Analysis of Conflict for Taking Critical Decision on Project Aerial

Memorandum

To:               Emma Richardson, Executive VP

From:           Executive Assistant

Date:           7th July 2019

Subject:      Analysis of conflict for taking critical decision on Project Aerial

I have thoroughly analysed the present situation of TerraCog concerning their decreasing market share to Posthaste’s product “BirdsI” and coming up with a similar product to BirdsI with satellite imagery named Aerial. I have described briefly the critical issues needed to address TerraCog’s decision to launch the Project Aerial or drop it and the various implications that each option can have to ease the decision-making process.

One-page summary

Situational Analysis: Terracog was founded in 1977 as a private company specializing in high-quality Global Positioning system (GPS) and fishing sonar equipment. After the launch of BirdsI by Posthaste which was the only hand-held GPS device with satellite imagery, Terracog started losing its market share as BirdsI was very well received by the target market exceeding their expectations. Initially, Terracog did not plan to come up with a product of their own which was similar to BirdsI but due to increasing popularity of BirdsI and pressure from their retailers, they had to reverse their decision. So, Terracog started working on a similar project named Aerial to regain their lost market share. But due to inter-departmental conflict they were not able to decide on the pricing of Aerial.

Problem Statement:  The main problem that the company is facing is the decreasing market share as the competition is increasing. Also, there is a conflict among different departments on the pricing of Aerial. They want to price Aerial at such a price that they are able to regain their lost market share while making profits at the same time.

Options: The company has options of whether to go with the launch of the product or simply drop the project. If they decide to go with the launch, then what should be the pricing, $425/ $475 and what should be the timing of the launch of the product.

Criteria: All the businesses exist with the motive of making some profit. So, one of the criteria would be the profitability of the project. The other criteria that would be considered are customer satisfaction, reputation, product quality, advantage that their product would offer over their competitors’ products and if the price tag would be able to justify its premium pricing.

Evaluation of options: If the company decides to drop the project it would go against their reputation as their retailers had been demanding for a product with satellite imagery from them. Also, the customers would be disappointed, and they would further lose their market share. If the company decides to launch Aerial then the pricing should be decided in such a way that the company is able to make profits and satisfy their customers which would help them to regain their lost market share. TerraCog will have to operate on thin margins by launching Aerial at $425 but will help them enter the market. It is difficult to launch at $475 as TerraCog being late to the market and considerably higher price compared to BirdsI which is around $400. Also, it would become difficult for them to justify a premium of $75 over BirdsI as they are already compromising on speed.

Recommendation: As per my analysis of the situation and after evaluating all the options I would recommend the company to go with the option of launching the product at $425. Launching the product would help them to fill their absence from the market. They would not feel the pressure of demand from their retailers as they had been demanding for a similar product to BirdsI from them. Also, pricing their product at $425 would help them to regain their lost market share though they would have to operate on thin profits margins at this price point. Pricing Aerial at $475 would become difficult for them to justify its premium pricing.

Brief

Situational analysis: Terracog was founded in 1977 as a private company specializing in high-quality Global Positioning system (GPS) and fishing sonar equipment. The company grew at exceptional rates in the market because of their ability to understand what their customers needed and how to translate their feedback into their product design. Terracog believed in providing quality products and placed the highest emphasis on customer satisfaction.

During the Outdoor Retailer Show of 2006, one of the competitors of Terracog named Posthaste unveiled GPS prototype called BirdsI which displayed satellite imagery. It was much more compelling to look at than the simple vector-based graphics which were used by the rest of the industry. But Terracog’s team anticipated that BirdsI will not be able to take off as it lacked both accuracy and reception quality and offered only the visual appeal. Thus, Terracog dropped the plan of coming up with a similar product of their own. Posthaste’s BirdsI was launched in October of 2006 as the only handheld GPS with satellite imagery. BirdsI was very well received by the target market exceeding the expectations of Terracog as was confirmed by their sales representatives. But Terracog’s team was confident that the popularity of BirdsI wouldn’t last as they attributed its success to holiday shopping season. But, the continued success of BirdsI and their retailers’ demand to come up with a similar version of their own sent ripples across Terracog. So, they decided to reverse their decision and initiated a project dubbed as Aerial in the spring of 2007.