Atlantic

Case Write-Up:

Atlantic Computer: A Bundle of Pricing Options

Harvard Business School May 2007

I. Executive Summary

Atlantic Computer is a firm specialized in high performance servers and high tech products. It is one of the most important competitors of the high performance server segment with its Radia server. However, the trend shows that the basic segment is growing significantly, faster than the high performance segment in terms of growth even if this latter is more important in terms of volume.

The main goal of the firm is to enter the basic segment by launching its new basic server “Tronn”, combined to the PESA software which allows the Tronn to improve its performance in order to compete with the leader of this market, Ontario Computer, and its basic server “Zink”. Atlantic also has to keep its position in the high performance segment.

So, the main impediment is Competition: Ontario Computer got 50% of the market share and proposes attractive prices (Zink’s Ontario: US $1700, Tronn’s Atlanta: US $2000) thanks to an innovative and flexible supply chain management. Moreover it is likely that the sale of basic servers will lead to a decline of our high performance servers.

To enter this new market successfully, it is necessary to choose the right pricing strategy. In our case, value in use strategy is the best issue in terms of profitability. Then we must target SMEs, especially file sharing and web serving companies. Finally our sales force will find out the market’s need to adapt the promotion then we can successfully conduct our goal.

II. Problem Analysis:

1. Goals

The main goal of this case is to enter basic server market and gain market shares (first year unit sales 2000 sold units) by launching our product to the right customer segments.

Long-term goal

- Become a strong competitor

- Build brand equity in basic server market

- Make the users loyal to our product

- Increase profitability of the...