Problem Identification

TerraCog has been a trusted brand for its hand-held GPS products, especially with customers who
are serious sports enthusiasts. It is losing its market share to BirdsI, a similar product already
presents in the market and is eager to hit the market with Aerial.

It had planned to launch its new product Aerial with additional features like altimeter and
barometer and the redesigned version which includes features like satellite imagery is planned to
be launched in the coming holiday season. But the cost of redesigned Aerial is high, and it is not
profitable to price Aerial below $475, which is $100 higher than BirdsI. Also, at current set price
of $475, company cannot expect enough sales due to price sensitive nature of the product.

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 to launch it after six
months.

From the outset, it appears that determination of launch price and time of the product is the only
problem in the case. But this is only a symptom of the bigger problem within the company.

Decision Areas

Short Term
 Draw communication strategy to create better operational alignment and cross-
departmental cooperation
 Resolve Conflicts - Resolve them proactively, as soon as they are identified
 Communicate - Be open about communication within the team, have individual meetings
with teams and members
 Collaborate - Inter team collaboration to achieve a common goal

Medium term
 How to Launch Aerial product on time
Long Term
 Address quality concerns in Aerial product and keep cost competitive

Objectives

1. Take decision about launching of Ariel

2. Address delayed market Responsiveness: They were already late to the market and were
launching at a market premium
3. Meeting demands of customer - stay connected with them
4. Retain position of market leader
5. Address short sightedness: TerraCog had started losing share to Posthaste, its rival in GPS
devices
6. Come out with innovations - There was an inherent tradeoff between their value
proposition and cost

Criteria for Evaluation

1. Responding to customers’ needs
2. Regaining Market share
3. Sustainability – Quality

Possible Solutions for launch of Arial:

1. Cancel product launch completely - Focus and capitalize on growth in untapped market
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

Evaluation of options
1. Cancel product launch completely & Focus and capitalize on growth in untapped market
 Product development team members had ideas for new products in cycling and fitness
GPS applications
Pros:
o Early mover advantage
o Under served market: Great scope
Cons:
o No share in Satellite Imagery GPS market
o Brand image of TerraCog at stake

2 Compromising on margins, launch Aerial at a competitive price of $425

Challenges pertaining to customer needs in this option are same as that of option 1.
If it is priced competitively at $425, it will help in gaining the market share. But this will
lead to accumulation of losses and is difficult to sustain them for a longer period. It will be
feasible only when the company puts in resources for development of high-quality product
to be launched in six months and is able to charge a premium on it. This will make up for
the losses due to current product. Also transition in the product development cycle will be
smooth and thereby augmenting the brand equity. However, unpredictability of the market
makes this option risky and thus is not preferred.
Pros:
o Immediate market presence (BirdsI and Garmin already there)
o Capture sales for holiday season
Cons:
o Decreased margin
o Pressure on manufacturing and design team to reduce product costs

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 regaining the brand value.
This strategy will also put the company in the driver’s seat rather than being a mere
follower in the market. There is no compromise on margins and thus this option has
positive impact on both top line and the bottom line. Overall this strategy is sustainable in
market where technology is changing rapidly.
Pros:
o Maintain supreme quality
o Surpass competitors
Cons:
o Declining market share
o High risk
o Missing holiday season sales

Recommendation
I would recommend decision two:
Launch Aerial at a price of $425 and continue to redesign and innovate
Company’s differentiating factor is in the quality of its products and it should not
compromise on the same
- If decision 3 is chosen
o Further loss of market share
o Loss of holiday season sales

- If decision 1 is chosen
o The project is cancelled
o Terra Cog will completely lose the Satellite Imagery GPS Market
o Affect company’s image
Action Plan

• Make a common consensus among all departments to launch Aerial at $425

• Initiate an aggressive marketing campaign
• Form an R&D team to redesign the product and take the speed factor into account
• Regular meetings conducted by Emma, so that each department is updated on the project
• This would help company to maintain its image and recapture the market share

Impediments to achieve Action Plan

1. Lack of leadership: As a leader, Richard Fiero, President of the company needs to
give proper directions to other team members, which he fails to do. This is evident from
three instances - initially, when the company did not react to launching of “Birds” in
time. Secondly, when the launch decision was made by Richard Fiero without
consulting all team members and finally when Richard Fiero did not consult Harold
Whistler on the project.
a. Had the management of TerraCog not ignored the idea of shifting to satellite
imagery as soon as Posthaste did it, the damage would have been much less. The
decisions were not made in the right manner.
b. Richard Fiero was persuaded into making the decision to launch Aerial by the sales
Vice President Ed Pryor. Richard Fiero went ahead and took the decision based on
only one source of information – Sales. He did not consult the other team members
– Production, Design and Development.
c. In the past, Fiero and Whistler had been very involved in new products and tended
to make quick decisions. But now, with the impending retirement of Whistler, Fiero
is not consulting Whistler on the project.

2. Inter group conflicts: The team is not united on the common goal. Everybody wants
to protect their own turf.
a. Ed Pryor (Sales) is interested in taking up the product as he is concerned with
compensation packages and does not want to disappoint his sales team.
 b. Allen Roth (Design & Development) and his team are not happy with the decision
made because they feel that there are several other exciting projects that are being
compromised upon. Further Roth has his eyes set on the post of Vice President
(Design & Development), for which he wants to launch some other item of his own,
to which Project Aerial is an impediment.
c. Tony Barren (Production) wants to prove his mettle. While in an earlier production
fiasco, he was held responsible, this time he wants success. However, he is very
conservative on the pricing aspect.

3. Lack of communication: None of the meetings had any fixed agendas. Team was
not clear what the meetings are about - whether it is about setting a price point or
positioning of the product in the market.

SOLUTION FOR THE ORGANISATIONAL PROBLEM:

1. Individual’s & Departmental goals to align with Organisational goals. Emma can talk
to individuals and sensitize them about the common goals and benefits that every
individual will gain out of it.
2. For launch of every new product, an Inter departmental team can be made as the core
functioning group.
3. Last but not the least, Richard Fiero should lead the different departments towards a
united goal.