TERRACOG GLOBAL POSITIONING

SYSTEMS: CONFLICT AND

 Memorandum

Date: 14th March, 2008

To: Emma Richardson
From:
Subject: “Project Aerial” Launch Decision

The purpose of this is to analyse the current situation at TerraCog regarding the new product
launch – Aerial.

The report has been kept simple and brief to make the users aware of the ongoing conflict
regarding Project Aerial and its launch price. Given the launch target is in six months, the
report analyses Aerial in relation to price, product positioning and product performance.

Additionally, it aims to evaluate the situation with an aim to better understand the existing
gaps in the communication channels and address the concerns of various stakeholders. It
would also aid in finalizing the required strategy with regard to the Aerial’s launch.
 Situation Analysis

TerraCog GPS devices has been working on a new prototype “Aerial”, a GPS equipped with
satellite imagery in response to existing competitive product BirdsI, launched by Posthaste in
October, 2006 (see Exhibit 1 for event timeline). TerraCog has had a history of launching
better quality products, targeting the niche industry of serious outdoor enthusiasts unlike their
competitors who have focused more on automotive industry. Catering to customer needs has
benefitted the company even after launching its offerings post competitors. Given the
company’s success by differentiating itself, the R&D department is working on a new line for
cycling and fitness industry.

After the successful launch of competition’s product in market, Sales team at TerraCog has
been anxious for their losing market share and resultant sales targets. To directly compete
with other brands, company President, Richard Fiero, and Vice-President of Sales, Ed Pryor
decided to launch Project Aerial with a redesign of their existing GPS platform to minimize
costs and ETA. However, in the process of rushing things up, the design and development
team had to abandon other projects and work on Aerial. The launch target for 2008 holiday
season was set without discussing with Allen Roth, Director – Design & Development.
Simultaneously, the sales team worked on product marketing and positioning overlooking the
cost estimates of the redesign. The communication gap in-between the departments and
individualistic approach to reach the target goal has now led to a strenuous situation in the
company.

TerraCog has consistently launched products which are better than their competitors and their
own predecessors in performance, speed and quality. However, Aerial has failed in those
parameters while chasing a better imagery. Also, the company is not sure if the feature will
add any real value to their target audience given the trade-off with speed. Being already late
to market, launching the product at a premium price will become even more difficult if the
company is not able to showcase why they are better than BirdsI (See Exhibit 2 for
Competitor Pricing). This could lead to a hit on the brand value of the company for offering a
sub-standard product and also affect their current brand positioning of being the go-to brand
for hikers, fishermen and campers. Additionally, given the cost estimates, the pricing is
coming out to be on a much higher end (Target price by Sales: $425; Price as per cost
estimates: $475) which could further lead to a loss in sales opportunity of their current
product portfolio. With increasing number of people getting involved in the project, it is
becoming harder to reach a consensus, specially with increasing inter-departmental conflict
of opinions on the next course of action. Moreover, there is some scepticism in senior
management about Tony Barren given his performance in the last project which has led to a
risk-aversion approach by Finance and Production.

The current situation requires a thorough evaluation of available options while ensuring inter-
departmental coordination and communication in order to maximize profits during the
upcoming holiday season.
Exhibit 1: Timeline of Events

October, 2008
Targeted Launch of Aerial

14 March, 2008
Aerial Pre-Launch meeting resumed;
Agenda: revised costing and sales price

7 March, 2008
Aerial Pre-Launch meeting;
Agenda: Launch price

Late January, 2008

Pilot Run for Aerial, passed to
production

Early 2007
TerraCog prepares to enter
new GPS sub-markets

Late 2007
Design & Development
of Aerial

October, 2006
BirdsI launched in the
market with impressive sell
through

Spring, 2007
Project Aerial launched

Summer, 2006
BirdsI prototype launched
at Outdoor Retailers Show

Late 1990s
Production shifts to
Shenzhen, China

1990
Diversification in GPS

1977
TerraCog starts with
Sonar Equipment
Exhibit 2: Price of Aerial vs Competition (approx.)

PRODUCT/ BRAND PRICE

Current Full Featured TerraCog GPS $375
Estimated Aerial Launch Price $475
BirdsI $400
Garmin $395

(Word count excluding Title page, Memorandum & Exhibits: 498)