TerraCog GPS

SITUATION ANALYSIS

Terracog was a successful privately held firm specializing in high quality Global Positioning system and similar products. Even though TerraCog 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.

When a competitor, Posthaste, introduced a GPS prototype called „BirdsI‟ that displays satellite imagery, TerraCog did not see any threat, which proved to be wrong. By the time TerraCog realized their mistake in judging BirdsI, the product was a huge success.

In order not to lose the market, TerraCog also plans to launch a GPS with satellite imagery dubbed Project Aerial. As the product was to be launched without any delay, a redesign within existing GPS platform was proposed. However, the projected costs threaten to scuttle the project.

Sales team headed by Ed Pryor feels the new product Aerial should be priced below $425 to capture the lost market share to the competitors. As per the estimate of pricing team, price for sale would, at the minimum, be $475.

The price is quite too high for the sales team to consider. The key unit managers gather in a pair of contentious meetings that feature anger, finger pointing, blame and bewilderment, but produce no effective conclusion. The responsibility of pushing the group towards a decision lies with Emma Richardson, a newly promoted Executive Vice President of the Company.

NOW THE MAIN QUESTION IS: Should Emma Richardson go ahead with the Project Aerial or not ???

PROBLEM ANALYSIS

No clear Agenda Lack of communication among executives

Inter group conflicts Delayed market responsiveness Short-sightedness

Lack of proper research Lack of innovation (redesigned within the existing GPS platform)

Lack of motivation Lack of enthusiasm

Lack of cohesive/common vision Preference of individual goals over organizational goals.

Lacking true leadership

KEY PROBLEMS ??

Short sightedness and lack of common vision/Goals Hurry to enter the market after a significant lag. Lack of Clarity on price and positioning Inter group conflict

DECISION ANALYSIS

Decision 1 Launch Aerial as planned with reduced margin i.e. focus on low price (at $425) Build a foundation in the market and gain consumer confidence. Continue Redesigning and improve the manufacturing process of the product to reduce production cost.Pros Cons• Immediate market presence (BirdsI • Decreased marginand Garmin already there)• Capture sales for holiday season • Pressure on manufacturing and design team to reduce product costs.

Decision 2 Cancel product launch for now. Recreate and redesign a new product with major reconfiguration and moldings i.e. focus on positioning. Hit the market with the new product with a “BANG”.Pros Cons• Maintain Paramount Quality • Declining market share• Surpass Competitors • High risk • Missing holiday sales season

Decision 3 Cancel product launch completely Focus and capitalize on growth in cycling and fitness GPS applications.Pros Cons• More stimulating technically • No share in Satelliteto team members Imagery GPS market• Early mover advantage • High risk• Underserved market: Great • Hamper the brand image ofscope Terra Cog

Decision 4 Emma Richardson works one on one with Team Leaders to address underlying agendas. Arrive on a consensus on price and thenProslaunch the product Cons• Better Coordination • May be too late to change the development process• Basis for consensus • There may be no solution to some problems• Aligns objectives and • Could be highly priced fromdecisions customer’s perspective

Plan of Action We recommend DECISION 2 Cancel product launch for now. Company‟s USP is the quality it offers. It should not compromise on that even if it lags in launching the product.

Why Not Other Alternatives ?? If decision 1 is chosen, Very low margins May fail to reduce the cost of the product Ultimately drive it into losses. If decision 3 is chosen, The project is abandoned TerraCog will completely lose the Satellite Imagery GPS Market Hamper company‟s image. If decision 4 is taken the company‟s customers may perceive the product to be highly priced with compromise on speed, as compared to competitors.

Plan of Action Cont.. Do a proper market research to identify gaps between what is offered and what is desired. Decide on a common goal and vision. Recreate and redesign a new product with major reconfiguration and moldings i.e. focus on positioning. Executives should start encouraging and motivating their teams. Make them realize the importance of launch of this product

Plan of Action Cont.. Emma Richardson should start working one on one with Team Leaders to address underlying agendas. She should start acting as a mediator and a common link for communication between various departments. This would ultimately lead to launch of a perfect product which would not only enhance company‟s image but may also help it recapture its market share.