Chuck Goes to New York Part II

In last week's column, I related how I was very provocative in my very first meeting with Marvel's President, Jim Galton, going so far as to ask him quite bluntly if dedicating my life to the world of comics made any sense in light of Marvel's seemingly precarious financial situation. To my surprise, Galton didn't immediately throw me out of his of his office for my confrontational attitude. He was, in fact, quite gracious in the level of candor of his answers. He didn't try to sugarcoat Marvel's deteriorating sales situation, nor did he avoid the issue of his being pressured by Cadence Industries (Marvel's parent company) management to quickly reverse the financial situation at the company. In essence, he told me he had been sent to Marvel to either clean it up, or shut it down.

The good news about a company that is in serious trouble is that it helps break down otherwise rigid internal barriers to change. In this instance, while I'm certain that Galton viewed me as quite a presumptious little twerp in our first meeting, he was also wise enough to understand that he needed to make some serious changes in the marketing of the company products. Given that newsstand sales were rapidly melting away, my rants about the potential viability of a nationwide network of comics specialty shops were very alluring. Galton was not one to jump into anything, however, without first seriously considering the possible negative ramifications, so at the end of our discussion, he sent me back to discuss my ideas further with Marketing VP Ed Shukin.

It was during this long dialog with Shukin that all my years of study finally paid off. Ed was a career newsstand guy, and was fantastic at working the good ol' boy network that existed among the 500+ small and large distributors who controlled the regional newsstand distribution system for comics, magazines, and paperback books. Thanks to my being mentored by Emil Clausen (Boulder's newsstand distributor) I was very well versed in the pluses and minuses of the ID wholesaler system, and could cover this topic very well with Ed. I made it very clear right from the beginning that I knew that his situation was both difficult and precarious because of the inexorable deline in mass market retail sites willing to even carry comics. Unless a new method was conceived that would cut Marvel's distribution costs (most specifically the cost of refunding the 60%-80% of the newsstand-distributed comics that were being returned unsold each month...) the future of the company was bleak.

It was at this point that I first made my "Lite Beer" analogy to Ed. For those of you who don't remember the dark days of the 1970's, there was no such thing as "Lite Beer" until the owners of Miller beer decided to change the marketing of their product from the very stodgy "The Champagne of Bottled Beers," to the much more catchy concept of (I'm seriously paraphrasing here...) "You can drink a keg, and not get fat!" I just happened to do a case study on Miller's marketing a couple of years prior to my meeting with Marvel, while I was a Business School major at the University of Colorado. The idea that Miller chose to abandon the mass of their customers in favor of focusing instead on just that segment of their market that drank the most, seemed absolutely brilliant. I believe that it was in an article in BUSINESS WEEK magazine that I read that in creating 'Lite" that Miller's target audience was the guy who drank at least a six pack (!) a day.

My basic argument to Ed was that Marvel should entirely focus their sales efforts on actively building up their base of dedicated fans (or as they were called in the day: Marvel Zombies), by abandoning the sinking ship of newsstand sales, and instead working to strengthen the struggling network of Direct Market comics specialty shops. By providing Ed with an alternative system that might enhance the high profit sales to buyers who purchased multiple issues each month, I was presenting Marvel with a methodology for potentially replicating the fantastic marketing coup pulled off by the geniuses at Miller. Why take on the huge distribution costs of selling into the mass market, when you could sell many thousands of issues through one or two stores per region? The economics of my proposal were incredibly compelling...

In retrospect, I firmly believe that I swayed Ed Shukin with my beer analogy. He already knew that the Irjax lawsuit challenging Seagate's sweetheart deal for Direct Market distribution was going to force the company to radically change it's distribution policies. The only question at that time was exactly which changes to implement. Given that he had a blank slate to work with, the suggestions that I had presented in my earlier letter to his assistant, Bob Maillo seemed like an excellent place in which to start. Before we got down to discussing possible alternatives to the present marketing systems, however, Ed asked me if I would first like to meet Marvel's current editor-in-chief, Jim Shooter. Having never met Jim before, I was thrilled at the opportunity to meet the man who in 1979 was already reviving Marvel's editorial output.

To be continued...

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