1. Final Marketing Plan
Name: Wei Lin
Student#: 999595193
Name:Chuanrui Li
Student#: 1000010846

2. Executive Summary
The final marketing plan is to market a Virtual Reality (VR) headset, the Oculus Rift, for the Oculus VR,
a company engages in VR product development and the leader in the VR industry. We analyzed the
company’s situation in detailed. Then, we applied different competitive and marketing strategies
accordingly. Key driving force, Porter's 5 forces, SWOT and Benchmarking are used in external and
internal analysis while focused­differentiation strategy is employed to acquire competitive edge among
rivals. In addition, advertising in Facebook and VR gaming event are adopted as marketing alternatives.
The Oculus Rift is a headset like goggles provides people with 3D computer­generated environment in
gaming. It is the most advanced VR product at present has higher functionality than its main competitors,
Sony Project Morpheus, and can be used in many other potential applications. In order to gain the
reputation, Oculus VR focuses on corporate branding and will apply mixed branding strategies for brand
advertising. In addition, the price of the Oculus Rift will be $400, which is estimated by target pricing
strategies and affordable by the target market. In term of channels, the company will collaborate with Best
Buy and SuNing Electronics as indirect B2B channels while opening some franchises and selling products
online as direct B2C channels. Furthermore, Facebook is used as a advertising and sales promotion
platform to attract more customers and provide better communication service.
Business Context
Our business idea is to help a company called Oculus VR to market a VR headset called Oculus Rift and
it will be launched this product during Q1 of 2016[1]. Since VR is a brand new area, Oculus VR needs to
spread the basic understanding of the VR technology among customers, which includes how the product
works and the difference between 2D and 3D display. Furthermore, the Oculus Rift provides users
affordable 3D gaming experience. Although the VR applications are still at beginning stage of
development, People believe that it will be widely used in telecommunication and healthcare industry in
the future [2].
Situational analysis
External industry & Competitors:
The key driving force is the game innovation in the world. In the game market, as time goes on, old
games will be knocked out. Then, new games will come into the market. Therefore, game innovation is
important to attract customers with different taste. In fact, the current gaming devices can be separated
into two major categories: traditional game consoles (PS4 or Xbox) and virtual reality headsets. Another
driving force is technology development. The revolution of the VR technology promotes the innovation
and development of the VR products in the industry, such as Oculus Rift and Project Morpheus.
1

3.
Competitive pressure from rivals is low, since the main competitor is only Sony Project Morpheus
headset [3]. As the rise of VR technology, unique 3D immersive gaming will attract customers from
traditional game consoles (PS4 or Xbox), which are the substitutes of the Oculus Rift [4]. In addition, new
entrants pose high risk. After the Oculus Rift is unveiled, substantial high­tech companies turn their eyes
to VR technology as a fresh market with numerous opportunities. Furthermore, the competitive force is
high among suppliers, since components used in the Oculus Rift are no longer being manufactured by
most suppliers [5]. Therefore, few replaceable suppliers can be found and suppliers’ bargaining power is
high. However, the bargaining power of buyers is low, since Oculus has cost advantage. The unit price of
the Oculus Rift is between $300­400 [6], which is lower than its substitutes, such as Xbox. Overall, VR
industry is attractive because of low rivals’ pressure, small risk from substitutes and low buyers’ power.
Internal company:
For the internal analysis, two tools including SWOT and Benchmarking are used below.
In terms of the strength of Oculus team within Facebook, the communication within a small engineer
team is more efficient, which facilitates the product development speed. For the weakness, since the VR
technology includes hardware development, software programming and optical design, the initial
investment could be high. Considering opportunities, VR will have $30 million market revenue by 2020
[7] and can be used in many other fields, such as healthcare industry [8]. Therefore, there is a huge room
for VR applications to make profit. The threats include some large companies such as Google, Apple and
Microsoft that may provide similar products in the future.
For the Benchmarking, the Oculus team will keep a fast­moving small talented engineering team.
Compared with other technology companies, small team will save a lot of expense in outbound logistics,
research and development. On the other hand, Facebook may help Oculus with brand advertising and
marketing promotion in this infant industry.
Competitive Strategy and your positioning:
The focused­differentiation strategy is most viable for Oculus. The Oculus Rift is lack of the potential to
succeed in the huge market, since VR technology is still a infant industry and majority people know so
little about it. Therefore, the target customers are 20­30 years old males who are willing to be the early
adopters and try on high­tech products [9]. In addition, the Oculus Rift enables people to interact with
artificial 3D world by computer modeling, which cannot be produced by most traditional game consoles
and is the greatest competitive edge [10]. In terms of positioning, the Oculus Rift is sold in a high price
and quality, but supports few types of games while Project Morpheus, the main competitor, has more
compatible games, but lower price and performance than Oculus Rift.
Marketing Alternatives & Market Segmentation
2

4. Marketing Alternatives:
● Using the social network platform
Facebook is one of the biggest Internet social network companies in the world with three major social
apps including Whatsapp, Messenger and Instagram. The Oculus rift can take advantage of the social
media and post the latest news and videos about its VR products, so billions of people are aware of the
Oculus Rift’s brand and VR technology. In some regions like China, Facebook is not permitted. Oculus
can build a strong partnership with local social network companies to promote the product. However, it is
difficult to provide players 3D gaming experience by watching online videos, rather than using VR
headsets by themselves, so holding an exhibition of VR gaming products may address this problem.
● Creating the VR gaming events
The Oculus Rift team can hold some VR gaming conferences to attract the best game players to try out
the latest 3D games. In those events, the ‘earlier adopters’ can introduce and promote 3D gaming
experience to their reference groups. Later on, the loyalty loop of the Oculus VR headset can be built up
and more and more users will take part in the 3D gaming community. However, the operation cost of the
conferences is expensive and only limited people roughly around 300 can have opportunities to
participate in each event because of geographic and time constraint [11].
Market size:
According to the latest report, the VR technology will have $30 billion revenue by 2020[7]. The major
VR technology will apply into gaming industry. To be more specific, the VR hardware devices and
gaming software will provides two main revenue streams, taking up approximately 25% and 30% of the
total market share respectively. In addition, the geographic distribution of users for Oculus Rift will be
wide including North America, Asia and Europe with the US, UK, Germany and Japan taking leading
positions[12].
Customer type and value:
● Type:
A group young male gaming enthusiasts whose age are from 20 to 30, also they are able to afford the high
price VR gaming productions [9][4].
● Value:
Buyers are willing to pay high price to try the latest VR games. Also, they focus on the high quality VR
hardware device with the best processor and graphic cards, which can give them remarkable immersive
gaming experience [4].
Purchase decision process:
3

5. The purchase decision process includes problem recognition, information search, evaluation of
alternatives, purchase decision and post­purchase behaviour. The Oculus Rift is only commercialized for
VR games, so customers purchase decision process heavily depends on its gaming experience.
● Problem recognition
Since the VR gaming is fresh technology for traditional game players, people should have a basic
understanding about the benefits and differences between VR gaming and traditional gaming consoles. By
watching VR live demos on Youtube, buyers have a greater understanding about VR products, though it
may not give complete 3D experience.
● Information search
Buyers need to ask existing VR game players about the characteristics of the VR games. For example,
buyers can consider the objective evaluations from some hardcore game players, which is more reliable.
In order to feel the immersive gaming experience, customers can try VR headsets in some physical stores
as well.
● Evaluation of alternatives
After the information search, there are several similar VR products for buyers to choose. Thus, they can
evaluate price, quality, and reliability of the VR headsets. Since different VR headsets have their own
merits and demerits and are suitable for different kinds of VR games, buyers need to check the products’
specifications that we care about most, such as screen resolutions and CPU capacity.
● Purchase decision
The Oculus VR company provides an online purchase option. People can also buy the product from the
franchises and retailers. However, it will take a while for the latest product to ship to retail stores.
Therefore, an online order is the quickest way for buyers to get the product.
● Post­purchase behaviour
People can easily try on the Oculus Rift with VR games to test its functionalities. More importantly,
customers can also evaluate the after­sales service of the Oculus Rift, especially software system
upgrading and hardware repairing services after purchase.
Segmentations of the market:
The targeted segmentation is the young male game players. Those people are willing to try the new
technology and pay high price for the gaming products. Based the geography, those people are living in
the developed cities surrounded by high­tech companies such as San Francisco, London, Berlin and
Tokyo. In terms of psychograph and behaviour, the target people usually have strong curiosity in the new
technology.
Marketing Strategy
Product Introduction:
4

6.
● Features:
Oculus Rift provides people with a completely different gaming experience, which totally changes the
perspective of gamers, from a limited size 2D platform to an unlimited 3D space. For the hardware,
Oculus Rift basically is a rectangular headset like goggles. A LCD panel is embedded in the front of the
headset and dual lenses are attached on the back. The lenses are made from OLED panels with 1080
x1200 resolution and the LCD panel provides a 90 Hz global refresh rate, which prevents gamers from
motion blurring.
● Benefits
In addition to non­traditional immersive gaming experience, the headset can be widely used in many other
potential applications. Firstly, in healthcare industry, clinicians can use the VR headset to guide patients
into a computer­generated environment for training or therapy at home, which is safer and efficient [8].
Secondly, in business and military, the Oculus Rift provides technicians with more virtual hands­on
experience, soldiers with safer battle simulation and pilots with more realistic flying experience without
damaging any expensive devices [13].
● Attributes:
Compared with the strongest competitor Sony Project Morpheus, there are three major differences: audio,
graphic display and hardware. Both the VR headsets provide same audio effect with 3D audio engines.
However, the Oculus Rift delivers clearer 3D images for each eye with 1080 x 1200 resolution while the
Project Morpheus offers a resolution of 960 x 1080. For the hardware, the Oculus Rift is assembled by the
most high­tech Nvidia GTX 970 graphic card which is better than the Project Morpheus’s GTX780.
Overall, the functionality of Oculus Rift is better than the Project Morpheus [3].
● Branding:
Oculus focuses on developing corporate branding ­ applying the company’s name to its products, such as
the Oculus Rift and Oculus Gear VR. The key of the Oculus’ logo is simplicity. The logo has improved
from an eye to a simpler oblong ‘O’, the initial of the company name, which is memorable [See Figure 1].
In addition, the widened ‘O’ is a unique and distinctive logo, since there are no existing companies using
this type of O shape as their logo [16]. The ‘O’ reflects the physical structure of the viewfinder on the
headset and can also be seen as a pair of eyes, which implicates using your eyes to experience VR [13].
For the word mark ­ ‘Oculus’, the company uses smooth and bold font, sans serif, with perfect spacing
and kerning, which is impressive and approachable[14].
● Branding strategies:
Mixed branding will be applied. Since VR technology is a brand new industry and unknown to most
people, Oculus needs to sell the products to retailers who have large distributions for brand advertising. In
retailer’s stores, several prototypes will be offered to customers for VR gaming, which promotes the
understanding of VR technology in the game market among customers. In addition, Oculus Rift will be
treated as a new category, VR Gaming Devices, and separated from traditional game consoles in the
stores. The logo of Oculus will also be shown on the shelves and the company’s brand will be highlighted
on the package, which promotes the company’s reputation.
5

7.
● Packaging and Services:
All components will be arranged in a rectangular suitcase made of high quality plastic with a handle and
two latches on the top, which is lightweight, waterproof and easy to carry [See Figure 2]. The company’s
name and logo are displayed on the front of the suitcase and the website on the back. In addition, the
suitcase is padded with foam rubbers designed to hold and protect the accessories. The components
include the headset, control box, lenses, different types of cables and adaptors [17]. For the service and
warranty, Oculus provides software support, free game trials, hardware installation, repairing and
replacement after purchase [18].
Figure 1[15]: The logo and word mark Figure 2[17]: The suitcase and components
Pricing Strategy:
● Product life cycle:
VR is a brand new area, since there are no companies and game developer who engaged with the VR
industry until 20th century. Oculus VR has been the first mover into VR development for gaming and the
company has created a product line called Oculus Rift. Currently, the product line is in the introduction
stage and within the product line, Oculus DK1 and DK2 have already been released.
● Identify pricing constraints and objectives:
The VR gaming devices will compete with traditional game consoles, so Oculus VR will consider the
price of PS4 and Xbox, two major consoles in game market. The objective is to make the price affordable
by the early adopters and survive in the game market.
● Estimate demand and revenue:
The final version of the Oculus Rift will price at $400. In addition, Oculus VR targets a 50 million
production volume [19], so the estimated total revenue will be $20 billion. Also, the VR headset is a
medium­high elasticity product, since with lower price, more people will be willing to try the product and
be the early adopters.
● Estimate cost and profit relationship:
The unit variable cost (UVC) for the headset is about $350 in total, which consists of the costs of LED
control chips, positional tracker, CPU, graphics card, audio engines and software development[20].
6

8. Therefore, the unit gross margin is $50 for the headset and the markup is about 14%. The fixed cost (FC)
is almost 1.5 billion, which mainly includes advertising fees, financial support in R&D, production cost
and overheads. The total profit will be 1 billion if all 50 million of the products are sold out. Break­even
analysis and detailed calculations will be illustrated in the later section.
● Select an approximate price level: target pricing strategies
The pricing strategies will be the demand­orientated approach and target pricing will be applied, since VR
gaming is gradually familiarize and demanded by public. Because of the positive result in sales volume
(over 3 billions) in the DK1 and DK2 at price $300 and $350 respectively [21], the target price will be
$400 for the final version of the Oculus Rift, which is slightly higher than the last version, the Oculus
DK2, and affordable by the early adopters[22].
● Set list or quoted price:
As mentioned before, there are three versions of products with different price within the product line the
Oculus Rift, which is the DK1, DK2 and latest version of the headset. Although the headset offers a
higher price than its rival, Sony Project Morpheus, it provides better functionality and visual experience.
● Make special adjustments to the price:
Oculus VR will provide 20% discount for the first 1000 buyers. In addition, the company will compensate
the customers who provide valuable feedbacks.
Place Strategy:
● Indirect B2B channels:
Oculus will collaborate with retailers who focus on selling high­tech electronics in different countries.
The company will sell the Oculus Rift to BestBuy and Futureshop in North America while building
partnership with SuNing Electronics in China in order to increase sales volume. BestBuy and Futureshop
have large distribution, high brand equity and large number of loyal customers in North America.
Similarly, SuNing Electronics has a large market share in the electronic market in China and China has
the biggest population base and a huge electronics demand. Therefore, sales volume of the Oculus Rift
will be increased because of large distribution and good reputation of those retailers.
● Direct B2C channels:
Oculus will open some franchises around developed countries, such as Canada and America. Because of
the gap of technology development between developing and developed countries, more consumers are
using high­tech products and willing to be early adopters in developed countries. Therefore, Oculus can
get more customers and feedback from developed countries. In addition, the company will set up online
inquiry, buying and delivery service, which helps customers with pre­purchase, post­purchase questions
and buying the VR headsets remotely.
Promotions & Communication Strategy:
● Advertising:
7

9. Oculus will use Facebook as its advertising platform. Facebook, as one of the biggest social network, has
supported 15 million companies for advertising [23]. Firstly, Oculus will buy the email address of
Facebook’s users, especially the people enrolled in the high­tech electronics group. Then, the users can
receive the latest information of the VR gaming product in Oculus by email. Oculus will also create a
official blog to post the contributed articles and attach the blog’s link to improve customers’
understanding of VR technology in game market.
In addition, Oculus will open a official group on Facebook to update the latest information of its VR
products and new VR games, and provides the links to download games and purchase devices. Oculus
will also post real gaming videos on Facebook, which provides viewers with remarkable visual impact.
What’s more, since Facebook supports many mobile apps such as Whatsapp and Instagram, people can
share Oculus VR’s news and videos to their friends easily by those apps. Therefore, advertising on
Facebook can rapidly transmit VR gaming experiences, non­traditional gaming techniques, to game
players around the world, which attracts large amounts of early adopters.
● Sales promotion:
Facebook is a most popular online chatting tool with over 1 billion of users and has a mobile texting app ­
Messenger [24], so Oculus VR can also use Facebook as a tools to communicate with customers. The
salespeople will be trained to understand the VR products and consumers can ask pre­purchase and
post­purchase questions on Facebook, which is convenient and efficient. Besides, customers can provide
product feedbacks on Facebook and Oculus will offers rewards, such as coupons and branded items, to
the people who provide valuable feedbacks, which can generate more loyal customers. In terms of
customers in China who seldom use Facebook, Oculus VR will use other similar online chatting tools,
like Weibo and Wechat, to post news and communicate with customers.
Timeline & Projections
Barrier to accomplish:
The major barrier is to show the buyer 3D gaming experience without letting them try it. In addition, the
buyer may have little understanding about the VR technology. Besides that, a tight timeline for marketing
the product is difficult, because the Oculus rift will be launched 4 months later.
Timeline of major tasks:
Since the Oculus Rift will launch in Q1, 2016, the marketing strategy will start before that.
Timeline(date) Tasks
Before launch
2015, September Updating the latest news and videos about the product features.
8

10. 2015, November Creating a list of demos and videos for the VR games that will be released in
2015, January. People can watch though all the social media platforms for free.
2015, December By the end of 2015, Facebook can create a launching day countdown in its
social apps.
After launch
2016, January Providing online Q&A sessions for the Oculus rift through Facebook platform
2016, February Creating public channels through Messenger or Whatsapp to provide real time
after­sale customer service
2016, March Listening to feedbacks and comments from buyers and then improving their
products.
Break­even analysis:
In terms of break­even analysis, the break­even point (BEP) is 30 million, which means Oculus will have
to sell 30 million of the VR headsets to balance the income and expenditure. Therefore, each Oculus Rift
sold after 30 million will generate pure profits $50 for the company and the expected total profit is 1
billion. Overall, the profitability is high.
Detailed calculations:
Based on the research, we assume the Oculus rift sales $400 per unit with $50 higher than its cost and the
fixed cost is estimated about 1.5 billion [25] [22]:
Price=$400, Revenue=$400 x 50 million=$20 billion,
UVC=$300, total FC=$1.5 billion, total variable cost=$350x50 million=17.5 billion,
Gross margin=$400­$350=$50, Markup=($400­$350)/$350=14%
Break­even point=FC/(price­UVC)=1.5 billion/ ($400­$350)=30 million
9

11. Reference:
1, PC ADVISOR, Oculus Rift release date, specs, features and games: Oculus Rift confirmed for 2016
with Xbox One controller, Windows 10 support and Oculus Touch, 11 Jun, 2015, Retrieved
from:​http://www.pcadvisor.co.uk/buying­advice/gadget/oculus­rift­release­date­specs­features­3522990/
2, VRFOCUS, Skype Coming To The HoloLens, ​Jan 21, 2015, Retrieved from:
http://vrfocus.com/archives/10877/skype­coming­hololens/
3, WEARABLE, Oculus Rift VS Project Morpheus: What is the best VR gaming headset, June 16, 2015,
Retrieved from​:
http://www.wareable.com/project­morpheus/oculus­rift­versus­project­morpheus
4, SlideShare, VIRTUAL REALITY GAMING OCULUS RIFT, 22 Nov, 2013 ​Retrieved from​:
http://fr.slideshare.net/funk97/virtual­reality­oculus­rift­business­model
5, EUROGAMER, Oculus Rift production on hold after component issue, 24 Feb, 2014, Retrieved from​:
http://www.eurogamer.net/articles/2014­02­24­oculus­rift­production­on­hold­after­component­issue
6, Wikipedia, Oculus VR, 20 Jun, 2015, ​Retrieved from​:​https://en.wikipedia.org/wiki/Oculus_VR
7, TC, Augmented And Virtual Reality To Hit $150 Billion, Disrupting Mobile By 2020, 6 Apr, 2015,
Retrieved from​:
http://techcrunch.com/2015/04/06/augmented­and­virtual­reality­to­hit­150­billion­by­2020/
8, MDDI, The Oculus Rift – Changing Virtual Reality for Healthcare, Jul 17, 2013, ​Retrieved from:
http://www.mddionline.com/article/oculus­rift­%E2%80%93­changing­virtual­reality­healthcare
9, TUMBLR, OCULUSRIFT, 2013, ​Retrieved from​:​http://seancrev85c.tumblr.com/
10, Wikipedia, Oculus Rift, 10 Jul, 2015, Retrieved from:​https://en.wikipedia.org/wiki/Oculus_Rift
11, Fast Company, Oculus Rift VR June 2015 Live Blog Coverage, June 11, 2015, ​Retrieved from:
http://live.fastcompany.com/Event/Oculus_Rift_VR_June_2015_Live_Blog_Coverage?Page=0
12, Road Tovr, Oculus Reveals More than 175,000 Rift Development Kits Sold, Jun 12, 2015, ​Retrieved
from​:​http://www.roadtovr.com/oculus­reveals­175000­rift­development­kits­sold/
13, GIZMAG, 8 ways the Oculus Rift could (eventually) transcend gaming, Jan 12, 2015,​ Retrieved from:
http://www.gizmag.com/oculus­rift­future­non­gaming­uses/35570/
14, Brand New, O Say can you See, June, 11, 2015, ​Retrieved from​:
10

12. http://www.underconsideration.com/brandnew/archives/new_logo_for_oculus_by_cory_schmitz_mackey
_saturday_and_nicolaus_taylor.php#.Vb56NMtRGmQ
15.Venture Beat, New Oculus branding ditches the creepy eye for something more … abstract, June 9,
2015, ​Retrieved from​:
http://venturebeat.com/2015/06/09/new­oculus­branding­ditches­the­creepy­eye­for­something­more­abst
ract/
16.The Fox is Black, VR company Oculus focuses branding on a perfect new logo, June 9, 2015,
Retrieved from​:
http://thefoxisblack.com/2015/06/09/vr­company­oculus­focuses­its­branding­on­a­perfect­new­logo/
17, PcMag, Unboxing the Oculus Rift VR Headset, 2015, ​Retrieved from​:
Retrieved from​: ​http://www.pcmag.com/slideshow_viewer/0,3253,l=313722&a=313722&po=1,00.asp
18, Oculus VR, Get Started, July 23, 2015,
https://support.oculus.com/hc/en­us/articles/202741283­Get­Started​­
19, Gamerant, Mark Zuckerberg Says Oculus Rift Must Sell 50­100 Million Units, January, 2015.
Retrieved from​: ​http://gamerant.com/oculus­rift­sales­estimate­success­zuckerberg/
20, Wareable, How Oculus Rift works: Everything you need to know about the VR sensation, June 15,
2015. ​Retrieved from​:
http://www.wareable.com/oculus­rift/how­oculus­rift­works
21.Road Tovr, Oculus Reveals More than 175,000 Rift Development Kits Sold, Jun 12, 2015. ​Retrieved
from​:
http://www.roadtovr.com/oculus­reveals­175000­rift­development­kits­sold/
22, PCWorld, Final Oculus Rift pricing, hardware teased as Gear VR reveals Oculus­ready interface, Sep
5, 2014, Retrieved from:
http://www.pcworld.com/article/2602906/final­oculus­rift­pricing­hardware­teased­as­gear­vr­reveals­oc
ulus­ready­interface.html
23, Venture Beat, Facebook: 15 million businesses, companies, and organizations now have a Facebook
page, March, 5, 2013, ​Retrieved from​:
http://venturebeat.com/2013/03/05/facebook­15­million­businesses­companies­and­organizations­now­ha
ve­a­facebook­page
24, The Statistics Portal, Facebook: number of monthly active users worldwide 2008­2015, 2015,
Retrieved from​:
http://www.statista.com/statistics/264810/number­of­monthly­active­facebook­users­worldwide/
11

13. 25, Business Insider, Facebook Buys Oculus VR For $2 Billion, March 25, 2014, Retrieved from:
http://www.businessinsider.com/facebook­to­buy­oculus­rift­for­2­billion­2014­3
12