Marketing, Management

GROUP 6, SECTION E
Anisha Goyal PGP/19/246,
Kunal Sapra PGP/19/266,
Prashant Agarwal PGP/19/276,
Shakti/19/286,
Varsha Murli PGP/19/296
ATLANTIC COMPUTERS
Problem/Introduction
Atlantic Computer is a 30 year old company and deals with various technical products. This
year they are launching a new server called Tronn which comes embedded with PESA
(Performance Enhancing Service Accelerator). PESA would allow the Tronn to perform up to
4 times faster than its standard speed. The relatively new product manager Jason Jowers has
got the responsibility to deciding the pricing strategy of this new Atalantic Bundle. He has
come up with 4 alternatives and has to decide the one which will suit the company the best.
Management Team
1)
2)
3)
4)
5)

Jason Jowers : Product Manager

Chris Matzer: Head of the Server Division
Emily Jones: Director of the RnD team
Harry Fowler: Director of product marketing
Jairo Cedena: Director of Sales

Four Alternatives:

Option 1: Stick with Companys tradition by charging only for hardware and give
PESA for free
Option 2: Charge a price equal to what the customer would pay for Ontario Zink
servers
Option 3: Charge a price based on cost-plus approach to pricing PESA (based on
software tools development charges)
Option 4: Charge a price based on value in use pricing

Option 1: Stick with Companys tradition by charging only for hardware and give
PESA for free

Pros
Lowest priced
Cons
Does not consider all the costs into account like the cost for designing the software
Failure in capturing the total value of the product

Option 2: Charge a price equal to what the customer would pay for Ontario Zink
servers

Pros
One Atlantic is equal to four Ontario Servers
Net profit is very high
Delivers secondary cost saving values associated with owning one server instead of four
Cons
Highest priced option
Customers might not be able to appreciate long term benefits and think it too high priced

Option 3
Charge a price based on cost-plus approach to pricing PESA (based on software tools
development charges)

Pros:
Takes into factor the cost of developing software thus more accurate representation of total
cost incurred by Atlantic
Promotes Atlantic bundle thus maximising server performance
Cons:
Per unit profit is not very high
Breakeven point is pretty high thus more pressure on sales team

Option 4: Charge a price based on value in use pricing

Pros:
Factors in all the value derived by the customer while using the product in the pricing
Allows customer focussed sales strategy
2nd highest profit margin as compared to all options
Cons:
Priced almost double of the main competitors
Customers not used to software price being included in the product pricing