Terracog Case Study
Case Analysis
Problem essay
The key issue is to get every concerned person to reach an agreement on the price point for Ariel, TerraCog’s 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 Arial’s price at $475, around $100 more than the current full featured TerraCog GPS and higher than closest competitor Posthaste’s 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 Posthaste’s. The increasing customer demand for such product and TerraCog’s 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, Posthaste’s 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 company’s 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