Terracog Situational Analysis

Case Summary

Situational Analysis: TerraCog, manufacturer of the high-quality Global Positioning System is losing its market to its competitors by not developing GPS equipped with satellite imagery. The company has earlier decided to not build this kind of product but had to give in to the repeated requests from the customers. TerraCog is now stuck, where it must decide on the launch price of Aerial as the estimates provided by the production team is much higher than that of its competitors and resolve its internal conflict on their satellite imagery GPS prototype Aerial’s pricing, whether they should launch the product at a competitive price of $425 or at $475 where they can make profit on every piece they sell or abandon the launch of Aerial.

Problem Statement: Whether to launch Aerial or not and at what price.

Options:

1. TerraCog can abandon Aerial and focus on the GPS submarkets

2. TerraCog can launch the product at $425

3. TerraCog can launch the product at $475

4. TerraCog can launch the product six months later

Criteria for Evaluation:

1. Impact on revenue (customer satisfaction)

2. Impact on brand image

3. Team collaboration

Evaluation of Options: The company’s decision of abandoning Aerial could be a big let-down for its customers and retailers who are asking for satellite imagery GPS devices, and a big loss on its market share. Launching Aerial at $425 could help the company build its market value but will turn into a loss-making as the costs involved is much higher. Launching the product at $475 can help TerraCog maximize its revenue potential where future cost reductions can be achieved. And, by launching the product six months later TerraCog can assure about better performance and quality but will eventually lose its market for six months.

Recommendation: TerraCog should launch Aerial at a price of $475 to recapture the market and maximize its revenues with the hope of cost reduction in the future.

Situation Analysis

Project Aerial, the satellite imagery enabled GPS gadget is on the risk of making to the shelves due to an internal rift between the sales team, and the production team over the pricing of Aerial. This project was dubbed to take on the ‘BirdsI’, which was launched by TerraCog’s market competitor, Posthaste, who changed the market dynamics of the GPS business by introducing handheld GPS with satellite navigation which was an upgraded version of the vector-based graphics used in the GPS. The outdoor enthusiasts and the potential customers were moved by the visual appeal and the improvement that was offered over standard maps which showed strong evidence of the market trend, but the company undermined the product and the competition from Posthaste who eventually lured customers to buy their product and thus captured TerraCog’s market share.

The company remained under the false impression about the popularity of BirdsI and had to finally give in to the market demand and pressure from sales representatives to develop a similar satellite imagery-based navigation system. Aerial was already late for the market but this time it was neither advanced nor had an add-on from what the competitor was offering. It is slow in terms of speed and a revamped version of their vector-based model. The biggest challenge that lies in front