Introduction:
TerraCog was founded in 1977 and is a privately held company that specializes in
high-quality Global Position System and fishing sonar equipment. Through understanding
what their retailers needed in their products, TerraCog developed strong relationships with
its key accounts. The company built its GPS line for outdoor enthusiasts market that
received praise for its durability and value-added features such as barometric altimeter and
integrated compass while outperforming its competing products on navigation.
Situation Analysis:
TerraCogs competitor, Posthaste, introduced their new product BirdsI that displayed
satellite imagery. This was an upgrade from the product that was already in the market.
TerraCog, however, didnt upgrade their GPS with this technology as they were not
impressed with it. They were also convinced that their current product was superior in
accuracy and reception quality compared to BirdsI. Some key buyers and product
reviewers found it an exciting innovation and, because of that, TerraCog has lost some of
its key accounts. Upon seeing this, TerraCog decided to introduce a product similar to
BirdsI called Aerial. Being two years late into the market already, the CEO of the
company, Richard Fiero, wants to launch the new product at the start of the third quarter.
The executive Vice President, Emma Richardson, has to meet with her team to finalize the
price of Aerial. The current prototype of Aerial is priced at $475, which is approximately
$100 more than its competitors, BirdsI of Posthaste as well as Garmin. Their Design and
Development Director, Allen Roth, wants to reduce the price so that the retailers would
want to buy their product as opposed to their competitors as it is much cheaper. However,
upon much deliberation, the team was not able to reduce the price of Aerial as low as
BirdsI and this is causing Emma Richardson to think of different options and alternatives.
Option 1: Keep the price $475
There is a lot of pressure on TerraCog to enter the market with the Aerial. Retailers and
customers are expecting them to introduce a product that has satellite imagery. Posthaste
will have introduced the BirdsI almost 2 years ago by the time TerraCog is ready to launch
Aerial. The biggest issue for the company is that they will not be able to meet the price
point they were aiming for. However, the company has reduced the costs to the lowest
levels possible. At this point, they must opt to introduce the product unless they want to
