Written By: Arshiya Chaudhary

If you haven’t heard about Marvel, you’re probably living under a rock. But if you’ve heard about it and have not spent a significant fraction of your time obsessing over it, you’re consciously missing out on one of the greatest cinematic experiences of all time. 

Has Marvel always been as buoyant and successful as it is today? Certainly not. Marvel initially started off in a blue ocean, but shortly adopted red ocean strategies, leaving the company in debt. However, almost a decade after filing for bankruptcy, Marvel established  a blue ocean for itself.

Red Ocean and Blue Ocean

According to Chan Kim & Renée Mauborgne, all markets consist of two types of oceans, red and blue. A red ocean is where industry boundaries are established and well defined. This is where cutthroat competition exists. A blue ocean, on the other hand, is one where demand is created rather than fought over, and this is where industry competition stands irrelevant (2).

Marvel’s Red Ocean Competition with DC Comics

Marvel started its journey in 1939, when it essentially produced comic books, starring superheroes (5). Around these years, Marvel’s target audience was  children, who were pleased by comics with little original content. But soon enough, this dynamic changed.

The comic book industry plunged in the early 1950s owing to the criticism regarding inappropriate content for children, which gave rise to the creation of the Comics Code Authority. After this event, only two comic book publishers dominated the market, Marvel and Detective Comics (DC). The cutthroat competition between the two gave rise to red ocean competition when DC tried to expand market presence by controlling retail shelf space.  (5)

The concept of retail shelf space emphasizes the importance of strategic product allocation. Put differently, rival brands compete with each other to acquire shelf space such that they can maximize product exposure to customers (1). What gave DC an upper hand vis-à-vis Marvel, was the acquisition of Marvel’s distribution unit by the former (5). Facing minimal distribution of its comics, Marvel adopted a completely new strategy.

Marvel’s First Blue Ocean

Shifting its target audience from children to college students, Marvel started to introduce characters that were humans first and superheroes second (3). This strategy brought marvel into a blue ocean, where it could capture an uncontested marketplace that no longer fought over existing demand. That is, by focusing on an entirely new demographic and shifting from shelf space competition to creative innovation, Marvel created a new value for itself.

Upon entering its first blue ocean, Marvel launched characters like the Hulk, Thor, Ant Man, Spider Man and Iron Man, who became exceedingly famous among its new audience. This was the first time a comic book chain could cater to a more mature and intelligent demographic.

Marvel’s Dive into a Red Ocean

Even a thriving business can become insolvent as a result of poor management, which was the case for Marvel.

In 1989, Marvel was sold to Ronald O. Perelman, who owned MacAndrews & Forbes. The company’s decline was caused by a string of poor management decisions. Perelman followed a bubble strategy to incentivize collectors to purchase volumes of comic books with the promise of increased value over time. However, this idea didn’t work well for Marvel since their sales were solely driven by collectors. Besides a failed bubble strategy, the new owner emphasized higher prices and limited distribution, which added to Marvel’s financial burden at the time. In 1996, Marvel fired one-third of its workforce and declared bankruptcy. The company was now surrounded by a red ocean and desperately in need of  stronger leadership to revive the brand. (5)

This was when Isaac Perlmutter stepped in. ToyBiz, owned by Perlmutter, bought Marvel in 1998, and hired a turnaround specialist, Peter Cuneo.

Reforms in Management Brought by Marvel to Move towards a Blue Ocean

Almost every organization in a blue ocean follows an analytical tool called the Leadership Grid (4). This tool focuses on what activities a company needs to eliminate, reduce, raise and create, in order to pursue differentiation and low cost strategies simultaneously (4). Cuneo adopted this tool religiously and completely revolutionized the company.

(4)

Moreover, Marvel decided to eliminate big offices and cut down high salaries to lower costs. Cuneo reduced middle management, encouraged a creative culture within the organization, and created Marvel’s own universe (4). At this point, the company appeared to be somewhat stable, concerning the corporate environment at least.

Later, the release of Blade, X-Men, and Tobey Maguire’s Spiderman was a game changer for Marvel (6). These movies were made by other companies that had licensed the characters shown, yet their release brought Marvel closer to the brand that it is today. The huge success prompted Marvel to invest more in original content and producing movies on its own.

Restoring a Blue Ocean

Then came Iron Man. The movie that brought Marvel back into a blue ocean, and made Marvel turn into a Cinematic Universe. Marvel emphasized its original vision: to introduce characters that were human first and superhero second. It created a world of itself, where different characters were linked to each other and were brought together in various films. It combined stories, grasped the audience’s interest, and made a complex universe out of its creative products.

The company wanted its first movie to be defined by Marvel’s characters, not by some highly paid Hollywood film stars. It didn’t want to compromise on storytelling and therefore its focus always remained on its own characters rather than hiring over-the-top actors (5). Instead of paying an exorbitantly high amount to well established actors, Marvel went for lesser-known but talented actors for its initial films.

To say that the first Iron Man was a success, is an understatement. The movie made an approximate of $585 million, and became the eighth-highest grossing film of 2008 (7). As David Zimmerman said, “ It left many plot threads to be explored” and thus formed a base for many upcoming Marvel movies (9). Only a year after the release of Iron Man, Disney bought Marvel.

And ever since, Marvel hasn’t looked back.

Marvel – a comic book company operating in a competitive market, urging to sell higher numbers than its rivals, is now a multi-billion-dollar business that has created a market of its own. For Marvel, competition stands irrelevant as it now operates in a blue ocean.

Conclusion

From bankruptcy to a multi-million-dollar company, in less than a decade, Marvel has redefined the franchise movie industry through a series of intentional and strategic business decisions. Their success story could act as a guide to other organizations aiming to operate in a blue ocean.

Firstly, a firm needs to believe that low cost and a superior product aren’t alternatives; instead, they can go hand in hand when differentiation and low cost strategy are pursued simultaneously. Marvel pursued a low cost strategy by hiring lesser-known actors and offered product differentiation by building a cinematic universe out of its characters.

Secondly, for any organization to tap into a new market, it needs to conduct intensive blue ocean market research to realize the nature of their demand. Marvel found a new market out of non-customers and tailored its comics and movies based on factors that would create a sustained demand.

Next, for a company to thrive, regardless of the ocean it stands in, it needs to cultivate and promote a creative culture within the establishment. The only reason why Marvel was able to restore a blue ocean is the weight that Peter Cuneo gave to shaping a creative environment within the company.

Lastly, the most important lesson that any organization can learn  from Marvel is to have faith in the company. Even if a company isn’t the top in one market, there are new markets and demands to be explored. Once you’ve created a market for yourself, all you need to focus on is continuing the company’s legacy by delivering the best content for your audience. Being the sole operator in a market gives you a lot of power, but to remain in a blue ocean, an organization has to stay committed to the kind of value it creates for its customers.

After all, “With great power comes great responsibility” (8).

 

 

Works Cited

(1) Jajja, M. S. S. (2013). Retail Shelf Space Allocation Analysis using system dynamics approach. Retrieved on July 21, 2022, from https://www.researchgate.net/profile/Muhammad-Shakeel-Sadiq-Jajja/publication/279911198_RETAIL_SHELF_SPACE_ALLOCATION_ANALYSIS_USING_SYSTEM_DYNAMICS_APPROACH/links/5a20ef974585158865c523b6/RETAIL-SHELF-SPACE-ALLOCATION-ANALYSIS-USING-SYSTEM-DYNAMICS-APPROACH.pdf

(2) Kim & Mauborgne. (2004). What is Blue Ocean Strategy: About blue ocean strategy. Blue Ocean Strategy. Retrieved on July 22, 2022, from https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/

(3) Kim & Mauborgne. (2004). Marvel. Blue Ocean Strategy. Retrieved on July 22, 2022, from https://www.blueoceanstrategy.com/teaching-materials/marvel/

(4) Kim & Mauborgne. (2004). Blue Ocean Leadership Grid: Blue Ocean Tools and frameworks. Blue Ocean Strategy. Retrieved on July 22, 2022, from https://www.blueoceanstrategy.com/tools/blue-ocean-leadership-grid/

(5) Olenick, M. (2016). The marvel way – full-time Mba program. The INSEAD Blue Ocean Strategy Institute. Retrieved on July 21, 2022, from https://mba.haas.berkeley.edu/hubfs/FT%202021%20DAH%202/FT%202021%20DAH%202%20Mock%20Class%20Marvel%20Case.pdf

(6) Stevenson, S. (2021, March 16). Marvel’s most superhuman feat was saving itself. Slate Magazine. Retrieved on July 22, 2022, from https://slate.com/business/2021/03/marvel-comics-history-bankruptcy-cinematic-universe.htm

(7) Iron Man. (2008 film). Retrieved on July 22, 2022, from https://en.wikipedia.org/wiki/Iron_Man_(2008_film)#cite_note-Boxmojo-6

(8) With great power comes great responsibility. Retrieved on July 22, 2022, from https://en.wikipedia.org/wiki/With_great_power_comes_great_responsibility

(9) Zimmerman, D. (2021, April 14). 10 times Iron Man 1 was the best movie in the MCU. Retrieved on July 22, 2022, from https://www.cbr.com/iron-man-best-mcu-movie-reasons/

(10) Arrant, C. (2022, May 25). The best marvel characters of all time ranked. Gamesradar. Retrieved July 24, 2022, from https://www.gamesradar.com/marvel-characters/