grp 17_atlantic computer case study

8/8/2019 Grp 17_Atlantic Computer Case Study

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Atlantic Computer Case

StudyMarketing II Assignment

Group 17

AMITESH PRIOLKAR (2009009)

MANISH ARORA (2009022)

NEELAY THALY (2009026)

SAGAR KHICHADE (2009040)

ALOK SHETTY (2009047)

SIDDHARTH CHAKU (2009048)


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Case Issue

Develop a pricing strategy for Atlantic bundle - the new Tronn server and the PESA

(Performance Enhancing Server Accelerator) software tool before SME trade show

Company Overview

y Atlantic Computers is a manufacturer of Servers and High-tech productsy Jason Jowers joined the Company four months back and he was responsible for the

pricing strategy of the Atlantic Bundle i.e (A package of the Tronn server and PESA

software tool)

y The Tronn was developed mainly f or the emerging US market opportunity for basic webservers

y The Performance Enhancing Server Accelerator (PESA) would allow Tronn toperform four times faster than its usual speed for standard procedures and hence the

bundling made sense

y Existence of 2 market segments - High Performance and Basic Serversy Atlantic has 20% market share in High Performance Servers with Radia being premier

product over 30 years

y An emerging market for basic servers is coming up in the late 1990sy Decided to introduce the Basic server into the market by 2000 with the belief that it

wont be seen as a substitute of the High Performance Servers

Advantages of PESA & Tronn

y PESA will improve Tronn speed by 4 timesy Need to purchase fewer serversy Lower annual electricity chargesy Less software licensing feey Less labor costsy Customer segments which will gain advantage by using PESA Customers in web server

& file sharing application segments


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Two market segments

Segment size Projecteddemand(1

st

yr)

Projecteddemand(next 2

yrs)

AtlanticMarket

share

OntarioMarket

Share

High

performance

servers

Largest 200000 units 3% annually 20%

Basic Servers 50000 units 36% compound

annual growth

Zink

50%

Competitor:y Ontario Computer Inc.y Majority sales generated by online trade.y Business model based on operational excellence so drove out many non value-added

costs so could compete largely on price.

Customers

Sample Web Server Basic Server (New SME)Customer

This customer will be the target customer as they stand to benefit the maximumfrom Tronn with PESA

Appli

i T T wi E A T wi u E A

Hi

P

rf

r

/ C !

"

I

"

#iv

W

r

$l

% # 18

&187

( . ., r! i l x # i "

ifi % l # )

Gr i # A li "

i # ' 8 & ' 81

( . ., r "

i ! # "

r i # / vi% )

E

"

r

ri

# A

li

"

i # ' (

4' )

4

( . ., # ! l0

i "

)

-M il A li "

i # 1 41 1 & &

( . . ,Mi r # f"

O !"

l $ , L"

! # N"

# )

Fil S ri 81' 4& 4

( . ., # r % #"

r % % "

b $ ! li "

i # )

W b S rv r # ' ' ' ' ) 4 '

( . ., r! i 2 b# i"

# # ! # 2 2 2 . # . )

' & 13

41& 3

1&

43

1143

Rati 4 4 fperf4 rmance

9( 3

1 & & 3


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5/7

Case3: Cost plus pricing

Total5

o. o6

Tron ser7 ers sold in 3 years 28

069

Total5

o. o6

Tron ser7 ers sold in 3 years@with

A B C

D

E @50% attach rate

E

8053

F

Cost o6

A B C

D

per ser7 er@in $

E

8 9 G.

96

A

rice@

withoutA B C

D

E @

in $E

8 G G G

.

F

A

rice@with

A B C

D

E @in $

E22

F

6.22

D.Value in use pricingy Atlantic Bundle needs to H e projected as a new product with high I alue addition one H asic

serI er withP

times speed

y Additional saQ ings can R e shown to customers R y comparing S Zink serQ er costs with T Atlantic Bundle cost.

CaseU : Value V ased approach

OPW

ION 1W

ronnX

1Y

erver

ZinkX

4Y

erverY

Prace o

bTronn

c an $

d2000 6

e00

f gec

hr

ac

a hy +

io

b hware L

acen

pe char

qe

p

c an $

d r000

s000

Toh a g Pra ce c a n $d 3000 r 0 e 00

i a t a nq p c a n $d

u ana

gPr

ace char

qed

ho cu

p homer

cTo

ha

gPr

ace+50% o

b

pa

t an

q p d c a n $

d

OPW

ION 2X

ConY

ervativev

Y

timate

W

ronnX

2Y

erverY

ZinkX

4Y

erverY

Pra ce ob Tronn c a n $d s 000 6e 00

f g

ech

ra

ca h

y +i

ob h

ware La

cenp

e charq

ep

c a

n $d

2000s

000Toha

gPr

ace

c an $

d6000

r0

e00

ia

t an

q p

c an $

d

u ana

gPr

ace char

qed

ho cu

p homer

cTo

ha

gPr

ace+50% o

b

pa

t an

q p d c a n $

d

5w

00

6s

00

x e 00

s e00

Note:W

he coY

t of labory

o

ld be eq

al in both the caY

eY

aY

Y

alary of adminiY

tator iY

fixed irrY

pective ofthe no. ofY

erverY

.


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Pricing Strategy for DayTraderJournal.comWe recommend Value based approach as it would lead to:

Lower acquisition cost - $5900.00 Lower possession cost High speed processing Savings - $3900.00

Pricing Strategy for Look Sharp Advertising

We recommend Value based approach as it would lead to:

Lower possession cost - $1000 Make highly requested information amongst employees readily available Availability of top notch post sales support

Pricing Strategy for HGIDMMWe recommend Value based approach as it would lead to:

Capable of maximizing speed of mathematical computations Availablity of all round support Flexible payment terms Savings - $4800.00

Recommendations for Cadenas sales force

The sales force needs to be trained to sell products on the basis of the following points

Focus on the value of the server to the customer Performance especially with PESA software tool Emphasize on the lower acquisition and possession costs Ensure excellent after sales service for customers


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Reaction of Zinks management

In the Short Term

Zinks management might reduce the price of its server In that case, Atlantic can charge according to the cost plus approach and show the

savings ($2,611) to the client i.e Zinks price can fall maximum upto their costs of

$1214 countering Atlantics cost of $2246. But since their 4 servers are needed, the

total cost for Zink equals 1214*4 = $4856 on which Tronn still earns a saving of

$2611.

In the Long Term

Zinks management may come up with an identical software Atlantic can provide the PESA software free in that case

grp 17_atlantic computer case study

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