Executive Summary
TerraCog, which has been facing a drop in sales of its GPS products, had decided to meet consumer demands of a product with satellite imagery display by launching Aerial. However, the decision to launch Aerial has met with a roadblock on price. On one hand, the Production and Design & Development departments have expressed their inability to cut down price below $475. On the other hand, Sales department has shown a resistance for a price over $425.
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
[109 words]
Table of Contents
Situation analysis 3
The Problem 4
The Options 4
Criteria for Evaluation 4
Evaluation of options 5
The Recommendation 7
Action plan 7
Situation analysis
TerraCog is a relative successful company specializing in GPS and fishing sonar equipments. TerraCog is known for its ability to convert user feedback into products which outmatch its competitors in addressing customer needs. GPS products offered by TerraCog are lauded for their durability and value-added features.
In 2006, Posthaste, a competitor, launched a GPS product called BirdsI which used satellite imagery as display. BirdsI has a visual appeal to the customers and has shown impressive sell-through rates last year. Consequently, customers have been demanding a product having satellite imagery display from TerraCog. In response to this, TerraCog decided to launch a product called Aerial. Both, the President and the Board of directors of TerraCog have shown a keen interest in ensuring a successful launch of Aerial.
In order to keep costs lower and speed up th...
... middle of paper ...
...the past experience, customer is expecting a user friendly product from TerraCog. Absence of such a product would have a negative impact on the customer relations
c) Impact on business – If Aerial is not launched, the market share of the company is expected to decline by 10% based on past trends, despite the fact that market for GPS products is growing. Hence, option of not launching Aerial would have an adverse impact on the business of TerraCog.
The Recommendation
TerraCog should launch Aerial at price of $475 in order to meet customer demands & expectations and increase its business
Action plan
Following series of actions are proposed to follow up on recommendation:-
1. The production team is to stick to the timelines that had been finalized earlier
2. Sales team needs to reconsider positioning of Aerial in the market as per the new cost estimates
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
- CIMA Mountaineering customers select their products perhaps based on their design, the quality of workmanship, and the safety features. I feel that price should not have an influence in the decision-making process because dealing with this case the purchasing process should be based on the safety feature, which is more important than the price tag.
Warren Buffet once said, “Price is what you pay, value is what you get.” These words have a very significant meaning when a business is looking to make a major decision. Everyone knows the price of buying a new piece of equipment, but very few understand the value. When searching for large growth opportunities it is the value of the equipment that matters, not the price tag. For your company, the Toyo Jidoki TT-9CW offers value far beyond the numbers on the price tag.
In order to measure the impact of United's price increase, we would need the price elasticity of the demand. The main problem is that there is no agreement as to whether, generally speaking, air transportation is or is not relatively price elastic. There is ample evidence that the introduction of deeply discounted fares by the low cost carriers can be very price elastic, although, each type of traveler has its own price characteristics.
Satellite radio is a technology that provides a radically new way to listen to radio. XM’s service makes use of advanced satellite capabilities and elaborates terrestrial receiver architecture to deliver a wide array of high quality radio programming nationwide. In early 1998, Robert Acker, director of strategic planning at XM, needs to develop a marketing strategy for this new radio service. There are several decisions that need to be made by the company in order to finalize the business plan. At fist XM needs to decide which of two business models to pursue, whether emphasis should be placed on charging customers a monthly subscription fee, or whether to rely more on earning revenue through advertising. In addressing this problem, management must consider the value that XM radio could propose for different consumer segments as compared with existing modes of radio (AM, FM) and in relation to its sole competitor in satellite radio – SIRIUS. Besides choosing a business model there is also a need to explore how best to approach and leverage manufacturer and channel partners, considering high unknown and high-risk technology. The purpose of this report is to analyze possibilities and outline possible recommendation on strategies for XM Radio. The following areas will be examined:
Atlantic Computer is a large manufacturer of servers and other high-tech products. They are known for providing premium high end servers. Atlantic Computer’s is in the process of introducing Tronn, a new basic server, which includes Performance Enhancing Server Accelerator (PESA) software. This software will allow Tronn to perform up to four times faster than its standard speed. Therefore these two new products were specifically designed to sell as a bundle or “Atlantic Bundle.” Jason Jowers, fresh off of his MBA degree is responsible for developing the pricing strategy for the “Atlantic Bundle. After much research Jowers narrowed down to four different routes on how the bundle can be priced: status quo, competitive, cost-plus, or value-in.
First off, when companies advertise they need to have a plan. How much is the company going to spend?
Being a technological piece of art and mechanically robust machine, sales expectations were too high. Segway was predicted to be the fastest company in open era to hit $ 1 billion dollars in sales and they were so optimistic they erected a 77,000 square feet factory that can produce around 48,000 units per annum with an average price of $ 5000. However, only 6000 units were sold.
Firstly, in assessing ourselves, we determined that our BATNA associated with $37 million. I comprised the cost of building a new plant ($25 million), loss of profits in 12 months ($12 million) and the cost of 90 day option to buy land ($0.5 million). A non-refundable expense of $10 million on buying the option for the land is considered the sunk cost. The maximum amount of money that our group could spend on this buying intention is $40 million. We decided that our target point would be $16 m...
The another pro is that they will soon democratize internet access. "More than half the global population lacks Internet access, but with its purchase of Titan Aerospace in April, Google could bring millions more online. According to an early report, "once the tech is dialed in, Titan’s 164-foot-wide solar-powered craft will soar at 65,000 feet, bringing new parts of the world online." With the use of drones helping boost Wireless Fiber optics (WiFi) capability it bring better education to countries that lack in it."
(Target costing is “a structured approach for determining the cost at which a proposed product with specified functionality and quality must be produced to generate a desired level of profitability at its anticipated selling price.”) In order to properly achieve target costing a company must complete the following steps; determine a market price point for the proposed product, calculate the target cost by subtracting the desired profit from the target price, reiterate the product design to achieve target cost, and finally revise the market price following the redesigned product and current market conditions. This mistake in the implementation of target costing led to missed opportunities to reduce costs through the redesign of product components and tooling. The missed cost reduction opportunities resulted from the hasty decision making in the design phase, Billings accepted early component designs without additional cost reducing
All these improvements will boost profitability by identifying at least or more that EUR 30 mio required by U.S.A headquarters. However, we believe it is not realistic to manage all this turnaround in 1 year’s time. It might take from 2 – 3 years.
Drones are used by universities, scientists, governments, ecologists, environmentalist, bureaus of land management and many other organizations to study wetlands and waterways, endangered species, herd health, erosion, track evasive species, identify blight growth, assist smoke-jumpers in forest fires, and take water and soil samples from inaccessible areas. Environmentalists have definitely maximized opportunities to use drone technology in their field of work.
In an unpredictable market customer perception is often the most viable source of information. It is difficult to directly benchmark the CAR prototype against other market offerings and therefore a value based approach could provide a better understanding of the price ceiling. Andy and Marc point out that value-informed pricing techniques are superior for products with a high relative advantage. With the current climate debate heating up, the CAR’s zero harmful emissions and low fuel costs boost its competitive advantage over petrol based cars. Yet risk per se cannot simply be av...
For example, the chart would reflect the correlation between demand and the products price, or in the case of supply, the supplied products and its price. Moreover, supply, demand, and price, along with supply elasticity can be graphed and analyzed. This particular method of tracking and analyzing data is essential in identifying the markets status and determining the best plausible route (Skousen, 2014). By studying supply and demand, one is also able to identify whether an excess or a shortage in demand or supply is occurring, or whether an equilibrium has been attained. Consequently, it is evident that supply and demand take part in the market economy and greatly influence and impact the price value. Furthermore, to express how supply and demand impacts the price value, the price value of airline tickets will be utilized as an