Case Study: Marketing in Action Case Real Choices at Facebook

Can virtual reality go mainstream? Facebook would like to believe the answer to that question is a resounding “yes!” The company has big plans for its virtual reality offering, the Oculus Rift, which is designed to transform how people play games, view videos, and share the experiences of their social lives. The Rift is one of three premium virtual reality headsets new to the market, and it’s no small market with estimated value at more than $16 billion. Facebook CEO Mark Zuckerberg believes that virtual reality has come a long way in a short time and that we are “entering the golden age of video and animation.”

Inspired by the gaming market, Palmer Luckey, founder of Oculus, created a prototype for a virtual reality headset that would later become the Oculus Rift. In 2012, he began a Kickstarter crowdfunding campaign to finance the development of the product, eventually generating more than $2.4 million in funds. Over the next few years, the product went through five working prototypes released to developers and the public for feedback. In 2014, Zuckerberg raised the question of what will be the next best thing in tech, and the answer was that it would be the viewing of movies, television, and other content in an immersive 3-D environment. Soon after, Facebook purchased Oculus for $2 billion.

In 2016, the Rift went on sale for $599, supported by dozens of games. Other uses include viewing conventional movies and videos, 360° 3D videos, and “virtual reality movies.” But alas, problems plagued the early stages of the product’s introduction. The first shipments were delayed by a component shortage in the production process. Jason Rubin, Head of Studio, expressed the company’s embarrassment, apologized for the delays, and offered free shipping to everyone who had placed orders. In addition, some people complained of motion sickness when using the Rift. Oculus has since issued developers a software fix that reduces the likelihood that anyone will suffer any nausea.

Other companies are rushing to join the virtual reality marketplace as well. Two of the major players are HTC and Sony. HTC, working with Valve Corp., introduced the Vive, a $799 headset designed to use while the user is standing up and walking around. Sony introduced the $399 PlayStation VR headset to compete as a lower priced option for the market. In conjunction with its launch, Sony created a new PlayStation 4 with better performance to effectively run the virtual reality options.

Facebook understands that the Rift represents a really new technology and thus will initially appeal to a limited market, although the growth potential is very high. Zuckerberg recognizes that video is presently the most popular mode of sharing but that virtual reality will soon be in second place. The outlook is favorable, and some professional reviewers have suggested that this may be the biggest tech product since the introduction of the iPhone (although using the Oculus Rift is significantly more complicated than using a smartphone). Yet despite the potential, success for the product and the technology overall is not guaranteed. Now that Facebook has taken the steps to develop its new product, it has to find ways to convince customers to adopt it.

CASE STUDY FACEBOOK

REQUIREMENTS: 2 PAGE WRITTEN CASE ANALYSIS PAPER (12 PT FONT, DOUBLE SPACED).  4 CITED REFERENCES.

TEXTBOOK REFERENCES:  MARKETING: REAL PEOPLE, REAL CHOICES, 9/E, Michael R. Solomon, Greg W. Marshall, Elnora W. Stuart 

Publisher:  Pearson Copyright:  2018

1) GIVE A BRIEF SUMMARY OF THE CASE THEN ANSWER THE FOLLOWING QUESTIONS.

2) WHAT IS THE DECISION FACING FACEBOOK?

3) WHAT FACTORS ARE IMPORTANT IN UNDERSTANDING THIS DECISION SITUATION?

4) WHAT ARE THE ALTERNATIVES?

5) WHAT DECISION)S) DO YOU RECOMMEND?

6) WHAT ARE SOME WAYS TO IMPLEMENT YOUR RECOMMENDATIONS?

Case Study: Marketing in Action Case Real Choices at Facebook

Can virtual reality go mainstream? Facebook would like to believe the answer to that question is a resounding “yes!” The company has big plans for its virtual reality offering, the Oculus Rift, which is designed to transform how people play games, view videos, and share the experiences of their social lives. The Rift is one of three premium virtual reality headsets new to the market, and it’s no small market with estimated value at more than $16 billion. Facebook CEO Mark Zuckerberg believes that virtual reality has come a long way in a short time and that we are “entering the golden age of video and animation.”

Inspired by the gaming market, Palmer Luckey, founder of Oculus, created a prototype for a virtual reality headset that would later become the Oculus Rift. In 2012, he began a Kickstarter crowdfunding campaign to finance the development of the product, eventually generating more than $2.4 million in funds. Over the next few years, the product went through five working prototypes released to developers and the public for feedback. In 2014, Zuckerberg raised the question of what will be the next best thing in tech, and the answer was that it would be the viewing of movies, television, and other content in an immersive 3-D environment. Soon after, Facebook purchased Oculus for $2 billion.

In 2016, the Rift went on sale for $599, supported by dozens of games. Other uses include viewing conventional movies and videos, 360° 3D videos, and “virtual reality movies.” But alas, problems plagued the early stages of the product’s introduction. The first shipments were delayed by a component shortage in the production process. Jason Rubin, Head of Studio, expressed the company’s embarrassment, apologized for the delays, and offered free shipping to everyone who had placed orders. In addition, some people complained of motion sickness when using the Rift. Oculus has since issued developers a software fix that reduces the likelihood that anyone will suffer any nausea.

Other companies are rushing to join the virtual reality marketplace as well. Two of the major players are HTC and Sony. HTC, working with Valve Corp., introduced the Vive, a $799 headset designed to use while the user is standing up and walking around. Sony introduced the $399 PlayStation VR headset to compete as a lower priced option for the market. In conjunction with its launch, Sony created a new PlayStation 4 with better performance to effectively run the virtual reality options.

Facebook understands that the Rift represents a really new technology and thus will initially appeal to a limited market, although the growth potential is very high. Zuckerberg recognizes that video is presently the most popular mode of sharing but that virtual reality will soon be in second place. The outlook is favorable, and some professional reviewers have suggested that this may be the biggest tech product since the introduction of the iPhone (although using the Oculus Rift is significantly more complicated than using a smartphone). Yet despite the potential, success for the product and the technology overall is not guaranteed. Now that Facebook has taken the steps to develop its new product, it has to find ways to convince customers to adopt it.

1. 8-36. What is the decision facing Facebook?


2. 8-37. What factors are important in understanding this decision situation?


3. 8-38. What are the alternatives?


4. 8-39. What decision(s) do you recommend?


5. 8-40. What are some ways to implement your recommendation?