Marketing

CASE SUMMARY

Atlantic Computers

A Bundle of Pricing Options

4/4/2011

Atlantic Computers is a leading developer of high-tech servers. It has recently

decided to expand its product line downwards in order to take advantage of an

emerging market for basic servers. Before it can launch the “Atlantic Bundle”,

Atlantic Computers must decide which pricing strategy to implement. Of the four

options: Status Quo, Competition Based, Cost-Plus, and Value in Use pricing, I

believe the best option is Value-in-Use pricing.

ATLANTIC COMPUTER: A BUNDLE OF PRICING OPTIONS

Summary of the Situation Analysis

Atlantic Computer is a manufacturer of servers and high-tech products. Two market

segments exist in the server industry: High performance and Basic Servers. Atlantic

Computers has held a 20% share of the High Performance market with their Radia servers

being their premier product. However, the market for Basic servers is growing and this has

caused Atlantic Computers to develop and introduce a Basic Server called the Tronn and a

software tool called the “Performance Enhancing Server Accelerator” (PESA). The Tronn

was developed mainly for the emerging US market opportunity for basic servers. The PESA

would allow the Tronn to perform up to four times faster than its standard speed and make

frequently requested information more accessible. Thus, bundling the Tronn and PESA made

more sense. Atlantic is not concerned that the Tronn will be considered a substitute for its

High Performance servers.1

Primary Question to be addressed:

What pricing strategy should Atlantic Computers implement to price the Atlantic Bundle?

Model Customer:

In order to decide which pricing strategy to use, it is best to identify and use the basic

server needs of a model customer. In this case, DayTraderJournal.com will be used as the

model customer.2 DayTrader.com is seeking four basic servers for their new website where

day traders will be able to review articles and relevant training information.3 Their...