Atlantic Computer is a large manufacturer for servers and other technology products. They have seen great success in the last 30 years since they have been competing in the market. While they have previously dominated the high-end server market, they are looking to expand to an emerging market, the basic server market. In order to do so, they have developed Tronn along with the Performance Enhancing Server Accelerator, otherwise known as PESA. Because Atlantic is penetrating new market segment than what they are used to, they are faced with competition issues, specifically against Ontario’s Zink server. The most pressing issue involves what pricing strategy to go with. They have four main options: 1. Status Quo Pricing – Offering Tronn at $2000 with PESA at no additional charge 2. Competition Based Pricing – Pricing Tronn based on price of competition’s server 3. Cost-Plus Pricing – Including developing costs
4. Value-In-Use Pricing – Finding the true value of a certain product Finding the right customer segment was also an issue for Jowers. Atlantic has been focused on high-end segments and has done relatively well for themselves. As previously stated, low-end products are becoming an emerging market that Atlantic wants to get into. As shown in Exhibit 2, the Tronn with PESA is most successful in the basic application systems such as web servers and file sharing. In fact, when it comes to high performance workloads and graphic applications, it may be detrimental and actually not work as well. Jowers found that DayTraderJournal.com was an exemplary customer that they want to focus on for the trade show and for future sales. This customer was seeking four basic servers so it was up to Jowers to find a way to show that they would receive both first order and second order savings by purchasing the Tronn server with PESA instead of four servers. This is the main customer that Jowers must focus their pricing strategy efforts on. Matzer and his colleagues...
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