Clearwater Technologies Case Analysis
Clearwater Technologies Case Analysis
OVERVIEW
Clearwater Technologies is a publicly traded technology firm for sales staffs of small- to medium-sized companies. Clearwater’s customized QTX product line held 70 percent of its mature market. To date, competition in this market had been minimal, because no competitor had been able to match Clearwater’s general functionality, and Clearwater held a U.S. patent on a popular feature that directed faxed documents to a specific salesperson’s e-mail rather than a central fax machine. QTX was a sales support server that allowed multiple users to simultaneously maintain their sales account databases. The product line consisted of 10-, 20-, and 30-seat capacity QTX servers. After thoroughly analyzing the product line with demand, Clearwater decided to manufacture only the 30-seat server with the appropriate number of seats “enabled” for the buyer, meaning if a customer wanted a 10-seat server, the company shipped a 30-seat capable unit, with only the request 10 seats enabled through software configuration. Clearwater realized that many customers may need expand capacity in the future, so to solve the problem of having two servers, they decided to sell the additional memory on the original server using an access code.
PROBLEM
Upgrading the server’s capacity did not pose a problem, however the pricing of doing so did. Clearwater’s product manager, financial analyst, district sales manager, and vice president of marketing could not come to a compromise when discussing the appropriate pricing of upgrades. Finance wanted the price as high as possible to generate revenue, sales wanted it low to sell volume, and product management wanted the price to be consistent with the current product margin. After taking all three ideas into consideration, the vice president of marketing stated that there are three very important points that the price structure for these upgrades must accomplish: 1. upgrade pricing should not undercut
OVERVIEW
Clearwater Technologies is a publicly traded technology firm for sales staffs of small- to medium-sized companies. Clearwater’s customized QTX product line held 70 percent of its mature market. To date, competition in this market had been minimal, because no competitor had been able to match Clearwater’s general functionality, and Clearwater held a U.S. patent on a popular feature that directed faxed documents to a specific salesperson’s e-mail rather than a central fax machine. QTX was a sales support server that allowed multiple users to simultaneously maintain their sales account databases. The product line consisted of 10-, 20-, and 30-seat capacity QTX servers. After thoroughly analyzing the product line with demand, Clearwater decided to manufacture only the 30-seat server with the appropriate number of seats “enabled” for the buyer, meaning if a customer wanted a 10-seat server, the company shipped a 30-seat capable unit, with only the request 10 seats enabled through software configuration. Clearwater realized that many customers may need expand capacity in the future, so to solve the problem of having two servers, they decided to sell the additional memory on the original server using an access code.
PROBLEM
Upgrading the server’s capacity did not pose a problem, however the pricing of doing so did. Clearwater’s product manager, financial analyst, district sales manager, and vice president of marketing could not come to a compromise when discussing the appropriate pricing of upgrades. Finance wanted the price as high as possible to generate revenue, sales wanted it low to sell volume, and product management wanted the price to be consistent with the current product margin. After taking all three ideas into consideration, the vice president of marketing stated that there are three very important points that the price structure for these upgrades must accomplish: 1. upgrade pricing should not undercut