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Atlantic Computer's Tronn Pricing Strategy

This document discusses Atlantic Computer's entry into the basic server market with their new Tronn servers. This will put them in direct competition with market leader Ontario's Zink servers. Atlantic faces a pricing dilemma on how to price the Tronn servers. They must decide whether to bundle or unbundle the Tronn servers and PESA software, maintain cost-plus pricing, use competitive pricing targeting Zink, or shift to value pricing. The target market segment for Tronn is small and medium businesses that are inexperienced in technology and have purchasing criteria focused on cost and product support. Atlantic's decision is to bundle Tronn and PESA, engage in value pricing rather than competing on price with Ontario

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38 views8 pages

Atlantic Computer's Tronn Pricing Strategy

This document discusses Atlantic Computer's entry into the basic server market with their new Tronn servers. This will put them in direct competition with market leader Ontario's Zink servers. Atlantic faces a pricing dilemma on how to price the Tronn servers. They must decide whether to bundle or unbundle the Tronn servers and PESA software, maintain cost-plus pricing, use competitive pricing targeting Zink, or shift to value pricing. The target market segment for Tronn is small and medium businesses that are inexperienced in technology and have purchasing criteria focused on cost and product support. Atlantic's decision is to bundle Tronn and PESA, engage in value pricing rather than competing on price with Ontario

Uploaded by

AtulSingh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Atlantic Computer Inc

Case Analysis
BBM, NMP Term III

Group 4
Argha Ray - 15
Chakra Dhar Kundu - 22
Khushal Malik - 28
Sanjay Kumar Prasad 45

Context
Atlantic Computer is the largest player in the overall Computer
Industry.
Competes in following Product segments

High Performance Servers


Basic Servers

Offers following products


Radia (High Performance Servers)
Tronn (Basic Servers)

Facing Pricing Dilemma on Tronn servers


Entry into Basic Server Market with Tronn will pit it directly
against Ontarios Zink.

Jasons Dilemma:
In the context of direct competition with Basic Server market
leader Ontario, the following questions are staring at Atlantics
product pricing team

Bundle or Unbundle Tronn and PESA


Maintain Cost Plus pricing
Go for Competitive Pricing targeting Zink
Shift market paradigm with Value Pricing

Additional considerations included

Market Share
Find Resonating Focus with Customers
Recover PESAs R&D cost

Market Segmentation:
Demographics
Company Size: Small and Medium Business
Operating Variables:
Company Technology: Inexperienced
Company Capabilities: Small Players
Purchasing Approaches:
Purchasing Criteria: Cost and Product Support
Based on above segmentation Atlantic must target Tronn in only
the Basic Server category which has uses in File Sharing and
Web Servers.

Yardsticks:

Tronn is in the beginning of its Product Life Cycle.


Basic Server Market is an emerging new market, with possibility of
Market Development among Inexperienced Generalists customers.
Ontario has already achieved economies of scale, hence difficult to
compete on price.
Traditional view of Software Tools as freebies with Server.

Top Line Revenue for 3 Years:

Atlantic is able to recover PESA R&D cost within two years, as


evident from above table.
Initial Acquisition Cost is comparable with Ontario, when One Tronn is
compared with Two Zink.
Only 1% market share considered for Price Calculation.

Distinctive Value Proposition:

Annual Maintenance Cost is significantly less for Tronn.


Total Cost of Ownership is less than Zink.
This POD can be reason enough to convince SME customers.

Decision:

Dont leave money on the table.

Cost Plus pricing doesn't make sense as SME customers will not
have enough clout to ask for Cost Audit.

Sell Tronn and PESA as system with adequate after sales support.

Dont compete on price with Ontario.

To get approval on pricing, specially Matzer, keep products


bundled for now.

Engage in Value pricing.

Convince customers using Value Equation.

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