Atlantic Computers Case Study Atlantic

Atlantic Computers Case Study

Atlantic Computer

Jason Jowers is the new Product Manager at Atlantic Computer; he has been working within the company for four moths now and he is rather enthusiastic about his role and responsibilities within the organization. His current task is that of establishing the retail for the "Atlantic Bundle," the company's newest server.

In making a final decision relative to the retail price to the end consumer, Jason Jowers has to consider the following:

the product would be best sold as a pack formed from the Tronn server and the PESA software tool, which would make it more efficient and better able to serve customers' needs; the server would run four times faster the product would have to be constantly maintained and improved, incurring as such additional costs - these costs would have to be integrated in the retail price the new product pack would ensure a market penetration into an industry so far dominated by another player; therefore the corporate faith put in this project are increased and the ultimate price has to address the penetration matter the proper identification and attraction of the target market and the potential responses of customers and the competition; the most responsive target market would be formed from customers in web-server and data-sharing the internet revolution turned large users to store their data on several smaller serves, rather than a big single one, meaning as such that the demand for the Atlantic Bundle may be reduced the company's primary competitor sold their servers online - Atlantic Computers could also do this and reduce as such the retail price the historical emphasis placed on product improvement within the server division was rather limited the higher price of the Atlantic Bundle could be explained by the future savings buyers would benefit from: the need to purchase fewer servers and lowered electricity bills previous experiences with the offering of free software to customers had proven limitedly successful and may a different approach should be implemented in the case of PESA customers revealed the desire for reduce purchase and maintenance costs the decision has to consider all these features, and be made in a short period of time, so that the organization is able to present it at the SME

The new product manager has four viable options from which he can choose the one he finds most suitable in the given circumstances. The first possibility is that of maintaining the current pricing strategy. The second option is that of replacing the current pricing strategy with a competition-based strategy; the third option is a cost-plus pricing method and finally, a fourth option is that of implementing a value-in-use pricing strategy.

The decision to still offer the software application for free is based on the risk incurred by the alternative. To better explain, the industry has implemented the strategy of free software for decades and the customers have grown accustomed to it. Therefore, it is rather unlikely for them to purchase products which require expensive software to run faster. In this order of ideas, the most suitable strategy would be that of maintaining the current status-quo.

However, when looking at the issue globally, maintaining the status-quo may not be the best decision at this time. The company should charge for both server and software application as to increases sales revenues. Also, since the company would charge for the PESA, the R&D and product teams would be more determined to increase their efforts in improving the quality of both server and software.

Despite the pro arguments, the decision to also charge for the software application could still generate customer dissatisfactions as a result of the increased retail price. In response to this situation, the product manager could argue the benefits of a cost-plus pricing strategy. This would have to be based on more actual calculi, but should retrieve the desired results as it would point out the benefits customers get from purchasing the Atlantic Bundle. In other words, clients who purchase the new Atlantic server with its additional software application would be able to complete their tasks faster, more efficiently and at superior qualities. They would also be able to register cost reductions as the necessity for more servers would decrease and due to the increased efficiency of the Atlantic Bundle, the costs with used electricity would also decrease.