Rakesh Ranjan

First Draft

PGPEX 3 32/3

Case Analysis
Problem essay
The key issue is to get every concerned person to reach an agreement on the price point for Ariel, TerraCogs envisioned new GPS product with satellite imagery. In the follow up Arial pre-launch meeting, the production and design team after reviewing came up with the Arials price at $475, around $100 more than the current full featured TerraCog GPS and higher than closest competitor Posthastes product priced at around $400. Sales team showed resistance for price above $425. Posthaste is already ahead of TerraCog in terms of GPS product with satellite imagery, a product concept initially dismissed by TerraCog, by around two years. TerraCog was never the first in market but would always catch up with better quality similar product. Here again, market was expecting that TerraCog will come up with a high quality product similar to Posthastes. The increasing customer demand for such product and TerraCogs loosing share to Posthaste was putting pressure on it to come up with similar product for its customers. Product development team were toying with new ideas for products but had to put it in backburner because of the Arial project. The new product would capitalize on the growing cycling and fitness GPS application market and this will put TerraCog back in market leader position. Allen Roth, Director, Design and Development, was not enthusiastic about focusing on Arial project, He was eager to show his readiness to be next VP after Harold Whistler, VP, Design and Development, resigns. The new product line would have provided Roth with project that he could truly call his own and also provide an opportunity to showcase his abilities.

Decision essay
TerraCog should launch Arial at $400 to compete with Posthaste and regain market share. It will position the Arial ahead of BirdsI, Posthastes product, as Arial is technically superior and with better quality but will be at same price. Product development team should then on focus on developing high-end model for growing cycling and fitness GPS application market, conforming to the brand image and

quality reputation of TerraCog. This new model can be launched at high price premium resulting in higher profitability, and also establish the companys image of exceptional product design and functionality. Alternate option could be to Launch Aerial at $475. This option is not viable as evidenced from the case. BirdI with retail price as $400 already has first- mover advantage and has maintained it for two long years. Another competitor Garmin has announced its similar product around $395. So, gaining back market share would not be easy with such premium pricing. Product development team felt that they could redesign the product if launch is deferred by around six months. They could resolve the issues with product making it less costlier and also the resulting product would be superior and better positioned. However, from the case it can be inferred from the case that it is not possible for the product team to design the product below $475. Also, Posthaste would not sit quite but will work towards improving its existing product. By the time, Garmin would have launched its product at $395 putting more pressure on others to lower the cost further. It then would be even more difficult to position itself against two products lower in cost even though they might not be technically at the same league. Abandoning the Arial product and focus on building other products whose ideas they have in mind could be another option. As Richardson had mentioned that their reputation for quality is paramount hence they can save themselves from launching a product that is not at the same league as their competitors in terms of quality. But this could be detrimental to the long term brand value of TerraCog. TerraCogs customer are expecting product similar to BirdI and will see the satellite imagery in GPS system as expected functionality. Longer their product has a functionality gap more they will erode their corporate brand image. Erosion of brand value will have an impact on their other product offerings. Customers might switch to Posthaste as they might see it as one that is providing the latest technological product.

Action Plan
TerraCog should first stabilize their falling market share and then work towards regaining their market share. Launch Arial immediately in the market positioning it competitively against BirdI. Price it at $400 and it will be at par with BirdIs pricing. Case specifies that Arial is technically superior to BirdI and with more sophisticate graphics though relatively slower. As Ed Pryor, VP, Sales, pointed out that their customers are tech savvy and hence they will understand the trade-off between sophisticated graphics and the speed. They should market it as a sophisticated gadget carrying latest technological features. This will set the expectation of customers right and they would not feel let down by the speed but would feel thrilled to be owning a latest gadgetry. Design and Development team can start working on the new product ideas and also parallel work on redesigning Arial to sort out current issues in the product. The current Arial product will help TerraCog curtail the fall in market share. But they will

need the new product line to regain their lost market share and also grow further. Design and Development team already has ideas for new product and they should capitalize it to take on the growing cycling and fitness market. Customer sees TerraCog as an organization that values quality and hence they do, after the launch of Arial, will start expecting TerraCog to come up with updated version of Arial that is faster and better. Design and Development team can come up with a better design for Arial in another six month or so as indicated by them and TerraCog can launch the new version of Arial in eight to ten months.