TERMI NUS

Technology Medium difficulty

Product launch Interviewer-led case

This case is about a high-end computer hardware company planning the launch of a new product to
disrupt the personal computer and mobile device markets.

The case involves challenging exhibits. It tests all areas of the scorecard.

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Problem definition

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Our client, Terminus, is a fast-growing company that started out making computer peripherals such as

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high-end mice, keyboards and headsets. A few years ago, it successfully launched a line of high-end
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laptops. After securing venture capital funding, they are researching new niche products.
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The company has decided to launch a new portable computer that they think would disrupt the entire
industry and change people’s lives. The new product is a powerful computer and hard drive about the
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size of a notebook that has no input or output devices and no screen or keyboard. It generates a wi-fi
field around the wearer and can instantly connect to any other device such as phones, tablets, and other
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computers. Any device will sync with the product, which will behave as the user’s own computer. It is
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designed to be worn on your back and is small enough to be barely noticeable. It can be worn under or
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above clothing and is always connected to the internet through mobile technology.

Terminus’s goal with this product is for users (individuals and businesses) to have a powerful computing
machine available at all times to eliminate the need for multiple computers. This would also bring down
the cost of devices like phones and computers as they would no longer need high processing power and
dedicated storage.

You were hired to help Terminus develop the new product’s launch strategy.

Terminus - 1/9
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Question 1 (Structuring)

What factors should Terminus consider to launch the new product?

Additional information

The client has already decided to launch the product. They want to understand how to make this a
successful launch and maximize their profit.

Product offering:
• High end laptop line for artists, musicians, and gamers – recently began targeting business
professionals

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High-performance computer peripherals – mice, keyboard, headsets, and joysticks

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• Robust driver software that can sync all Terminus products

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New product features:
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Allows for data portability and preferred configuration, eliminating need for multiple high-end devices
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• Connects to mobile network through 4G/LTE and is 5G compatible

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• Generates its own wifi network and connects to other wifi networks
•
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Bio-metric security (more secure than cloud storage) and 60-hour battery life
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• Lightweight wearable, improves posture

• Variety of designs:
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˗ Invisible under clothing

˗ With lighting effects to be worn on top of clothing
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˗ Blending with business attire

Terminus - 2/9
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Possible answer

1. Understand demand, for key customer segments

a. Use cases
b. Competing trends (e.g., portable computer market, cloud computing, mobile technology)
c. Willingness to pay
d. Size

2. Define marketing mix

a. Product offering (product features, time to market)
b. Price
c. Brand and advertising

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d. Distribution

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3. Expected profits in ai bin

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a. Set up costs
b. Fixed costs
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c. Gross margin (price minus unit cost)

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4. Implementation & risks

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Terminus - 3/9
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Question 2 (Judgement & Insights)

The client has shared these exhibits with information about shipments of different types of devices and
their penetration of each age group (share Exhibits 1 and 2).

What can you conclude from this information?

Possible answer

• Steady decrease in desktop PC shipments indicates a growing preference for portable, smaller-sized
systems over desktops
• The younger generations have high ownership of laptops, tablets and gaming consoles. This

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suggests this could be a good target market for our product, as it caters to mobility and can provide

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additional power for gaming applications

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However, shipments of laptops and tablets are projected to fall over the next few years This could be

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explained by:
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A decline in first purchases (i.e., people are already equipped)

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˗ A decline in replacement rate (i.e., those who are equipped keep their laptops and tablets
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longer as innovation slows down)

˗ Increased competition from smart phones, who are becoming increasingly sophisticated (e.g.,
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larger screens, more power)

• Overall, this suggests that:
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˗
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We should target the younger generations (Millenials and GenX), particularly those who game
˗ We should analyse potential competition from increasingly sophisticated smartphones, which
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could make our product obsolete

Terminus - 4/9
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Exhibit 1: Shipments of tablets, laptops, and desktop PCs worldwide from Y-6 to Y+3 (Forecasted)
(in millions of units)

375 406.8
332
227.3 303.5
145 229.7 269.4
76
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201 209 201

180.9 174.3 194 202 196.6 170 170.4

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155 148 134.4 133.9 129 127 123.1 121.1 121

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Y-6 Y-5 Y-4 Y-3 Y-2 Y-1 Y0 Y+1 F Y+2 F Y+3 F
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Desktop-PCs Laptops Tablets

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Exhibit 2: Share of device owners in each generation of American adults

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Younger Older Silent

Millennials Gen X G.I. Gen All adults
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Boomers Boomers Gen.

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Cell
95 92 86 84 68 48 85
phone
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Desktop
57 69 65 64 48 28 59
computer

Laptop 70 61 49 43 30 10 52

Game
63 63 38 19 8 3 42
console

e-Book
5 5 7 3 6 2 5
reader

Tablet /
5 5 4 3 1 1 4
iPad
None of
1 3 8 8 20 43 9
these

Terminus - 5/9
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Question 3 (Numeracy)

The estimated cost to setup manufacturing and distribution for this new product is $1.2 billion and the
cost of producing one unit is $800. Worldwide market forecasts estimate annual demand for the product
will vary with price (Exhibit 3).

What do you think is the optimal price for this product?

Possible answer

The optimal price would be the one among the three scenarios that yields the highest revenue for the
same cost.

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Price scenario Variable cost Gross Margin Annual demand, Gross Profit,

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Price - VC units GM * # units

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$900 $800 $100 9M $900M
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$1,150 $800 $350 5M $1,750M
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$1,400 $800 $600 3M $1,800M

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The market is price sensitive, and the optimal price point is $1,400. As this is nearly double the price of
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high-end smartphones, smartphones could be a competitive substitute for the product.

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As next steps, we suggest investigating demand at even higher prices if the product is positioned as a
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high-end and niche product, as well as estimating potential synergies with complementary products.
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Terminus - 6/9
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Exhibit 3: Estimated annual demand for the product for a given price range

Price Annual demand (mn units)

$800-$1,000 9
$1,001-$1,300 5
$1,301-$1,500 3
>$1,500 Unknown

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Puzzled by some case interview charts?

Practice on your own with the Exhibit Drills in the

Interview Prep Course

Terminus - 7/9
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Question 4 (Creativity)

The product’s price is competitive with low-medium portable computers, but its actual cost is even higher
considering all the add-ons required. Given this and all the other factors we have seen, Terminus wants
your advice on how to brand and market this product.

How would you think about marketing this product?

Possible answer

Provided that our target segment is Millennial and GenX gamers:

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Branding

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Pitch our brand as powerful and trendy, for the best gamers

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● Leverage Terminus’ association with quality and performance in this market
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● Key selling points would be performance, convenience and portability
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● Compatibility with complementary products needs to be emphasized too as the new product is
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designed to work with existing devices and not to replace them

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Promotion
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● Partner with gamers (e.g., Youtubers)

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● Organize / sponsor mobile gaming competitions

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● Utilize current social media marketing capabilities popular with our target segments
● Cross sell with other product lines

Terminus - 8/9
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Question 5 (Synthesis)

While leaving the office, you run into the Product Manager at Terminus. He asks you what your ideas are
for their product branding and launch.

Convey your findings and recommendations in a short 30-second summary.

Possible answer

You have asked us to develop a launch strategy for Terminus’ new product.

Based on the current findings, we believe that an attractive launch segment would be the Millennial and

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GenX gamers. They value mobility, and gaming can make use of our product’s computing power.

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We suggest to launch the product at a price of $1,400. This could generate $1,800mn gross profit a year.

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We believe our brand is compelling for this market segment. We could reinforce our appeal through
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partnerships with YouTube gaming stars and sponsorships of mobile gaming competitions.
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As next steps, we suggest to:

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● Identify other high potential segments (e.g., professionals)

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● Check whether increasingly sophisticated smartphones are a threat

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● Make a plan for a successful implementation

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Terminus - 9/9
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