Their rapid growth could be attributable to a dedicated focus on this particular niche of the market, where they appear to have made significant headway. (www.betabreakers.com)
Game Instinct (a division of Testing 1-2-3) is a game-industry specific division of larger software testing firm Testing 1-2-3. Game instinct has revenues of $2.25 million. Their services tend more towards the hardware side of the business with a focus on TCR checks/compatibility testing, localization testing, black box/crash testing. But they also do standard functionality testing, playability testing, localization testing, and offer beta administration services (helping a company run its customer beta test process). They have a location in India for low cost testing labor. (www.gameinstinct.com)
Veritest (a division of Lionbridge). Lionbridge is a leader in the market, with a very large localization division. Their testing business (Veritest) has roughly $20 million in testing revenue total, including games testing. Lionbridge also offers application development, and a full range of hardware and software QA and testing. With locations in multiple countries around the globe, they have a high profile in the market and are strongly positioned as the leader in localization/translation and globalization services. (www.veritest.com)
Critical Evaluation: Market Situation and Growth Opportunities
TTI has established a strong presence in the industry, with several high-profile clients. However, its business has been focused primarily on console games, which is not a high-growth segment of the market at the present time. Staying focused on this market segment alone will cause TTI's business to stagnate, thus it needs to seek find ways to grow revenues through one or more of the following approaches:
1. Increase the NUMBER of customers served: Increasing its customer base in its current console market segment through enhanced customer acquisition and retention campaigns
2. Increase VALUE of each customer through service-line extension: Expanding its service lines for the existing customer base to create upsell opportunities and grow same-customer revenue (increase the customer lifetime value)
3. Increase TYPE of customers served: Enter new market segments to broaden its customer base, offering the same service suite (or slightly modified versions) to new markets
Rapid growth is occurring in the segments of online and mobile gaming. In many respects, expanding its services to incorporate testing in both of these new segments would be a natural service-line extension for TTI, leveraging its brand identity as game test experts. Some investments in equipment and personnel would be required to be competitive in these segments. In terms of the subject matter expertise required, online game testing is relatively similar in nature to console testing, and many of the same development languages are used for both types of software. However, mobile games and applications are typically developed using different programming languages, primarily Java.
The software testing market is also growing rapidly, and is more than twice the size of the games testing market, thus presents a very attractive potential target. However, the most significant trend in outsourced software testing is the increasing use of Indian firms. India offers a technologically educated workforce yet at labor rates that can be much lower than those in the U.S., Canada, and Europe, creating significant downward price pressure in the market. Those software firms that outsource their testing are increasingly looking to India. TTI would have to pursue a cost-leadership positioning strategy to compete effectively in this market, a shift from what has been its successful differentiation strategy.
Marketing Analysis: To date, TTI has done little marketing. It has established a basic "brochure-ware" website presence, and appears with a small (10' x 10') or tabletop booth at game industry tradeshows. No industry-focused collateral, public relations, or other marketing campaign tactics have been tried. These avenues helped the company to acquire a handful of accounts, but only modest success has been seen with these limited marketing tactics.
The traditional customer communication stages are designed to move customers through each step in the response heirarchy: Awareness, Interest/Knowledge, Evaluation/Preference, Intention/Action/Trial/Purchase, and finally Advocacy (Kotler, 2001, p. 273). Historically, the company has done only minimal activity at the front end of the process, and their customer acquisition has been slow as a result.
The primary customer acquisition strategy has been relationship selling to a few targeted, large accounts, based on industry contacts of the company founders and executives, and customer referrals. To penetrate new markets in online, mobile and software testing and achieve continued growth, the company would need to engage in more defined marketing activities and brand building. While thus far TTI has been effective at growing the business to its current level and acquiring several large customers, the growth potential with those customer is now limited, and the company needs to begin attracting a larger number of new customer...
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