Atlantic Computer

Atlantic Computer: A Bundle of Pricing Options

1. Statement of the Problem (introduction)

The company’s youngest product manager (Jason Jowers) has to develop a pricing strategy for the “Atlantic Bundle” – the new Tron server and the PESA (Performance Enhancing Server Accelerator) software tool before the SME trade show. The “Atlantic Bundle” was developed to meet the needs of the emerging basic server market (new market to the company). To make things more complicated for Mr.Jowers the “Atlantic Bundle” has to compete with Zink server of Ontario Computer (major player in the basic server market).

2. Situational Analysis

* Atlantic Computer is a manufacturer of Servers and significant player in the high performance market

* The basic server market has shown compound annual growth rate of 36% in 2003 which is substantially higher that the 3% growth of the high performance market

* Atlantic Computer decided to penetrate the basic server market with the “Atlantic Bundle” – a package of Tron server and PESA software tool

* PESA (Performance Enhancing Server Accelerator) software tool will allow the Tron to perform four times faster than Tron’s usual speed for standard tasks and therefore makes “bundling” sense

* Customer will need to purchase fewer servers

* Will offer lower electricity charges

* Lower labor costs

* Less software licensing fees

* Atlantic Computer is famous for providing top-notch quality, highly reliable products and very responsible post-sale assistance

* Customer Segment – customers in web server and file sharing application segments

* Company’s major rival is Ontario Computer who only focuses on basic server market with 50% revenue market share

* Ontario Computer has been able to drive out many nonvalue added costs and compete largely on the price

* Majority of sales generated online

* Market segments

* High performance servers

* Large...