Terra Cog Case

What was Airborne’s long term strategy to address low willingness to pay among its target customers?

This paper intends to discuss a proposal on analysis of cost and price. The proposal describes a company known as Hi-delta which is a new start company which targets the industry of drone navigation systems.

Our competitive intelligence reports indicate that during Year 6 our company was offering the highest quality AC Cameras as well as UAV Drones, however our products were also the highest priced across the market. These reports also show that during the first year only one of our competitors (Group G) invested a great deal into sales promotions and advertising for the AC Camera segment. In retrospect this could very likely be one of the reasons why or how our competitors gained so much of the market share so quickly. As for the UAV Drone segment, all of the team's invested approximately around the same amount in search engine advertising and retailer discounts.

We recommend that the company extend its promotional strategy used in the western regional launch to the national launch by spending $12.8 million for advertising (=$1.6mil x 2 x 4 regions), while continuing to offer $50 rebate and 5 day free trial. The price reduction to ECPs recommended earlier will strengthen the "push" strategy by increasing their gross margin.

Zoecon Corporation sells a variety of animal-health-related and pest-control products. With a strong growth rate of 10% annually, Zoecon enjoys a 25% before-tax profit without a clear threat of declining demand. However, while the company’s trade relations with pest control operators (PCOs), veterinary clinics, and pet stores, stay strong; the company has found the profit from its consumer-market sector lacking. In an attempt to conquer the consumer market, some of Zoecon’s top executives have suggested heavy investment in marketing efforts for its new product line, Strike Roach Ender. Some other executives find the proposal too risky, and prefer to stay within the company’s comfort zone: the PCOs market. The other

This due to the downward sloping curve facing the market, if the price down the demand. Therefore, to improve profits to invest in advertising, improve productivity and reduce costs.

Cams who had the highest markets shares of 12.9% and 23.2% respectively in 2010; GMS’ increased their share by 0.3% in 2011 which put them above Camadrone Inc. Even though we all had the same discount percentage and warranty period, both competitors secured online retailers above the industry average which differentiated them between the other companies selling at similar characteristics. However, in 2011, Camadrone came out above Hackers because we secured a higher drone market share at 15.1% and had lower prices at $1500 and a higher P/Q rating at 4.2 stars compared to Hackers’ 3.0 stars at $2050 in 2011. Camadrone Inc. is more competitive in the UAV Drone market because we maintained high ratings and low prices in all four markets. Camadone focused on all four target markets, so even though they were not exceeding in North America, they were not falling behind. Camadrone Inc. was competitively stable in all four market destinations which allowed for currency fluctuation buffers. Aside from the strength of Hackers’ abilities to capitalize on large market shares, Camadrone could closely trail behind GMS due to their strength and diversity of their UAV Drones while GMS’s strategy was to focus on the sales of their AC Cameras. This became one of Camadrone’s major strengths against its

Geocaching is an effective way to spend an afternoon, a day, or a weekend. This procedure seems to be taking the rustic thru storm and is answerable for the rising reputation and availability of GPS and auto navigation strategies available on the market in recent years. Many people don’t seem to be simply purchasing minimal strategies that data them to their coordinates with beeps and blips alternatively investing in whole strategies that can provide much more useful tracking and mapping utilities.

Without a unified goal and a lack of leadership and communication, TerraCog has found itself in a tough situation on whether to sell its new GPS system, dubbed Project Aerial, at a competitive price or at a higher price. Their main competitor, Posthaste, has been slowly taking shares from the company with their satellite imagery GPS system that has been on the market for almost two years. As the threat of this competition continues to pressure the company, TerraCog seems to be straying away from its core competency of producing higher quality products compared to its competitors. Internal issues also arise as personal goals within departments interfere with other department goals, hindering the success of their main objective. Emma

Brown’s numbers show strong profitability of $2.4 million due to the 2004 sales promotion, while the consultants’ numbers show a loss of $409,697 due to the promotion. Our intermediate scenario, incorporating cannibalization costs but splitting the difference between the consultants and Brown on both sales figures and variable costs, shows a weak profitability of $106,594 from the promotion. This weak profitability must be held against the negative side effects of price promotions in general, and particularly with regard to premium products.

Similar to our cameras, we designed our drones with basic features and mid level product enhancements, to produce a two point two star level product. Some of these specifications include front and rear obstacle sensors, 6 rotors, and an 8 minute battery pack, etc. By producing only three models of low quality drones, we were able to manufacture and sell our product at a lower cost. We produced our drone for $460.85 and sold it for $1150 to $1550. Similar to our cameras, we invested in research and development, longer warranties, and retailer support/recruitment. Furthermore, our investment in our website product displays and info increased in all regions over the years as we realized a rise in e-commerce for UAV drones, and reacted in order to remain competitive. Our business strategy and operations varied globally considerably more than it did for our entry level cameras. Since we had the lowest market share in North America, we invested a large amount of our marketing efforts in this region. However, consumers in this region were willing to pay more for our product, and our profit margin was highest in this region (56.9%). Our investment in search engine advertising was also significantly higher in this region because North Americans are highly engaged with search engines. Buyers of UAV Drones in Latin America and the Asia-Pacific regions are the most sensitive to price differences across brands, so we balanced factors like quality, profit, and competition in order to create the ideal selling price. As a result of this, we also offered high discounts for third party retailers in Asian pacific and Latin America, 20% and 25% respectively, which was more than double the discount offered in North America and

Evaluating the impact of decision on our business, on our ability to meet customer needs and on our customer relations, it is recommended that TerraCog launches Aerial at a price of $475

The additional 3 months will allow competitors to gain market share. Sales team will have to work hard to regain the lost ground after the launching. However, it will be easier to market Aerial; assuming the new product will have a technical edge compared to its competitors.

I personally believe that Airborne‘s business strategy is play a vital role for emerging industry. It would take a very large

Airborne Express has many options available for sustainable growth and success in the coming years. After the recent 29% increase in revenue over the past year, there are opportunities to take into consideration that will boost this growth for the fourth quarter. This company should join the “industry trend” of distance-based pricing. This will result in higher revenues, and will give Airborne Express a more substantial budget to merge with Roadway Package System in order to create a more technologically advanced tracking system. This