Techsonic

INTRODUCTION

After several new product failures, the company began using customer input to help develop new products. In 1989, the fishing electronics industry is experiencing a downturn, and the company's sales and profits are slipping. The company, which has one product line (depth sounders) and a strong brand (Hummingbird), has conducted substantial market research on three new products. These products are project 901, hummingbird VHF Radio, Locator/ GPS navigator. Of these, project 901 is an extension of the depth sounder product, while the other two would be new product lines for the company. Top management is deciding which one or more of the three new products it should proceed with. In this paper, I will discuss the positive and negative aspects of each product ideas and my recommendations to Techsonic management

New product ANALYSIS

Listening to customers is the foundation of techsonic corporate structure. As sich techsonic business strategy puts customer needs on top of all initiatives.

In this section, I will analyze the each techsonic new product ideas to make a decision of GO/ NO GO for each idea. I will measure each product using the following criteria.

1. Will the Project align with Techsonic business strategy?

2. Importance of the project to the business?

3. Extent to which the product will meet customer needs

4. Market size and growth rate if the product is commercialized?

5. How the project will leverage our marketing, distribution, and technological and manufacturing strengths?

6. Is the project technically feasible?

7. Expected profitability based on NPV?

Project 901

This product is an extension to depth sounders. It is aimed at satisfying the important benefits that anglers sought 1. Find Fish Faster and 2. See Fish Better. This product is already developed by Techsonic from the case and will satisfy the above benefits.

Positive aspects of the product

* From Exhibit 5, 901 project is a clear winner because it scored high on the dimensions of uniqueness and purchase likelihood.

* 901 earned high uniqueness score of any techsonic product and highest intention to buy score since the original LCR in 1984

* Fresh water fishers and mid sized boat owners were the most likely to buy the product. From exhibit 4, techsonic already is a market leader in freshwater LCD units and 901 would increase its market share.

* Based on techsonic retail pricing plan of $441 for standard unit and $629 for deluxe unit, 901 would represent sales of $71.2 million.

* Important perceived benefit of 901 is that it helped customer find fish faster and see them better, which is exactly what the customers are looking to get from a depth sounder product.

* 901 can make fishing easier and hence more fun for the customers.

* Exact features that customer wants in standard and deluxe models was easily obtained through market research

* MRF suggested retail price of $529 for standard model and $629 for deluxe model Which is more than what techsonic had initially estimated

* Techsonic can continue to distribute project 901 products through mass market channels since customers are already aware of depth sounders.

Negative Aspects of the product

* Project 901 is an extension to LCD depth sounder and won't compete with Morpal's Flashers or Chart

* Project 901 would attract only freshwater fishers and won't attract water fishers. Morpal's charters are the popular product for salt-water fishers.

Based on the positive and negative aspects of project 901, scorecard of the project is as shown in Exhibit 1 indicates that this project scores a total 69 on a scaled of 1-10 to each criteria. Net present value is also positive as shown in exhibit 2.

VHF Marine Radio product

VHF Radios are used primarily for safety: to communicate for help in emergency and to find out the weather. VHF is also used as a popular method of communication among boaters. VHF radio is very fragmented with various brands (none of which had more than 3% market share) had a combined market share of 45%.

Positive Aspects

* More than 2/3rd of respondents had VHF and about 1/3rd had citizens band radio.

and about 2/3rd installed radio themselves . So customers are generally aware or

know about VHF radio

* Most of humming bird customers owned either very old brand CB radio or No radio at all. Infact 7% off humming bird customers owned VHF and 42% owned a CB Radio. So if Hummingbird comes up with a VHF product it is easy to target it current customer base.

Negative Aspects

* Techsonic was quite weak in Marine dealers (Margins 30-40%) channels were radios are purchased. 56% of respondents purchased their VHF radio from Marine dealers.

* Major problems with VHF are: durability, battery dying and the absence of waterproofing. Adding to that, It was not clear what impact solving these problems would have on brand choice

* Hummingbird radio would potentially force a removal of another hummingbird product from retailer's shelf.

* Techsonic decided to set $269 as the expected retail price for the radios and a net dealer price of $195(15-35% margin for dealers). However this would make humming bird radio a high-end radio and mass merchandisers would like to sell the radio for $199 (Mid end radio).

* First hummingbird product to be manufactured outside the company.

Based on the positive and negative aspects of VHS radio , scorecard of the project is as shown in Exhibit 1 indicates that this project scores a total 53 on a scale of 1-10 to each criteria. Net present value is negative as shown in exhibit 2.

Navigation Products

Most commonly used Navigation system for recreational

...