'Atlantic Computer Case Study Essay\r'

'Atlantic Computer verit open a product, the â€Å"Atlantic Bundle”, to meet an emerging be upsetlying server commercialize place. The Atlantic Bundle is a Tronn server coupled with the Performance Enhancing waiter Accelerator hoard system program joyride â€Å"PESA”. Atlantic Computer must get back on the pricing schema. Situational Analysis\r\nThe external abridgment is as fol funky-downs:\r\n•Customers: The first customer identified has a chief(a) need to host websites, â€Å"Web Server” customer. The second customer identified has a firsthand need for file servers that help layout designers share graphic, text, and layouts, â€Å" agitate sharing” customer. Customers in these surgical incisions appear to be the ones that provide benefit the most from the PESA tool.\r\n•Competition: The immemorial contestation in the market place is Ontario who claims 50% of revenue market share with the remainder of market comprised of many smaller venders (external threat, concomitant A). Ontario’s business model focuses on driving out non-value added represents and competing largely on terms (value pricing). Its products are sold primarily with the internet.\r\n•Collaborators: The server division relies upon a utmost-touch direct gross gross revenue channel at a high(prenominal)er 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 proceeding server segment. The segment is expected to requisite almost 200,000 units next grade and is expected to beget at approximately 3% annually everywhere the following two years. The raw material server segment is a newer segment with strong forecasted growth of 36% (external opportunity, Appendix A). The segment exit comprise approximately 20% of total units sold next year at 50,000 units. By the third year of the forecast, the staple fibre server market leaveing make up approximately 30% of total units sold.\r\nThe internal synopsis is as follows:\r\n•Company situation: Atlantic is a well-established companionship with over 30 years of cause in the server market. The political party is known for providing top- nonch, extremely reliable products and high quality, responsive post-sales assistance (internal strength, Appendix A). Atlantic has focused on selling high-end performance servers to large enterprise customers. The â€Å"Atlantic Bundle” was developed to assist the company in emerging into the basic server segment. The product was created to produce a basic server without creating a substitute product to the high performance servers. However, the logic seems flawed as customers would non have viewed the basic server as a substitute to the high-performance servers (internal weakness, Appendix A). In the past, Atlantic’s sales force gave away software tools.\r\n•Relative market/co mpetitive position: Ontario’s Zink server performs at approximately the same level as Atlantic’s Tronn. Even without the constituent(a) PESA R& adenosine monophosphate;D costs the Tronn was outlayd higher relative to the Zink. Hence, the target market was narrowed to transmit on customers that require more than one server. PESA allows the Tronn to perform up to four times faster than its standard speed. The â€Å"Atlantic Bundle” ordain allow companies to reduce the derive of basic servers they must purchase and reduce in operation(p) expenses such as electricity charges and software pass fees. Mr. Matzer indicated the â€Å"Atlantic Bundle” is the sale they want.\r\n•Results: The gains to customers from the PESA software tool were examined and it was found that the Web Server and File Sharing application segments give benefit the most from the tool. The end was based on the benefit to customers of being able to purchase fewer servers and the resolveing savings (internal strength, Appendix A).\r\n•Challenges: The primary challenge lead be to address whether Atlantic will be successful utilizing its commissioned sales force rather than online sales. A nonher problem arises in how to motivate the sales force and the training required to sell the â€Å"Atlantic Bundle”. Finally, software has historically been given away which appears to be the industry norm. Charging for software may alienate customers (internal weakness, Appendix A). Alternative Courses of live up to\r\nFree PESA Software with Purchase. Rather than regarding the PESA R&D as a sunk cost, I chose to distribute the costs to every server. The determine under this roadway was driven to be $2,122 (see Appendix B). The primary drawback is that a customer who would have normally purchased the Tronn without the software would be charged a higher price ($2,122 vs. $2,000). Continuing with the tradition and norm of guiltless software, sta ve would not have to be retrained and customers will not feel alienated. Furthermore, the one-bundle price could easily be transitioned to on-line sales, and the low price will increase market share. The â€Å"free” software could create an illusion of low perceived value. Finally, the lower price will result in lower cyberspace margins, and it does not squeeze into consideration the value utility received by the customer.\r\nCompetition Based Pricing. The price under this route was impelled to be $3,400 (see Appendix C). Under this route, the company will earn more profit per bundle sold. Additionally, minimal effort is required to determine the price. However, the emulation based pricing creates indifference between the â€Å"Atlantic Bundle” and its competition. The higher price will withal reduce market share and could stir a pricing war. Cost-Plus. The price under this route was determined to be $2,245 (see Appendix D). Atlantic would gain market share under this route as the price is low relative to the benefits the customer receives. Additionally, the pricing will remain the same for the next three years. This border on does not take into consideration the value advantage received by the customer. Also, it results in lower profit margins per bundle sold. Value-In-Use.\r\nThe price under this route was determined to be $3,200 (see Appendix E). The primary benefit is that the rise is customer focused. The price is justified and the customer will perceive higher value for the price. Higher margins will also be earned. However, Atlantic will drop off market share under this route at the higher price. Additionally, staff would have to be extensively re-trained and motivated. Customers who primarily purchase online may be loath to sit through â€Å"We can save you funds!” sales pitches.\r\nRecommendation\r\nThe company should proceed with the free PESA software route. The primary benefit is that the company will be able to init iate online sales which will reduce training costs, salaries, and commissions and will make up for the lower profit margins earned. One primary drawback is a customer will be charged a higher price even if they do not require the PESA tool. However, the target market has been narrowed to admit customers that require more than one server, because it is unlikely that a customer who requires only one server will purchase the Tronn over the Zink. The most likely repartee from Ontario is to lower the price of the Zink to remain competitive. At the low price of $2,122, Ontario would have to lower Zink’s price to less than half of the price of the Tronn to fight for market share from the target market. Finally, the lower price feeds into the market-penetration strategy to maximize market share. The issue of perceived low quality can be disregarded as customers have proven the low-cost strategy use by Ontario has not affected their opinions on quality.\r\n outcome\r\nThe free PESA software will allow the company to compete on the same level as Ontario through price and online sales without having to retrain employees, order from the general rule of providing free software, or introducing sales pitches to customers who will likely be reluctant to take part. The low, competitive price will support market penetration and favor Atlantic should Ontario reduce its prices.\r\n'