History of the Company

TeraCogg was a successful privately held firm established in 1977. It specialized in

high quality Global Positioning system and similar products. Even though TeraCogg was
always not the first to market new products, the company did not have any problem in
capturing the market as the products were of high quality and effectively addressed
customer needs. The product quality and durability helped it to build the brand and
customer loyalty. The products were mainly targeted towards sports enthusiast like fishers,
bikers and hikers.

Situation Analysis
TeraCogg has been a trusted brand for its hand held GPS products, especially with
customers who are serious sports enthusiasts. It had planned to launch its new product
Aerial with additional features like altimeter and barometer. But it is facing a tough
competition by BirdsI, a product launched by its competitor Posthaste. BirdsI has satellite
imagery features and has got a positive response in the market. As a result, TeraCogg has
started losing its market share. Thus the design team has come up with a new design for
Aerial having the additional feature of satellite imagery. But this has led to an increase in
cost. After all possible considerations, Aerial cannot be priced below $475 without adversely
affecting the margins. Also its launch is delayed by two years and BirdsI has strengthened its
market position in this category. At a price of $475, the premium of $100 over BirdsI is
difficult to justify as the new technology has led to a lesser processing speed. Under these
circumstances company primarily needs a go-no go decision. If company decides to go
ahead with the launch, it must decide clearly the pricing and positioning strategy. If it
decides otherwise, it must have a plan to regarding further improvement in Aerial so as to
launch it after six months.

SWOT Analysis
 Strengths Weakness
Product quality and Weak environment scanning
durability Lack of innovation
Consumer and Retail Lack of enthusiasmin system
prefernece Lack of inter departmental
Customer loyalty co-ordination
Retailer relationship

Threat Opportunity
Competition from newer Launch of Aerial and other
products products
Lack of market share Explore new niche markets
Pressure from retailer Upgradation in technology

Problem Identification
Product short sightedness
Lack of common Vision/Goals

Analysis of the Problem

Product short sightedness : TeraCogg has always been a Market follower. It waits for
competitors to come up with new products and then develops a better quality
products to take lead in the market. This process brings in a big time delay which can
cause problems for the company. There is lack of innovation in the company and
new product ideas are not discussed much. Also, over the years the company hasnt
changed itself and upgraded its technology so the cost of products being
manufactured remains high.
Lack of common Vision/Goals : A lot of conflicts exists between various departments.
All department heads and management individuals focus on their individual goals
and not on company goals. This affects the internal working environment and the
entire decision making process. Due to this, the price and positioning of Aerial is not
being able to be decided, resulting in the increasing the time lag of new product
launch and the decreasing market share.

Objective
To decide the best possible strategy to counter the competition posed by BirdsI and to
recapture the lost market share.

Alternative Action Plan

1. Launch Aerial at a price of $475
2. Compromising on margins, launch Aerial at a competitive price of $425
 3. Delay the launch by six months and come up with a new and advanced product
4. Market expansion with new products for new markets

Evaluation of Alternatives
1. Launch Aerial at a price of $475. This price is $100 higher than that of BirdsI. The
premium thus charged has to be justified by the value proposition of the product.
Since the new feature of satellite imagery has significantly reduced the speed, this
may not go well with the customers. Thus the current design is not a proper
response to customers needs. High price will not help in gaining the market share
due to the very price sensitivity of the product but may help cut down the losses.
Sales force of the company will also face difficulty to pull it through.
2. Compromising on margins, launch Aerial at a competitive price of $425. This
competitive pricing will help to regain the lost market share and also the decrease
the losses being occurred. The revenue generated might be low but will help the
company stay afloat in the market and buy itself time to come up with a new
strategy.
3. Delay the launch by six months and come up with a new and advanced product
The kind of market the product caters to calls for quality product and the product
development team has assured that it can come up with such product at a lesser cost
in six months. Thus the customer requirement is addressed to a large extent in this
case. Also brand loyalty for this category of product solely depends on features and
quality offered. If the customer perceives new Aerial to be better than BirdsI, it can
easily switch over, thereby enabling the company to regain its market share. Thus it
compensates for opportunity lost in six months and also regaining the brand value.
4. Market expansion and new product launch. The company can look to increase its
market base and target new customers or segments. The product development team
has new ideas for existing product which can be used to target new customers. They
are already behind in the existing market and expanding into new markets will be
good for their revenues and future sustainability.

Recommendation
Company should compromise on its margins and launch Aerial at $425. Meanwhile, they
should continue their focus on improvement to the product design so that in six months
they have a better product at competitive price with desired quality.

Contingency Plan
Company should monitor the sales and revenue generation from Aerial. If they are low, it
should look towards market expansion by developing new variants of existing products to
satisfy the needs of the new target market.