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Techsonic Industries: Take Home Case

1. Single minded- devotion to listening to the consumers could lead to problems and may
not have been the reason for Techsonics success.
a) Effective product development strategies may rely on input from your existing customer base.
These existing consumers are willing to help develop a new/better product. Although, there may
be some limitations with this approach. By asking customers, the innovation process becomes
diluted as they are only limited to their own experience. These could be incremental changes that
arent innovative enough, and competitors are able to enter. It also becomes an issue when
consumers do not want new features or functions on their products as they dont believe
improvements are necessary; their current product is already the status quo.
Consumers are usually unaware of the evolution of technologies in an industry, they focus on
existing technology. It becomes difficult to assess the value that a breakthrough in technology
may have on consumers. (as may be the case with GPS product). This accounts for a high
percentage of product failures, without considering barriers to adoption.
Consumers also tend to under-weigh benefits and firms tend to over-weigh them, finding the
middle ground may be challenging.

b) Through their research, especially in focus groups, they surprisingly learned what their
customers really wanted. Their LCR product had emerged as a success due to points that were
brought up in focus groups, such as less buttons and simpler layouts. From them on, Technsonic
placed their consumers as the foundation of their culture.
The GPS product has a technology breakthrough that consumers may not be aware of. Techsonic
may be vulnerable to over-valuing the particular product and consumers being more skeptical.
Also, solely listening to customers limits their innovative mindset, they had become a mid-level
product. MorPal had become the technological leader, some considered Hummingirds fish in
red a gimmick but worked well with consumers because it was simple.

c)Techsonics success come from a number of different factors. Their ways of communicating
were paramount to their success. Starting with their company culture of putting customers and
their outlooks as a priority. They would listen and use feedback to better their products. They
would gain knowledge first hand, through focus groups (MRF), and address specifics about their
products.
Their vision to focus on growth through new products and proving outstanding service set them
apart from their competitors. Their reputation for quality and standards of service kept a loyal
consumer base.
They have a strong supply chain in place, mostly through mass merchants and catalogers who
have lower gross margins than marine dealers. They were perceived as the pioneer for many of
the industrys first products, which gave them a loyal customer base as well.
Their promotion of products played an important role in their success. They would feature
regularly in fishing magazines and would show their new products at trade and boat shows.

2) Criteria used to evaluate three new products

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Features of Product (Exhibit 8): Necessary to include only features that provide value to
the end-user. It should better that of other companies in the market. What is unique about
their product?
Profit and Loss (Exhibit 9): To see if the product is viable it has to be profitable. They
need to measure the margins needed to work with marine dealers or merchants. Capital
Expenditures must be less than Earning before tax. Do they expect to be profitable? In
what year?
Customer Interest (Exhibit 5 for 901) and Purchase Intent: They need to create a
demographic for their consumer base. They need to compare previous products and test
new products on the market to gauge reaction. The extent to which the product meets the
customers needs.
Market Potential and Size: Techsonic have potential customer information for the first,
second and third years. They need to measure sales over these years and how high
potential for market growth is. Are they also going to attract new consumers to the
market? If so, how many will they capture?

3)Product 901
a) This is a product extinction of the depth sounders which primarily find fish faster and see fish
better. It scored high on uniqueness and how likely consumers would purchase it (customer
interest high). It bettered the past new products of Techsonic, most likely replicating that success.
Although technology played an important role in the uniqueness of the product, consumers were
no longer amazed by it. Also, consumers who are very likely and somewhat likely are a big
part of the sales forecast. These above assumptions may make the market seem bigger than it
actually is. The price was not precisely tested in the market, and it was rather estimated on
responses of a price range would pay for.

b) It is more likely to overestimate demand for the 901. The assumption of somewhat likely
consumers as potential sales for years 2 and 3, is overestimated. Also, the sales forecast is based
on the money people said they would spend on their next depth sounder rather than Techsonic
offering a reasonable price to them. It was based on a reasonable range.
Many consumers also may not know the benefits of using the new 901 product until they try it or
see someone trying it. As of now, they may not have problems with their current fish finder and
not sure if the new product will fix any problems they are having until they test it.

c) For the 901, I would recommend removing the deluxe model completely as the most important
features are already included in the standard model. The deluxe line will not sell as much and
may prove a failed product. Techsonic should provide consumers and marine experts with a trial
run for the product and measure the responses from the consumers. I dont believe that, in
Exhibit 6, they should include somewhat likely purchases for the Hummingbird in their
forecast. This is an unpredictable assumption that the 2nd and 3rd year sales are based on.
I believe they should have also included a specific price they would sell. I would consider more
interviews than 375 should be conducted (500-750 is a wider scope) and they should focus on,
more than proportion, freshwater consumers as that is where the majority of fishing takes place.
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4) I strongly recommend that the GPS navigation product should be launched. The Locator
system seems obsolete in technology and the evolution of the technology will provide a market
opportunity. As technology also develops, costs of the navigation product will reduce and
therefore the prices accordingly. It solves the problems of using an unreliable and inefficient
Locator system, that consumers also found difficult to use. This category also doesnt have a
dominant market leader, nor are competitors (such as MorPal) are considering GPS products.
The forecast shows that the GPS is very profitable, more than the Locator. The option to create a
joint venture is beneficial, as this would put Techsonic in a unique position with experienced
partners who create low cost GPS products. It also opens the door for other GPS consumer
applications. This system is also profitable, especially in year 2 and 3, according to the forecast.
I do not believe that another simpler locator is needed, but rather the GPS replacing it
completely.

I similarly recommend the launch of Humminbird 901 system. The new product addresses the
issues that consumers have with fish finding. It is able to see fish better and find fish faster. It is a
unique product and serves the market with two different product options. The research among
consumers show similar patterns to that of previous successful new products by Techsonic. The
forecast, even though may be overestimated, shows that the 901 is extremely profitable from the
first year and grows exponentially over the next two years. Capital

I do not believe the VHF product is viable in the market. The concerns among the distribution
channels are justifiable. Techsonic has a weak presence with marine dealers (due to margin
concerns) where the majority of radios were purchased. Among other channels, Techsonic may
have to remove another product to launch their radio as mass merchants are unwilling to increase
allocation of stock keeping units. It requires more shelf space. Their pricing strategy as a mid-
point product is quite high. Their pricing is among high-end radios and their current reputation
will not work in favor of this. They may also need to reduce margins so they can get space
among retailers, this could change their profit forecast substantially. The first year also shows a
loss in earnings and does not exceed capital expenditures.

5) Their NPD process relies heavily on what consumers tell them. It can be beneficial as past
experiences indicate success, but may create limitations as mentioned in part(1). Listening to the
customer only, may deter them from technological advancements and they will base their
products solely on what consumers know through their own experiences. They also needed to be
more specific with their pricing strategy and proceed to giving consumers test products. I believe
they need to test the product in the market with trial-runs among lead-users and marine experts.
This will improve the feedback they receive and go back to the drawing board if need be. It will
improve the information base of their own product and realistically how consumers value their
products. They need to be more skeptical with their forecasts and market presence, especially
with 901. Their forecasts need to take into account the best and worst circumstances possible
(they can create 3 forecasts). They should position themselves as the pioneers, but only if their
NPD process is more assuring.