Atlantic Computer

MKT 6336.501 | Pricing

Atlantic Computer: A Bundle of Pricing Options

Atlantic Computer Inc. is the largest player in the overall computer industry, competing in the server market for over 30 years with its high performance server, called Radia. Atlantic Computer and, more specifically, its Server Division is well known for providing high-quality and highly-reliable products, and it has developed a reputation for responsive post-sales assistance.

Problems to Address:

1. Atlantic must choose a pricing strategy for the “Atlantic Bundle,” which consists of its TRONN server and PESA software tool, before the SME trade show.

2. Along with the right pricing strategy, Atlantic is also facing the hurdle of breaking away from the well-established industry norm of giving software tools for free and helping the sales force to understand and sell the value of the PESA tool effectively.

3. In addition to factoring in the reaction of Atlantic’s main competitor, Ontario Computer, to Tronn’s entry, Atlantic Computer must consider new strategies that will protect their market share in this particular segment.

Company Objectives:

Atlantic’s objective is to enter a new market for basic servers, which has been dominated by Ontario Computer for a long time. With the right pricing strategy, Atlantic Computer hopes to break the existing market structure to gain a large share and high profits from selling the “Atlantic Bundle.”

The market demand of basic servers is projected to grow quickly. This market should demand about 50,000 units in 2001, and register about a 36% compound annual growth rate through 2003. To be estimated, it would demand 212,000 basic servers in total from 2001 to 2003.

Customer Segment:

The main customers for Tronn are small and medium-sized enterprises, which increasingly need basic computing capabilities to perform simple, repeatable tasks such as showing website information on the internet. More specifically, companies who mainly use...