MARKETING CASE STUDY-4
Atlantic Computer: A bundle of
MBA Class of 2014
Alma Graduate School
Atlantic Computer has developed a new Tronn server
and PESA software tool known as Atlantic Bundle and
needs the right market price strategy for this product.
The challenge is to attract customers and outcompete
direct and main competitors in terms of prices,
performance efficiency, reliability and quality.
The main purpose and focus of this report is to provide
a solution to the above challenge by coming up with the
right pricing strategy.
A detailed quantitative, qualitative and other factors such as competition and customer demand has been analyzed
in this report and recommendations have been proposed.
The Tronn server has been developed specifically to
meet an emerging U.S market place opportunity of
Basic Server users. Tronn computer is to be sold with
the specific PESA software to boost performance
The basic market segment was dominated by the main
competitor, Ontario which claimed a revenue market
share of 50% with its product line, Zink
Atlantic Company current policy is to give software to
customers for free upon purchase of servers
However now a pricing strategy needs to be chosen
charge only for the hardware and give the PESA software tool for free
charge a price equal to what the customer would pay for four Ontario Zink servers
charge a price based on cost-plus approach for PESA
charge a price based on value-in-use pricing.
Product and Bundle
Current product of Altantic is the Radia, which is a leading product in the high performance servers market.
Atlantic has developed a new server called Tronn and a
Performance Enhancing Server Accelerator, PESA, which will
enhance the Tronn server’s speed by 4 times its normal
The company aims to determine a pricing strategy for the
‘Atlantic bundle’ which is Tronn server plus PESA tool.
Atlantic‘s main competitor in the basic server market segment, Ontario’s Zink, performs at approximately the same level as Atlantic’s Tronn without PESA
Also, Ontario’s business model enabled the company to drive out non-value added cost which allowed it to competed fiercely on price.
Other competitors in the basic server market composed of
many small scale vendors.
Model-1: Status Quo based on free software with hardware Model-2: Competitive pricing based on Zink’s price folded 4 times Model-3: Cost-plus based on the COGS for hardware and software R&D spread over 3 years
Model-4: Value in use approach based on sharing profit with customer
For model-1 : 3rd Year, but selling 4,329 units would be tough For model-2: 1st year, but price of $6800 is too high
For model-3: 2nd year, with an attractive price of $2,244 giving 4 times performance than the nearest competitor priced at $1700 For model-4: 1st year, but a price of $3,500 would need justification and investment on advertisement and brochure
2 markets segments: High
Performance and Basic
Atlantic captured 20%
revenue market share in the
High Performance segment
Basic segment demand
about 50,000 units, growth
rate of 36% through 2003
High Performance demand
200,000 units, growth rate
Target Basic Server
Users for the Tronn
The targeted segment
used the server for
simple tasks like file
sharing and web servers
Business targeted will be
Small and Medium Size
Consumers dedicate their basic servers to one
Key buying criteria for consumers were minimizing...
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