In the movie business, it’s not unusual for the cost of marketing a movie to eclipse
the cost of making it, particularly for what Hollywood calls “tentpole” films, those
big summer blockbusters that can carry the rest of the studio’s projects on the strength
of their revenues. In the decade between 1987 and 1997, the average cost of making
a movie went from $20 million to $53 million, but marketing costs zoomed from $6.7
million to $22 million. Here’s a story that illustrates what money and marketing can
do for a new movie—and what it can’t do:
■ Sony Pictures Entertainment During the summer of 1998, you probably
noticed the giant billboards with the teasing, double entendre, “Size does
matter.” However, you may have already forgotten the movie that the bill-
boards were touting. Sony Pictures spent $125 million to make its summer
blockbuster, Godzilla,and some $200 million to make sure it was a hit. Ac-
tually, Sony’s 250 marketing partners, such as Taco Bell, put up $150 million
of that $200 million for licensing rights to Godzillabackpacks, T-shirts, and
other scaly paraphernalia. The huge ad campaign infiltrated billboards and
buses, buttons and T-shirts, TV and radio. Yet, for all of Sony’s marketing
muscle, the only truly big thing about Godzillawas that it was a big flop.
Three weeks after it opened, it had grossed only $110 million, about half of
what Sony had predicted. Critics panned the movie and audiences agreed.
However, Sony’s claim that “Size does matter” certainly rings true when it
comes to marketing movies. When Sony’s top brass saw the initial screening
and realized Godzillawould be a bomb, they went out and spent even more
money on marketing. By luring as many moviegoers as possible into theaters
early, Sony’s gamble paid off. It would end up grossing more than the $175
million it spent to make and market Godzilla.^34
When (Timing)
In commercializing a new product, market-entry timing is critical. Suppose a company
has almost completed the development work on its new product and learns that a com-
petitor is nearing the end of its development work. The company faces three choices:
- First entry:The first firm entering a market usually enjoys the “first mover ad-
vantages” of locking up key distributors and customers and gaining reputa-
tional leadership. But, if the product is rushed to market before it is
thoroughly debugged, the product can acquire a flawed image. - Parallel entry:The firm might time its entry to coincide with the competitor’s
entry. The market may pay more attention when two companies are advertis-
ing the new product. - Late entry:The firm might delay its launch until after the competitor has en-
tered. The competitor will have borne the cost of educating the market. The
competitor’s product may reveal faults the late entrant can avoid. The com-
pany can also learn the size of the market.
The timing decision involves additional considerations. If a new product replaces
an older product, the company might delay the introduction until the old product’s
stock is drawn down. If the product is highly seasonal, it might be delayed until the
right season arrives.^35
Where (Geographic Strategy)
The company must decide whether to launch the new product in a single locality, a
region, several regions, the national market, or the international market. Most will
develop a planned market rollout over time. For instance, Coca-Cola launched its new
soda, Citra, a caffeine-free, grapefruit-flavored drink, in about half the United States.
The multistaged rollout, following test marketing in Phoenix, south Texas, and south
Florida, began in January 1998 in Dallas, Denver, and Cincinnati.^36 Company size is
an important factor here. Small companies will select an attractive city and put on a
blitz campaign. They will enter other cities one at a time. Large companies will in-
troduce their product into a whole region and then move to the next region.
chapter 11
Developing
New Market
Offerings^351