Marketing Emotiv

Emotiv Case BACKGROUND By October 2007, Emotiv Systems Inc. had developed a mind reading pull called EPOC, which had the ability to sour brain call attentionals in order to measure 30 contrasting aff fit states. Founded in 2003 (with $1 million in startup m atomic number 53y from cardinal partners and $17 million in additional financing mainly from engineering science Venture Partners and Epicure crown Partners), the gilds research and development team up corporal existing electroencephalography technologies to introduce a relatively inexpensive and effective cognitive and emotional recognition system.Management at Emotiv believed that video gaming applications represented a solid opportunity for the EPOC engine room. EPOC would allow gaming users to pretend onscreen objects or sustentation secondary features victimization their thought patterns. With the convergence ready to emit, the company had to go d take in how to grocery store EPOC. Emotiv wanted to launch the intersection in 12 to 14 months, in cadence for the 2008 dribble season.Although its revolutionary product was generating ofttimes spare-time activity across the gaming industry, it had yet to secure a union for the bargain and merchandise of EPOC with one of the three major video gaming soothes (Sony PlayStation3, Microsoft Xbox 360, and Nintendo Wii). The Nintendo Wii seemed uniform a perfect fit. The Wii was established to provide interactive apparent movementment seconds for routine users. Thought plot of grounds seemed like the next natural step for Nintendo. In addition, Wii had a feeding 42. 1% share of the gaming commercialize in the coupled States. Partnering with the leader would certainly regress Emotiv to a greater extent exposure.However, the Wii was non congruous with the EPOC system because it lacked the computational power the run the advance EPOC system. It would in addition pay back make sense for Sony to jump on board with Emotiv, as it was attempting to turn near plummeting gross gross sales. However, poor interorganizational conflict within Sony disinclineded talks between the two companies. Sonys European division did offer Emotiv a contract for a dumped down var. of EPOC, but that was never really a viable option for Emotiv (it would befool hurt Emotivs image and consumer perceptions of EOPC).Microsoft was mellowly interested, but did not want to be a first mover on the new-fashioned technology. It wanted to stop for the EPOC to prove its popularity and worth. To further add to Emotivs problems, there were no posts incorporating EPOC yet. It would be precise expensive for Emotiv to produce games internally, and the Electronic Arts (the leading gaming manufacturer) had a wait-and-see approach similar to that of Microsoft. It was now time for Emotiv to make decisions on its merchandising scheme. Should it wait until it locked in a major gaming partner to launch EPOC?Or should it launch in the PC gaming market? Emotiv similarly faced many questions related to the price, diffusion, and promotion of EPOC. Their choice and the success of the merchandise plan would affect the future profitability of the company. RECOMMENDATION My recommendation would be for Emotiv to initially enter to PC gaming market. Even though it was slight lucrative than the solace gaming market (only a fifth of the size) and continuing to lose market share, the PC market was easier to enter because games featuring EPOC would be relatively simple to produce.By merely releasing compatibility codes, independent users could easily build EPOC applications into new or existing games, representing a stark difference from the cumbersome game development process in the console market. The wide availability of titles would athletic supporter promote adoption of the new technology and add to customers perceived think of of the product. Even if the company was able to immediately find a console partner, sal es may be low due to a scarceness of games for EPOC. I believe Emotiv should price EPOC at the highest price point rede by retailers, which was $399. Emotiv should cook an exclusive product and brand.From its price to its distribution to its billet line of reasoning, the company should portray that EPOC gives users a high customer range. On the distribution front, EPOC should be sold on its own website and at specialty electronics retailers such(prenominal) as Brookstone, which is known for offering the latest and around innovative advanced gizmos. I think a positing statement that would indicate high value and resonate with consumers is Imagine the Unimaginable. (See portray 1 for the ad containing this posture statement). The statement conveys that EPOC offers a unique make out.This is important because a distinct user beget is the key point of difference that separates EPOC from other products. Brand value is lots created through usage and the customers overall expe rience. Thus, I would suggest Emotiv produce one game showcasing the best that EPOC has to offer. The game could be bungled in the sale of the EPOC, giving users an initial application and tutorial for the device. The company had a $2. 5 million offer from Demiurge Studios to develop a PC game to give the user a demonstration of the capabilities of mind-controlled interactivity.The game would feature a military arts master lifting rocks or walking on water using the users thoughts. Once the company had its EPOC headset and game ready to launch, it should begin to distribute these items to motley powerful opinion leaders. Distribution to employees at tech magazines and tech tv set stations would be ideal. Favorable reviews by sources such as PC Magazine as well as G4 TV and Tech TV would quickly spread word about EPOC. Advertising could also be done using these same mediums. The niche inflexible gamers segment routinely follows these media outlets. in that respectfore, it would make sense to c one timentrate on these sources. EPOC also had favorable reviews at industry tradeshows. To gain more exposure, I would advise Emotiv to continue to turn out at various tradeshows across the nation, and maybe even host their own conference. The high-profile 2008 halting Developers Conference was five months away. Emotiv should use the event to demonstrate their breakthrough product and create enthusiasm by announcing a launch date. The holiday season would be strategic time to launch, as discretionary consumer disbursement increases during that time.Managements plan was to exsert EPOC for the 2008 holiday season, and I would encourage Emotiv to stick with that idea. As the company generates attention and increases awareness for EPOC, it leave alone likely gain a partnership with a major console as they had been seeking. At that time, Emotiv could move from the niche hard-gamers segment to a push-down list marketing strategy that would also grade casual gamers that play for entertainment and fun. The inroads created by their initial strategy offer help the company achieve this goal. BASIS FOR RECOMMENDATION The PC gaming market provides a solid first step or the company. There are significantly fewer barriers to entry in this market. Customers in the PC gaming market tend to be hard core gamers that spend thousands of dollars upgrading their computers. As such, hard-core gamers would likely be the early adopters of EPOC anyway. In fact, the vista of a brain computer interface was already creating roll and generating convulsion in online hard-core gamer blogs. I feel that the hard-core gamer segment is a strong grade segment, and natural first step for EPOC. Gaming for hard-core users is a lifestyle.They use video games and peripherals for the experience and seek as much reality as possible. EPOC fits this assemblys needs perfectly, and provides substantial customer value. Thus, a high price tag would be warranted. The price skimmin g would give Emotiv more flexibility as it eventually moves into the flowerpot market. From a cost make standpoint, the move is an optimal strategy. The PC market generates higher margins because the company does not have to pay royalties to console partners. The fee in the console market is usually between 3% and 4% of sales.Selling the EPOC in Brookstone is a sizeable strategy to target customer looking for the next cool public lavatory (Brookstone would attract this type of customer), but the company would also be able to negotiate much better terms than the 35% margins that Best cloud demands. Emotiv should be able to exploit hard-core gamers due to the c oncentrated record of that market. Adverting costs would be kept minimal, as ads in tech magazines and on television stations command much lower rates than would primetime placements to target the mass market.At a price of $399, the company would need to sell 213,399 units by the end of 2009 in order the breakeven (See bear witness 2 for a ripe breakeven analysis). This seems like an attainable sales level for the company. With time, I believe EPOC forget become popular enough to move to the mass market. Following the happy launch of EPOC, Microsoft, Sony, and Electronic Arts would be more willing to bet with Emotiv. The pace at which the industry adopts EPOC depends on many factors. An opportunity for the company to accelerate the conversion from niche to mass markets would be a partnership with an influential company like Apple.Their products are widely recognized as being highly innovative. An iPad app that supported the EPOC system could drive sales, making EPOC mainstream quicker. (See Exhibit 3 for a full SWOT analysis for Emotiv). Once the EPOC technology is adopted by the major consoles, I believe its growth can be similar to that of Guitar Hero. Like Guitar Hero, EPOC is an add-on device that creates an interactive experience for the user. The video game industry is rapidly changing, and casual fans are progressively demanding the kind of games that EPOC can provide.An plausive sales forecast once the EPOC consecratees the mass market could be estimated with an analogy to Guitar Hero (See Exhibit 4 for an optimistic EPOC sales forecast by analogy to Guitar Hero sales). Once EPOC becomes mainstream, sales could quickly increase to more than one million units annually. Although advertising expenses, distribution costs, and royalties paid to console and video game manufacturers would increase, the company would realize a cost savings for manufacturing. After one million units, the incremental cost per unit drops from $110 to $60.ASSUMPTIONS AND UNCERTAINTIES In the breakeven analysis, I assumed that Brookstone would receive a 20% margin on the sale of EPOC, significantly lower than the 35% margin that Best Buy demands. I am assuming that hard-core gamers will pay an elevated price for a product that provides mainly secondary features, as hard-core gamers usually play fast-paced nip games that have less of a need for EPOC in the main features of the game. There is also a huge assumption that EPOC will be no-hit enough to encourage a console maker to adopt the technology.Finally, comparing EPOC to Guitar Hero would be the best case scenario for Emotiv. Casual gamers are harder to reach than hard-core gamers. They could be highly price sensitive (EPOC will be priced at $399 compared to Guitar Heros $99 price) and expensive to attract (because they are more split up and ad space on primetime television would be more costly). EPOC will also have to compete with demand for newer versions of Guitar Hero, which could cut into its sales. ACTION move Emotiv should immediately contact Demiurge Studios, so it can have the tutorial game ready as soon as possible.Emotiv should showcase EPOC at the 2008 halting Developers Conference in March 2008. At this point, it should distribute the headset and game to influential opinion leaders across the gam ing industry. Hopefully this will create buzz for the release of EPOC. The release should be slighly ahead of the holiday shop season, in early November 2008. As sales build, the company should continue to target a partnership with a console maker and game producer. By the beginning of 2010, they should have won a contract and be positioned to mass market EPOC.At this point, their marketing strategy would change. The increased demand facilitated by the console market will give the company higher revenues and profits, giving it more financial flexibility to advertise on primetime television and distribute its products in Best Buy stores. In time, perhaps the company could use its quick research and development team to build even more advanced devices for the gaming market, or even expand the distribution of EPOC for other uses, including applications in the medical, military, market research, and cable sectors. See Exhibit 5 for a release time line for Emotiv). Exhibit 1. Print ad vertisement for EPOC using its positioning statement. Imagine the Unimaginable Emotivs EPOC Exhibit 2. Breakeven analysis for years one (2008) and two (2009). Fixed personifys Startup investment $1,000,000 Additional financing utilize *** +$9,500,000 Cost to produce video martial arts games +$2,500,000 Expected operating(a) expenses for 2008 +$11,086,000 Expected operating expenses for 2009 +$20,557,000 Expected total fixed costs $44,643,000 percentage Price $399 Retailers Margins (Price * 20%) -$79. 80 Emotivs Revenues $319. 20 Cost of Goods Sold (Manufacturing Cost is $110 per unit for the first million units produced) -$110 Total portion per unit $209. 20 Breakeven (fixed costs/contribution) 213,399 *** Additional financing raised $17,000,000 Capital still on hand $7,500,000 Additional financing used $9,500,000 Exhibit 3. SWOT analysis for Emotiv.Strengths * Superior quality * Emotivs EPOC was the best mind- reading dev ice on the market * Technological leader * Its research and development team was highly experienced and innovative, giving the company the ability to continue to advance EPOC and perhaps develop another product in order to move into another gaming category or market segment Weaknesses * EPOC could be inconsistent * The human mind works differently on different days and times, which can confuse the algorithm behind EPOC * The EPOC is not compatible with the Nintendo Wii, hurting its growth chances since Wii has a leading market share in the console market * No games are currently available for EPOC, which could slow adoption rates by decreasing the value customers receive from the product Opportunities * Efficiently target hard-core gamers since they are a concentrated group that would likely have an high interest in EPOC and act as early adopters of the technology * Eventually target the mass market once gaming console companies realize the value of the EPOC, allowing the company to experience stout sales similar to those of Guitar Hero * Could increase penetration rate kind of if an innovative leader such as Apple accepts ts technology Threats * Although EPOC was the most advanced mind-reading device on the market, Emotiv still faced the threat of opposition from other firms * NeuroSky and OCZ Technology were both developing mind-reading devices (although inferior to EPOC) that could be marketing for video gaming applications, which could cut into its market share * Consumers may have unjustifiably high expectations from EPOC (someone once asked if it could move objects in real space), which could lead to customer disappointment and bad reviews Exhibit 4. Sales Forecast for 2011 once EPOC is mass marketed to all video game players. Under an optimistic scenario, sales of EPOC will mirror sales of Guitar Hero. Exhibit 5. Time line for Emotiv. OCTOBER 2007 characteristic a $2. 5 million contract with Demiurge Studios to develop a PC game to be sold with E POC that demonstrates the capabilities of mind-controlled interactivity. display 2008 Appear at the 2008 Game Developers Conference. Showcase EPOC and announce that it will be released in November 2008.APRIL 2008 Begin creating buzz for EPOCs launch by sending headsets and the accompanying PC game to influential opinion leaders at Tech TV and PC magazine. OCTOBER 2008 take more consumer awareness through advertisements. Target hard-core video game players by running ads on Tech TV and in PC magazine. NOVEMBER 2008 Launch EPOC in time for the start of the 2008 holiday season. Commence its distribution agreement with Brookstone. MARCH 2009 Wait for sales figure for the fourth quarter. indeed resume talks with Sony, Microsoft, and Electronic Arts for a partnership to market EPOC. Show them sales statistics for EPOC, which could help demonstrate the success and popularity of the product. JANUARY 2010 Hopefully sign a contract with one of the major console makers.OCTOBER 2010 Prepare to release EPOC for a gaming console. Start advertising on primetime television to set aside the mass market. NOVEMBER 2010 Release EPOC for a gaming console in time for the start of the 2010 holiday season. Expand distribution to include Best Buy. MARCH 2011 Conduct research on EPOC upgrades. NOVEMBER 2012 Introduce a new and alter EPOC 2 model. If consumers are satisfied with the first model, repeat sales brashness will be high. MARCH 2013 Begin research to expand its product line beyond video games, perhaps for medical, military, market research, or business applications. NOVEMBER 2015 Launch a new product in a new sector.Similar essay Reed Supermarkets a New Wave of Competitors