Terracog Global Positioning Systems

1237 WordsSep 2, 20085 Pages
Letter of Transmittal To Ed Pryor- VP, Sales Harold Whistler- VP, Design & Development Tony Barren- Director, Production From Emma Richardson- Executive Vice President Date 17/03/2008 Subject: Pricing strategy & viability of “Project Aerial” Enclosed report deals with the launching price problem being faced by TerraCog for its forthcoming GPS product Aerial, different options that are available to the company, selection criteria for evaluation and proposed solution along with action plan and contingency plan. Executive Summary There is significant disagreement over the proposed pricing of Aerial between the different departments. Presently TerraCog has 3 options. It could offer the product at a price which is…show more content…
Though production is presently working on a couple of other exciting projects, keeping the company’s best interest in mind, they should work for another 3 months on “Project Aerial”. 2. Increase in Market Share 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. 3. Performance of the device The additional time will allow TerraCog to make adjustment with the design. Even, development team can think of building it in a new GPS platform which will also improve the current slow processing speed. B. Launch it according to schedule at $475. 1. Profitability Margins & profitability at this price will be good unless there is an increase in input costs. Although CFO thinks another $25 increase is necessary to be on the safer side that is not possible considering competitors aggressive pricing. 2. Increase in Market Share Increase in Market Share could not be guaranteed as there are similar products from competitors at substantial lower price. Although it is expected, that the product will be able to retain TerraCog’s customers who would otherwise shift towards its customers products. 3. Performance of the device The device is built on TerraCog’s
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