 12% (Cision, 2020) while toy industry is growing at 9.4%. Also, kids today spend most of their time playing videogames rather than playing with toys (Robertson, 2014). Marvel can further tap this area and come up with such applications which appeals to this segment.

7. Dynamics of the rise, fall, and the rise again of Marvel utilizing the concept of value creation:

Every time Marvel was falling, a raider or an acquirer rescued it. But eventually they didn’t deliver to the promise as their focus was different. For example, Perelman’s investment in trading cards companies, Toy Biz which were totally unrelated to Marvel’s business and goals. The wrong diversification strategy which solely focused on return and ignoring risks.

i. Phase One – Initial Rise

Starting off with its creation when it only operated in comics’ segment. It developed some characters which are still known today i.e. Iron man, Spider man, Thor etc. When it saw DC Comics getting hold of distribution it answered back with changing themes of its comics and appealing to adult audience. Till that time, it was on rise. At that point it created value for new customer base. It kept on delivering stories which audience could relate with. It build characters which still live today. Audience have remained attached with those characters throughout their entire life. This everlasting entertainment is what defined Marvel to its audience.

ii. Phase Two – Fall

Later on when Cadence acquired Marvel and formed a team which was not respectful towards its employees its downfall began. It was sold to New World Entertainment who didn’t understand Marvel’s business model and finally it went into the hands of Perelman’s. The whole focus of creating value for customer shifted towards making money. Whatever effort was invested by previous owners was being taken out by new owners. This strategy ruined the image and value of Marvel. During this time the focus was value extraction, Perelman created comic book price bubble, entered into stock market, entered into fight with Carl Ichen etc which eventually resulted in bankruptcy. During his initial year business was performing pretty well. But actually people were hoarding or stockpiling comics with a perception that the price would grow. No one was aware of this bubble and suddenly it burst (Bryant, 1998). Also, Perelman blamed distributor for diminishing sales and didn’t notice the overproduction and low quality of his comics. To counter that he acquired Hero World distributor and gave it sole right to distribute Marvel comics. This strategy affected the entire distribution network. Perelman’s idea didn’t work and eventually he had to divest this business. The revenues diminished significantly and resulted in Bankruptcy. Again raiders and other potential acquirers entered the market.