Harry Potter:A Multi-Billion Dollar Business

Group IX:

Li ShuguoTanda SongLiu YazhuoHan Jie

Harry Potter is not only an incredible story about the magic world, but also an unbelievablemiracle of business. The series has recorded a stunning 325 million book sales worldwidesince its 1997 debut. Along the way, Harry Potter has spawned a multi-billion dollar industrycomplete with the requisite movie and video games, plus merchandise ranging fromHogwarts-crested iPods to earwax-flavored jelly beans. Doubtlessly, Harry Potter has gainedhuge success especially when the Warner Brothers succeed in implementing itswell-controlled market strategy for the franchise.

Main reasons for the initial success of Harry Potter franchise

A perfect foundation of the branding

Although it is the Warner Bros. who mainly made the Harry Potter become one of the bestpopular and profitable brands of the world, the amazing work of J.K Rowling and theprimarily work of Bloomsbury and Scholastic cannot be neglected at all. J.K Rowling

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sbrilliantly written story did not talk down to the audience while kind of guide the readers todiscovery Harry Potter themselves, which intensify the feeling of participating in the processand become a special experience of the readers at last. It is the special marketing strategy,such

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word of mouth

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and

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denial marketing policy

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that enlarge the segmentation rangefrom only children to both children and adults and also makes Harry Potter not a book or acharacter anymore, but a brand and a kind of culture symbol eventually. In a word, beforeWarner Brothers

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success, a perfect foundation has been built for its further work, whichcannot be excluded for the success factor.

Outstanding insight for new market space

With the good reputation of excellent insight in the entertainment industry, W.B. of coursewon

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t miss the huge potential market of the Harry Potter. Actually, the franchise processwas not really creating a new market space but rather scrambling the unoccupied marketspace and utilizing of mature business model used by W.B. for the successful literatureworks. So it is just follow the rational line to encash the brand

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s power through the movieand the relative merchandising deals. Since these merchandising products are thecomplementary value provided for consumers, so what kind of merchandise to producebecame a critical issue for the W.B. to consider? Finally, W.B. chose several kinds of merchandising products mainly including family product, gift and collection, children andfamily entertainment product, toy, bedding product and interactive electronic games.What is something new is that the franchised companies are not exclusively for the physicalproduct, there is also kind of franchised company ,such as Coca Cola, just holding somecampaigns together with Harry Potter while is not allowed to use product placements. This isa kind of interesting way to cooperation. Though the brand name and image of Harry Potter

were not used by Coca Cola products or commercials, related images and themes wereextensively used for promotions. The franchise range is enlarged without compromising withthe inconsistency of tow cooperated companies

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brand images.

Well-controlled marketing strategy

Realizing that it was important to maintain the brand

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s carefully created image during thecourse of releasing new books, merchandise and movies, J.K. Rowling decided to have a firmsay in what Harry Potter marketers could and could not do, which means that W.B. had tobe very careful in choosing the licenses. This marketing with the consideration of controllingactually made the biggest contribution to the success of the Harry Potter. And thecontrolling can be perceived from several aspects as follow:

Strict standard of choosing licenses

In order to maintain the fine and classic brand image, the W.B. set a high standard of choosing licenses. Warner Brothers

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majority licensing agreements are signed with theleading manufacturers of the US based relative industry.

Brand /Company Position of the industry

Mattel The world

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s leading manufacturer and marketer of family products based inthe USEnesco Group US-based world leader in the gifts and collectibles industryCap Candy US-based worldwide leader in Children

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s and family entertainment productsOddzon US-based leading children

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s toy makerSprings Industries US-based manufacturer of beddingLego Company US-based world leader in making construction toyElectronic Arts US-based world leader in the interactive electronic games market

Accompany with the high standard is the high quality, so the well designed products woulddoubtlessly generate a good memory and intensify the positive cue of the Harry Potter.They not only signed up with world leaders, but also turned down sever potential licenseesthose whose brand image might be related to idea of cheap. In order to protect the brandimage, some interesting agreement, such as signed with Coca Cola, also emerged. And all of these done by W.B. illustrate that the worldwide retail strategy for Harry Pottermerchandising was carefully controlled and limited.

Certain rules for the merchandising product

Although the manufacturers are the top ones of the world, there are some certain rules setto guarantee the quality of the products and benefit the brand image and growth. Forexample, the book-based merchandise product is asked to follow the book by letter, whilesome of the product is required not to base on character images but on objects from the