Transcape Systems Essay
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- Transcape would have to overcome a number of barriers to create a market for its front runner innovation in interactive multimedia exercise CD ROMs. These include:
- They need to provide a product that makes the user have a sense of accomplishment and that is not boring.
- The fact that clubs already experience membership turnover of about 40%.
- Home exercise equipment users are very price sensitive.
- The company has limited investment funds so funding for educating the market is an issue.
- The company is unable to go on spend any more money on marketing so it may have to form an alliance with a home exercise equipment provider and may as a result have to change from its open system strategy to a exclusivity strategy.
- The company may not have much of a choice but to partner exclusively with one of the home exercise equipment manufacturers because that will be more attractive to the manufacturer and because the home market is much bigger than the health clubs.
There were just about 13,000 in number in 1994.
- To support the market segmentation strategy (home market vs. club market), the home market was growing at a faster rate than the club market with 43% of the population owning at least one exercise equipment in 1994. The home market estimated at $2 billion annually as against the club market at $400 million in sales in 1994. The issues they have to face are how to address both markets without any confusion.
- They can also diversify into the CD-ROM business with their “Do-Along” CD-ROMs.
In the face of current circumstances, I agree that market segmentation, diversification and exclusive partnering with a home market manufacturer are the way to go.
- I suggest concentrating efforts on the “Do-Along” CD ROMs. These CD-ROMs are market ready and they already have leads to convert this product into sales. The money made from the sales of the “Do-Along” CD ROMs is will enable them raise the development money for the interactive multimedia exercise CD ROMs.
- The parallel between the multimedia exercise software market and the evolution of PC hardware and software industries is the similarity the Transcape’s ICE (Intelligent Cardiovascular Environment) standard has with the open systems of Microsoft and IBM. ICE was adopted at the International Health and Racquet Sportsclub association (IHRSA) convention in March 1995. This serves as a common platform for developers to write exercise software.
- There is a lot of potential in the home market because almost 50% of the population already owns the equipment. The issue is how to make it interesting. Audio and video content add-ons can do this. Since the Arena platform exists, development is faster. Also, the CD ROMs can be marketed to Fortune 5000 organizations for use on their multimedia PCs.
- Home Market Segment
- Partner with a front-runner manufacturer and provide exclusivity
- Market Do-Along CD ROMs
- Market Fortune 5000 companies
- Club Market Segment
- Promote Open Systems
- Generate funds to support development of more software
- Offer affordable upgrade kits ($1,500) so that clubs did not have to buy ICE machines
- Transcape Systems later became known as NetPulse. Its products, the ICE stations (1997) and CardioVision (2003) were listed as FitnessManagemnet.com’s “TOP 20 PRODUCT TRENDS from the PAST 20 YEARS”