Michael Porter’s Five Forces Model is an analysis tool that aims to provide with a both vertical and horizontal view of the company. It comprises five fields, namely: threat of new entrants, threat of substitutes, bargaining power of suppliers, bargaining power of customers and industrial rivalry. By using this tool, it can reflect the current market position of Marvel Entertainment. With this analysis, the further recommendation could be given and the validity can be proven to a certain extent.
Industry Rivalry:
With long history and strong reputation, Marvel Entertainment has established a solid stand in several markets comprised of comics, animation, movie, toys and character license in TV series production and other commercial uses. Up till now the proven success of Marvel in this conglomerate market has reinforced its market leader position. Despite of a few rivals existing in this market,Marvel’s consistent, longstanding rival is DC Comics. However, as compared to DC, the Disney mergergives Marvel an economic edge to either develop its products or its market because of the deep pockets of Disney funding more Research and Development (R&D). This competitive advantage cannot be easily reproduced by its competitor.
The biggest rival of Marvel all the time is DC Comics. In the past few years, DC Comics has made a great influence on the super hero market with its renown movies of Batman and Superman series, especially The Dark Knight Rises, the last movie of Christopher Nolan’s Batman film trilogy released in 2012. The movie earned 1.085 billion USD for gross revenue and was rated 87% on Rotten Tomatoes. It was a movie with both great commercial benefits and word of mouth. Comparatively, despite of high box office earnings, Marvel’s movies are usually lack of good plots and thoughts, merely for commercial and entertainment use. Apart from movie production, according to the latest report in Jan 2017, the Marvel beat DC with a 38.08% dollar share and a 39.46% unit share while DC was the month’s number two publisher with a 26.17% dollar share and a 31.30% unit share. However, this may be attributed to increasing Marvel “overships” of comics, where retailers received extra comics they did not order.
Threat of Substitute Products:
The threats of substitutes are very high in the entertainment industry. A single new character created by the rival company may lead to enormous increase in the market share of these competing companies. When customers have more choices of products it is difficult for Marvel to sustain its success. Naturally, the switching cost among different companies is also very low. It should be noted that the correlation effect between comic book and movie adaptation is double-bladed with the significant upside potential or a negative impact on both the sales and brand. For example, the movie Elektra (Budget $43MM, Domestic Gross: $24MM), and Catwoman (Budget: $100MM, Domestic Gross: $40MM) failed in both box office earnings and word of mouth.Likewise, any success movie adaption from a substitute comic company will pose a significant threat on Marvel’s current market position.
Bargaining Power of Buyers:
The bargaining power of buyers is impacted by two factors: the substitute products and the market power of customers. As analyzed above, the substitute products could threaten the current market position of Marvel, since the switching costs among different brands are very low.Although Marvel’s customer consists of individual customers who have minimum influence on the price as well as institutional customers who might be business partners, investors and outlet sellers with relatively large influence on the price. All types of customers have the liberty to like or dislike a particular character, movie or the company. Their past experience of watching the movie of Marvel’s or cooperation with Marvel affects their decision whether to continue to be the audience or continue the cooperation. Buyers satisfaction ultimately leads to the popularity of the entertainment company. Customers today have a higher bargaining power due to a wider choice available in the world of entertainment. Marvel Entertainments should take the bargaining power of customers as a serious concern for a sustainable survival in future.
Threat of New Entrants to the Industry/Marketplace:
The threat of new entrants depends on the maturity of the market itself.It is a fact that the super hero market is saturated to certain extent. However, as analyzed above in Threat of Substitute Products, with the low switching cost and unpredictable upside potential triggered by movie adaptions, the possible threat of new entrants can exert on Marvel should not be taken for granted.
Bargaining Power of Suppliers:
Marvel Toys is the toy division of Marvel Entertainment, a subsidiary of The Walt Disney Company. Scott and Sons (SNS) toyshop is the leading supplier for Marvel toys, Lego toys, DC Universe toys and transformer toys. In addition, Marvel Entertainment has signed a 5-year Master Toy license agreement with Hasbro Inc., which is a well-known American multinational toy, board game company and one of the largest toymakers in the world. This license agreement will continue to bring loyal customers with high-class quality toy and reputed brand name.
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