1. TerraCog is a successful private held company specialized in high-quality Global Positioning
System (GPS) and fishing sonar equipment. TerraCog was founded in 1977 and started
manufacturing high-end sonar equipment for sport fishermen and boaters. In 1990, the company
had introduced its first GPS products, marketed specially to hunters, hikers and campers. The
company had completed 31 years.
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:
TerraCog facing a tough competition and “Project Aerial” should be launched or not?
:
Product Aerial should be launch or not at this point of view or Launch should also be there with
working on existing projects.
:
Evaluating on the price, quality, reputation, time, current market scenario and market share of the
company.
:
As the quality is not up to the mark as they are redesigning the existing GPS satellite, cost of the
product is too high and even uncertain about the profit could be made by the company or not.
There is substantial decrease in the market share of the company.
Product Aerial should be stopped for now. Do proper market research, recreate and redesign a
new product with major configurations and moldings in price, quality, reputation, time of the
new product.
3. TerraCog is a successful private held company specialized in high-quality Global Positioning
System (GPS) and fishing sonar equipment. TerraCog was founded in 1977 and started
manufacturing high-end sonar equipment for sport fishermen and boaters. In 1990, the company
had introduced its first GPS products, marketed specially to hunters, hikers and campers.
Management believed that company’s skills at translating retailer and user feedback into
exceptional product design and functionality that fueled the growth of its GPS business.
TerraCog had developed strong relationship with its key accounts. The firm had built its GPS
line for serious outdoor enthusiasts’ market and the products had won applause of the audience
for durability and value-added features like integrated compass and barometric altimeter.
Even though TerraCog was not the first to market new products, the company did not had
problems in capturing the market as the products were of high-quality and effectively addressed
customer needs. TerraCog was free to lag in technological innovations with little risk because the
company had finally introduced new products, and surpassed most of competitors in addressing
customer needs. In summer 2006 at the outdoor retailer show, a competitor, Posthaste, had
unveiled a GPS prototype called “BirdsI” that displayed satellite imagery. The imagery was not
live, but static satellite photographs that have been “stitched” into a single rear view. This did not
impress the TeraaCog team. TerraCog researched that BirdsI technology did not offer
substantive performance improvement over the standard maps in terracog’s GPS satellite. While
the Terra cog team had dismissed the Posthaste concept, a number of key buyers and product
reviewers found it an existing innovation. Based on the situation, TerraCog’s executive debated
whether to upgrade to satellite imagery. However they realized that adding the feature to the
existing GPS platform requires upgrades to processor speed and memory as well as new
firmware. After the arguments, the company dropped the idea as a non-essential fad. TerraCog’s
management remained confident that the company’s core customers were discerning purchases
who would value durability and performance over dressed-up graphics.
In October 2006, Posthaste introduced BirdsI as the only handheld GPS with satellite imagery.
Within 2 months, TerraCog’s sales representative reported impressive sell through rates for
BirdsI nationwide. However, by spring 2007, sales reps were noticing increasing customer
demand for the GPS-BirdsI. By the time, TerraCog realized his mistake about being judgmental
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4. for the BrdsI, the product was a huge success. In order not to lose the market, TerraCog’s also
plan to launch a GPS with imagery satellite dubbed “Project Aerial”. For the fast development
and avoid the costs of new pattern and major reconfigurations, the team decided re-designs
within the existing GPS satellite. “Product Aerial” launch meeting scheduled, in the meeting
Richard, president, told as they are already late, so to make sure the product completely right for
the first time, as reputation for quality is paramount. While Allen, director, design and
development, had a doubt that the new project will have all the same features that they have in
current GPS line. Ed Pryor, VP sales, plans to offer Aerial at approximately a $50 retail premium
to the current top-of-the-line, so it’s important to maintain the same high-end quality. TerraCog
expected to get Aerial to stores by the 2008 holiday season. TerraCog was trying to capitalize on
growth in cycling and fitness GPS applications and Project Aerial was forcing them to put aside
these more exciting projects. After this meet, the president wanted to Emma, new executive vice
president to schedule another meeting after the follow-up. Richardson was worried about the
size of the group that might threaten the focus and oppose decision making. She needed to
finalize decisions on costs, pricing and initial production volume. The cost estimated was
surprisingly very high. Aerial had to sell for $550 to maintain the margins. In Resumption of
Aerial Pre-Launch meeting one week later, new cost estimate was calculated, and that they could
produce for approximately 8% less than the prior week’s estimate that is it could be priced at
$475, about $100 more the current full-featured GPS. While Posthaste is selling at around $250
to dealers, which means they retail for around $400, around $75 more. Ed Pryor, VP of sales
feels the new product Aerial could be priced $475 or below to capture the from the competitors
lost market share. The price was too high to be considered. The managers gathered in
contentious meetings that featured anger, finger pointing, blame and bewilderment, but no
effective conclusion concluded.
Should Aerial Project get launched at the price of $475, where profit margins are very less or not
and how market share can be increased?
Launch the product at $475 with low profit margins
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5. Don’t launch the product for now
Launch the product and side by side do existing projects which were kept aside in
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fitness and cycling products.
Enter the market as early as possible after a significant lag
Price the product accordingly to have little bit more profit
Company’s USP is the quality it offers. It should not compromise even if it lags in
launching the product.
Continue redesigning and improve the manufacturing cost of the product to reduce
production cost
Sell the product at a low margin and built a consumer confidence
Recreate and redesign a new product with major modern set up and pattern, i.e., focus
on positioning
Focus and capitalize on growth in cycling and fitness GPS satellite.
Understanding the market situation and do all the possible changes and enter the market
with the bang
Try to persuade each and every executive and decide at a common goal and then do it
Cancel the project launch for now
Recreate and redesign a new product with major modern set up and molding, i.e., focus
on positioning, decreasing the cost of product and earning high profit margins, try to
focus on increment of market share
After some time and deciding about the new product, hit with the bang
Proper market research should be there to bridge the gaps between what is offered and
whist is desired
6. Common goal and clear vision should be there
Executives should start encouraging and motivating their teams. Make them understand
how important this project is for the company.
Emma Richardson starts up working with each and every executive of every department
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separately.
She should be common link for communication between various departments.
