Situation Analysis:
Operating successfully since 1977, TerraCog has been a specialized producer of high-quality Global Positioning System (GPS) and fishing Sonar equipment. Serious sport fishermen & boaters were its initial consumers but with introduction of GPS in 1990s, it has specifically targeted hunters, hikers & campers as its consumer. TerraCog enjoys high reputation in the market due to its products which are known for high quality, durability & integrated value-added features.
TerraCog has always followed a lag principle in product innovation & marketing under which it developed far more superior products after thorough study of its competitor’s products addressing deeper customer needs. Proper utilization of user & retailer feedback,
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So, TerraCog cannot move ahead on the assumption that customers are ready to compromise on speed in order to buy their product. At a price of $475, Aerial would be $100 costlier than BirdsI & hence the value perceived by customer may not prove to be justified. It can also be concluded that with low speed, the current design of Aerial doesn’t take care of customer needs. Since the value-proposition & customer needs both are doubtfully catered, launching the product will not guarantee the capturing of lost market share, in fact it can cause further losses if the sales team fail to push it into the market.
2. Launch Aerial at $400 compromising on margins:
Selling Aerial at a price which is anything below $475 is going to add to company’s losses as there is no margin of profit available. At a price of $400, Aerial will regain the lost market share to some extent but in long run it won’t be able to continue the sales due to losses being accumulated. Moreover, the dubious status of perceived value-proposition & fulfilment of customer needs will still exist due to slow performance issue of Aerial.
3. Postpone the launch for another 6 months & come up with more advanced