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Terracog Global Positioning Systems: Conflict and Communication on Project Aerial

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

A report submitted to

Prof. Danesh Gojer

In partial fulfillment of the requirements of the course

Written Analysis and Communication-I

By

Akashdeep Katiyar

Section C

Roll No. 1911014

On

07-07-2019

Memo

To: Emma Richardson (EVP)

From: Akashdeep Katiyar (Executive assistant to EVP)

Subject: Analysis on Project Aerial and impact of abandoning or launching it

Date: March 21, 2008

         In accordance with the instructions given by you, I have prepared a brief situation analysis about the present situation of Terracog losing market share to Posthate’s “BirdsI” and current status of Project Aerial. I have identified and analyzed the major issues related to the decision of launching Project Aerial and its different implications. Also, I have defined the main problem using the problem statement.

One Page Summary

  • Terracog is a major company in handheld GPS and sonar equipments market
  • It’s competitor posthate launches “BirdsI” in 2006 with additional feature of satellite imagery instead of vector graphics
  • TerraCog believes “BirdsI” will fail eventually but are forced to launch Project Aerial in 2007 after they are proved wrong after a few months.
  • Aerial is designed and developed using the existing platform and has better graphics but slower speed.
  • The final product is ready till March 2008 but turns out to be costlier than expected, at 550$, and management members have a difference of opinion among themselves about what the final pricing should be.
  • Sales department is not ready to sell Aerial at such a high cost and production department is able to bring down the price to 475$ which is not enough.
  • VP of Design & Development, Harold Whistler suggests going to the market with current product and at the same time redesigning it to make cost cutting possible.
  • Sales department is not convinced and VP of Sales, Ed Pryor is not ready to sell it for anything more than 425$.

Problem Statement:

Whether to go ahead with launch of Aerial to recapture lost market share, or abandon it

Options:

  1. Abandon Project Aerial
  2. Launch Aerial at 475$
  3. Launch Aerial at 425$ and do not redesign
  4. Launch Aerial at 425$ but redesign the product to reduce manufacturing costs

Criteria:

  • Profit Margins
  • Sales
  • Product Quality
  • Urgency and recapturing market share.

 Evaluation of options:

  • Abandoning Project Aerial would make it impossible to gain back the lost market share to BirdsI and also might lead to losing more key customers
  • Launching Aerial at 475$ might lead to very few sales and customer dissatisfaction after paying such a high price but will lead to healthy profit margins on each product.
  • Launching Aerial at 425$ would lead to really low profit margins but will result in more sales and recapturing lost market share.
  • Launching Aerial at 425$ at present and redesigning it to reduce final cost after few months would lead to high sales but low margin initially but high sales and high margins after few months along with regaining lost market share.

Recommendation:

TerraCog should launch Aerial at 425$ in the holiday season of 2008 and redesign it at the same time to reduce manufacturing costs.

Situation Analysis

TerraCog, founded in 1977, started with making high end sonar devices for boaters and fishermen and then diversified into handheld GPS products for outdoor enthusiasts. It achieved success in the GPS market especially due to its skill at understanding user preferences, translating retailer and user feedback to exceptional product design and functionality. It was rarely the first mover in the market, but maintained its edge by introducing products which surpassed its competitors in addressing customer needs.

Terracog was doing really well until a competitor, Posthate, unveiled a GPS prototype in 2006, called “BirdsI” which provided static satellite imagery rather than vector graphics used in other GPS products. This new feature made BirdsI really popular among buyers and reviewers though TerraCog felt their core customers would not buy another product just for better graphics. Moreover they were unwilling to add satellite imagery to their product as that would require a product with better processor speed and memory. BirdsI was reported to be selling really well nationwide and TerraCog started losing market share to Posthate. Terracog management was initially surprised but quickly dismissed it as a result of holiday season. Though they were proved wrong when their sales reps reported more and more customers wanted a product with satellite imagery like BirdsI which forced TerraCog’s president to start Project Aerial to develop such a product.

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