Atlantic Computer developed a product, the “Atlantic Bundle”, to meet an emerging basic server market. The Atlantic Bundle is a Tronn server coupled with the Performance Enhancing Server Accelerator software tool “PESA”. Atlantic Computer must decide on the pricing strategy. Situational Analysis
The external analysis is as follows:
Customers: The first customer identified has a primary need to host websites, “Web Server” customer. The second customer identified has a primary need for file servers that help layout designers share graphic, text, and layouts, “File Sharing” customer. Customers in these segments appear to be the ones that will benefit the most from the PESA tool. •
Competition: The primary competition in the market is Ontario who claims 50% of revenue market share with the remainder of market comprised of many smaller venders (external threat, Appendix A). Ontario’s business model focuses on driving out non-value added costs and competing largely on price (value pricing). Its products are sold primarily through the internet. •
Collaborators: The server division relies upon a high-touch direct sales channel at a higher cost than that of online sales. Sales reps receive 70% salary and 30% commission. •
Context: The largest segment of the server industry is the high performance server segment. The segment is expected to demand approximately 200,000 units next year and is expected to grow at approximately 3% annually over the following two years. The basic server segment is a newer segment with strong forecasted growth of 36% (external opportunity, Appendix A). The segment will comprise approximately 20% of total units sold next year at 50,000 units. By the third year of the forecast, the basic server market will make up approximately 30% of total units sold. The internal analysis is as follows:
Company situation: Atlantic is a well-established company with over 30 years of experience in the server market. The...
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