Computron Case

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Computron Inc.

1. What are the considerations affecting the price strategy of Computron? What is the relative importance of these considerations? What are the international marketing implications?

Summer 1996, Zimmerman, manager of the new European Sales Division of Computron, an American manufacturer of medium sized digital computers, is faced with a biding process. He has a deadline in two weeks to decide if Computron would submit and if so at which price on a bid to sell a Computron 1000X digital computer to Konig & Cie AG, German’s largest chemical company.

In an international context as described in the case, price are driven by costs, consumer economic conditions, consumer goals and competitor pricing policies. Competitors and customers reactions to price change, threats on market shares and profits are important issues for Zimmerman. Computron must also adjust his bid to the geographic location of the market: transportation and installation, as well as taxes have to be taken into consideration.

Both internal and external factors will affect his decision first to bid or not, second to price his offer. Internal constraints are the necessity to protect the pricing policy of the company and its role in the brand positioning of Computron, the required development of the European market initiated in the winter of 1992 and the pressure to create a contract flow for the newly built Frankfurt plant sustainable over an overhead of $ 600,000.

External factors are customers and competitors in this case. Koenig is the largest German client with 83.3% of Computron’s sales on a local market which is expected to growth at an annual rate of 25% for the next several years. Koenig has an impact of 0.14% on Computron profit of 6% which tend to decrease since last year figure was 17%. Koenig has an excellent relation with Computron until now and are fully satisfied by Computron’s units in terms of system reliability, flexibility, accuracy and overall quality....
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