Atlantic Computer, Essay Example

Atlantic Computers has been presented with a great opportunity to create a business advantage with their new “Atlantic Bundle” server and software tool combination, but the challenge is to set the right pricing strategy that ensures success and maximum profitability.

Evaluate Henry Fowler’s comments and actions. Henry Fowler, Director of New Product Marketing, was very comfortable in Atlantic’s position in the high performance server market segment, but for internet practicality there was stronger growth in a different market segment, basic servers. While projections for the high performance segment indicate 3% growth, basic server estimates were much higher at 36%.

Evaluate Jason Jowers’ comments and actions. Jason Jowers, assigned to identify the pricing strategy, started by researching his company’s strategic positioning in the marketplace, and also competitors such as  Ontario Computer, Inc. Among his findings, he knew that Atlantic Computer had a reputation for high end, reliable products, with responsive post-sales assistance. For Ontario, he learned that they competed largely on price, and had succeeded very well with 50% of the basic server market share. He also learned that the majority of their sales, unlike Atlantic, were placed online.

What is the competitive  advantage for Atlantic Computers? A critically important aspect of this project was the competitive advantage for Atlantic Computers. Performance tests of the “Atlantic Bundle” indicated that one such bundled service could provide the same service as four Ontario “Zink” basic servers. This equated to far more value than what Ontario could provide to consumers.

What would you recommend as the most effective pricing strategy for Atlantic Computer? This recommendation would require a different approach for a company and industry accustomed to providing free applications with their hardware, as PESA software was no ordinary complement, but one that made the purchase of three additional servers unnecessary. That equated to a value that needed to be included in the price of the Atlantic Bundle. A cost-plus approach based on software tool’s development costs was a justifiable add on cost given the value it provided. This approach would allow Atlantic Computers to enhance profitability for a superior product offering, while also maintaining their status and reputation of high end products. The performance data could be utilized by marketing and sales to justify the additional cost and reinforce the pricing strategy in a credible manner.

References

Bharadwaj, N. & Gordon, J. (2007, May 28). Atlantic Computer: A Bundle of Pricing Options. Harvard Business Publishing.

[1] Darren Shepherd Nov 14, ’10, 3:08 PM

[2] Darren Shepherd Nov 14, ’10, 3:09 PM