Introduction: Emotiv Systems Inc. has developed a headset called EPOC. This product uses EEG technology transmit brain signals wirelessly to a computer. While the product has several potential applications, the most lucrative market seems to be video games. Emotiv systems management needs to decide whether they wish to market to the PC gamers only or to be integrated on one of the gaming consoles. Further, decisions regarding the marketing mix need to be made.
Segmenting and targeting: The video game market can be segmented as per the chart in Exhibit 1. The PC gamers largely comprise hard core gamers and the segment is shrinking. However, the console market has seen a tremendous growth in casual gaming segment (specifically Wii).
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Cost reduced to $60 after 1,000,000 cumulative units sold | operating costs ( '000, $) | 11086 | 20557 | 31961 | Exhibit 12 | operating costs per unit sold ($) | 595 | 53 | 45 | Calculated as operating costs / estimated sales | Tutorial software - one time cost ('000, $) | 2500 | | | From page 12 | Tutorial software Cost per unit
(amortized over 3 years) - $ | 2 | 2 | 2 | calculated as tutorial software cost / cumulative sales in three years | total cost per unit, in $ | 707 | 165 | 157 | | Weighted retail margin | 32% | 32% | 32% | From page 11 - Calculated as 80% of 0.35 + 15% of 0.25 + 5% of 0 | Market development fund | 7% | 7% | 7% | From page 12 | total margin to retailer | 39% | 39% | 39% | Sum of retail margin and market development fund margin | Break even retailer revenue per unit ($) | 982.73 | 229.35 |