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CASE ISSUE
Develop a pricing strategy for Atlantic Computers: Bundle of the new Tronn Server & PESA software tool before the SME trade show
COMPANY OVERVIEW
Atlantic Computers is a manufacturer of Servers and High Tech products The company has 20% market share in high performance servers with Radia being premier product over 30 years The company manufactures two kinds of products: High Performance Servers & Basic Servers Decided to introduce the Basic Server into the market by 2000 Developed a new server Tronn & a software tool PESA which enhances the performance of the same
Atlantic Computers planned to sell the Server & the software together as a bundle. Jason Jowers was responsible for developing a pricing strategy for the bundle.
CHARACTERS:
Chris Matzer : Head of server Division Emily Jones : Director of Division R&D team Harry Fowler : Director of New Product team Jason Jowers : Product Manager
PRODUCT
Tronn : Server developed to cater to the Basic Server Market PESA : Will enhance the speed of Tronn By 4 times Atlantic Computers want to bundle the products together
COMPETITORS
Major Competitor : Ontario Computer Inc. Product: Low End Server Zink, currently 50% market share in the basic server market Majority Sales were generated online Zinks server performed at approximately the same level as Tronns Rest competitors were Local Vendors
COMPETITIVE PRICING
Performance of one Atlantic Bundle is equal to that of 4 Zink Servers Zinks Market Price = $1700.Therefore,cost of Atlantic Bundle should be approximately 4 times This price would be very high as compared to competitors product
CONCLUSION
Status Quo Pricing : Loss of the software development costs Competitive Pricing : It would be very difficult to convince customers why the Basic Server is priced 4 times of its competitors price. Cost Plus Pricing : Customers would prefer buying Tronn alone than paying extra for the PESA software Value-in-use Pricing : The product should be launched as an all together new product with a separate approach highlighting the performance & cost savings. The pricing strategy should be in accordance
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