Terracog Global Positioning Systems: Conflict and Communication on Project Aerial

Assignment 1: TerraCog Global Positioning Systems: Conflict and Communication on Project Aerial

MEMO

To:                 Emma Richardson, EVP, TerraCog Global Positioning Systems

From:         Harsh, Executive Assistant (To EVP)

Date:                 16th March, 2008

Subject:         Whether TerraCog should launch or not ‘Aerial’ in the upcoming holiday season and its implications.

Please find below the attached analysis for Project Aerial as to whether TerraCog should launch or not Aerial in the upcoming holiday season, and the impact of the same on the business.

EXECUTIVE SUMMARY

TerraCog which was established 31 years back in 1977, has grown from manufacturing of high quality sonar equipment for sports enthusiast to a company specializing in high quality Global Positioning System. Its product was better than other and it emerged as one of the top notch companies in the market. They believed that a little lag in terms of technology was justifiable because their products surpassed those of competitors in addressing customer demands. They failed to evaluate one of the products launched by one of their competitors and were losing their market to them. In order to compete and regain its market share -

TerraCog has the options of

1. Either going ahead with the Launch of Project Aerial with low margin (at $425).
2. Cancel product launch for now and to recreate and redesign the product in a better way and then return to market after 5-6 months.
3. Scrap project Aerial and focus on the underserved GPS markets of cycling and fitness apps.
4. Launch Aerial at a price of $475 and have a presence in market and then to improve the quality in time bound manner to justify its price,

The factors to be considered before choosing an option are USP-Quality, Customer Satisfaction, Market Share, Reputation and impact of the decision on different departments.

After closely evaluating the options on the above mentioned criteria’s, it is recommended that TerraCog goes with the option of cancelling launch of Aerial for now and return to the market with a Wow Product after doing proper market research and improved coordination between departments and structured development of the product not in a hurried manner.

Situation Analysis: TerraCog started in 1977, manufacturing high quality sonar equipment for sports professional and it started to extend its market by launching high quality GPS products to hikers, campers and hunters in 1990. TerraCog didn’t believed that there was a need to market its products as the products were of high quality and effectively catered to the needs and demands of the customers, facilitating the company in capturing the market. The products of TerraCog left the competitors far behind when it came to durability, navigation and other value added features like integrated compass and barometric altimeter. Because of this, they emerged as one of the best companies in the market catering to this sector.

 TerraCog was planning to enter in an underserved GPS sub-markets which included cycling and fitness applications in early 2007.When Posthaste, a competitor of TerraCog, introduced a GPS prototype called “BirdsI” at the Summer 2006 Retail Outdoor Show having unique feature of static satellite photographs which was a marked improvement on what other competitors were offering through their products, TerraCog did not see any major threat as according to their research the technology offered by BirdsI was not a significant improvement over the maps which the products of TerraCog possessed as well as their team was confident to point out that Posthaste’s product lagged on accuracy as well as reception quality which proved to be wrong. Only two months after being launched, BirdsI had seen an impressive sell throughout the market. After this also, the management at TerraCog endorsed that success of BirdsI was only because of shopping during holiday season and as the holiday season will get over the popularity of BirdsI will fall and their products will fare better in the market than BirdsI. By the time TerraCog came to realize their mistake in evaluating BirdsI, the product was a huge success. Garmin, another competitor of TerraCog announced the launch of its satellite image version which would cost around $395 to the customers.