Scribd
Upload
85 views2 pages

Atlantic Computer Case

Atlantic Computer is developing a new basic server called Tronn to compete with Ontario's Zink server. Tronn will be bundled with a software tool called PESA that increases server performance four-fold. Atlantic must determine the pricing strategy for the Tronn-PESA bundle. There are four options: 1) provide PESA for free to maintain tradition, 2) price competitively based on Zink, 3) use cost-plus pricing, or 4) price based on the value-in-use savings customers receive from the increased performance. The case compares customer-focused and company-centric pricing approaches for a new product launch.

Uploaded by

Chahat Shah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
85 views2 pages

Atlantic Computer Case

Atlantic Computer is developing a new basic server called Tronn to compete with Ontario's Zink server. Tronn will be bundled with a software tool called PESA that increases server performance four-fold. Atlantic must determine the pricing strategy for the Tronn-PESA bundle. There are four options: 1) provide PESA for free to maintain tradition, 2) price competitively based on Zink, 3) use cost-plus pricing, or 4) price based on the value-in-use savings customers receive from the increased performance. The case compares customer-focused and company-centric pricing approaches for a new product launch.

Uploaded by

Chahat Shah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Case summary of Atlantic Computer: A Bundle

of Pricing Options
Group B, Section I
Group Members
Akhil Rathi
Apeksha Sagar
Nikhil S.
Ravinder Singh Ghataoda
Sharad Kachare
Yash Shah

Introduction
Atlantic Computer is a large manufacturer of servers and high-tech
products. Two market segments exist in the server industry: high
performance servers and basic servers. Atlantic was planning to foray into
the server market. The server market was primarily operating across two
segments. The High End Server segment and the Basic Server
Segment. To have a brief overview of things, the High end server market
was being led by Atlantic which had a forecasted demand of 200000
units for the following year with a projected growth rate of 3%. However, it
was the basic server segment where it was trying to penetrate, the
segment that was being led by Ontarios Zink. In order to meet the
demands of this segment, they have created a software tool, called the
"Performance Enhancing Server Accelerator," or PESA, that allows Tronn to
perform up to four times faster than the standard speed of the basic
servers. The main question was how to go about pricing its products such
that the customers could relate to its offerings.
Companys History
Atlantic Computer, Inc., was the largest player in the overall
computer industry. It has been competing in the server market for 30
years by selling its high-end performance servers, called Radia, to large
enterprise customers. The firm in general and its Server Division in
particular had come to be known for providing top-notch, highly reliable
products, and had developed a reputation for providing high quality,
responsive post-sales assistance. This was a direct result of their
overarching strategy being based on customer intimacy and product
differentiation.
About the product

Atlantics Tronn was going to compete directly with Ontarios Zink.


The performance of both the servers was same. Beta testing confirmed
that Tronn coupled with PESA increased the performance four folds where
in lied the USP for Atlantic. Ideally it was a no brainier to go for Atlantics
Tronn but the pricing had to be right.
Developing a Marketing Program
The pricing strategy for the Atlantic bundle, which is Tronn server
with PESA tool, need to be determined.
There are four options available

Atlantic Computers can stay with the status quo and provide PESA
as free with Tronn server. This is in line with company tradition by
charging only for hardware and giving the PESA software tool
With option 1 Atlantic will have to forego the amount of R&D
investments done in PESA software amounting to $20, 00,000.
It can choose competitive based pricing, which is charging customer
to 4 times Ontario Zinc servers.
For option 2 conservatively 2 Tronn servers should be equal to 4
Zinc servers. Aggressively 1 Tronn server will be equal to 4 Zinc
servers.
Arrive at cost plus pricing
Option 3 requires certain assumptions with forecasting sales 3 years
down the line and putting up mark up costs.
Arrive at price based on value-in use pricing
Option 4 requires analysis of savings received by using the Atlantic
package and value a customer derives from its use.

Target Market
Atlantic can target the market that do web hosting and file sharing. These
companies can achieve the maximum benefit from PESA software. Showing the
pricing benefit to these customers will be most beneficial for Atlantic as well and
these companies can become attractive customers
The learning from the case is comparing and contrasting the customer focused
approach to pricing (value-in-use) with company centric (cost-plus), competitor
based and status quo approaches for a newly launched product and the potential
impacts of implementing various strategies.

You might also like