July 20, 2006
In December 2003 the management team at Saurer Twisting Systems (STS) was facing increasing competition in the critically important Chinese market. Local competitors in china were undercutting the price of Saurer’s CompactTwister, which was manufacturED in china, by over 50%. The company was considering the introduction of a lower cost machine targetED at Chinese and Asian customers, who would not buy its high cost machine. Margins were likely to be significantly lower on the new machine, and the new machine might cannibalize their high-end product. If the STS team did decide to introduce the new machine, it would have to make some difficult decisions about positioning, pricing, naming the product, and sales strategy. It was also not clear how their Chinese competitors would respond to the proposED new product.