Atlantic Computers Case Essay Example

server applications are primarily concerned with price, as they typically don't require highly complex applications. However, owning a basic server incurs possession costs such as electricity and software licensing fees. For customers in this segment, minimizing these costs and acquisition costs is crucial. Additionally, they require sales support and need servers that can efficiently handle information requests from websites, while providing easy access to employees. Luckily, Atlantic can fulfill these needs, as their PESA software can effectively reduce procession expenses by enabling four servers to run simultaneously.

The software enabled administrators to monitor system health and respond more quickly to repairs. This gives Atlantic an advantage over Ontario Computers in terms of customer benefits. Internally, Atlantic is the dominant player in the industry, having sold high-performance servers for over 30 years. Atlantic has a strong reputation for providing reliable products and quality sales assistance. This reputation is especially strong within the large enterprise market segment.

What sets them apart in the market is their customer focus and distinct product. However, an internal weakness lies in conflicting opinions and objectives, as witnessed during the first meeting when Jowers was overwhelmed with varying viewpoints on product pricing. Matzer's stance was that software tools should always remain free, as that aligns with the company's tradition.

The belief that Atlantic company should not deviate from its traditional pricing strategy could be hindering their success. Additionally, it was important for Jowers to consider the sales force. However, during the initial board meeting, the head of the sales division was excluded, possibly due to concerns about sales commission. This suggests a potential lack of trust between divisions, as Cadena may have valuable input regarding

the pricing strategy. Furthermore, Atlantic was weaker than Ontario computers in supply chain strategy and cost reduction. This added difficulty to the pricing decision because in order to compete with Ontario's pricing, Atlantic would need to sacrifice profit margins due to their higher overall costs.

On the flip side, Ontario lacks the powerful PESA software that Atlantic has, which could give them a competitive edge. Despite being initially pricier, the PESA software helps cut down overall expenses post-purchase and is most suitable for the server market’s web-server and file sharing segments. Jowers has the option of pricing Atlantic’s bundle in four ways: first, they could stick to the company tradition and just charge for hardware while giving PESA away for free; second, they could price it the same as Ontario’s Zinc, a similar product on the market.

Atlantic Computers has two options for pricing: Firstly, a cost-plus approach based on the development costs of their software tool PESA, and secondly, a value-in-use pricing approach which demonstrates savings to customers compared to Ontario Zinc. As a recommendation, it is suggested that Atlantic uses the value-in-use approach and prices the Atlantic Bundle package to include both the server and software. However, since the company has a history of giving away software for free, it is crucial to ensure that charging for it does not affect consumer opinion. The sales force should focus on highlighting the benefits and savings that customers will receive upon purchasing the bundle.

The sales strategy for Atlantic computers should highlight the exceptional customer service and support provided. Although the Tronn is priced at $2000, this cost can be sustained as it ensures a profitable margin.

Reducing the price to match that of the Zink would decrease profits. Despite supply chain management not being perfected by Atlantic, they should focus on enhancing other core competencies that may result in additional costs to customers, but provide greater value.

Furthermore, The Atlantic must implement charges for the PESA software. According to my perspective, the software is a vital aspect of the company's marketing strategy, and offering it for free devalues its worth. Providing the software without charge may suggest that it is a supplementary benefit and not an indispensable component of the package, which is inaccurate in this scenario. The PESA software enhances server efficiency by almost four times, enabling customers to execute four times more work on a single Tronn.

The development cost of the PESA software was around $2 million. Although the license for it is usually provided to customers for free, it costs $750. Given the software's importance and significant R&D expenses, I believe Atlantic should charge for it, bringing the total bundle cost to $2,750. Despite being more expensive than Ontario's Zinc at first glance, customers will ultimately see savings that justify the added expense.

The cost of electricity per server is $250. By using Tronn, customers can save $750 annually by using only one server instead of four ($250 x 3). This means that the savings in electricity costs will cover the software cost within one year. Additionally, with Tronn, one administrator can manage up to 40 basic servers. This will save customers $80,000 per administrator annually if fewer administrators are needed due to a reduction in the number of servers.

The PESA software's efficiency results in significant savings for customers. However,

some customers may not initially perceive the benefits of purchasing the bundle with the software if they only consider the present moment. Thus, it falls upon the sales team to communicate these savings by demonstrating to customers how much they would save by buying fewer servers. As the target markets for Tronn and PESA are those interested in Basic Servers, it is essential to analyze the projected sales of this product. From 2001-2003, the projected sales are as follows: 50,000, 70,000, and 92,000, respectively. Therefore, Atlantic expects to see a total market volume of 212,000 in the upcoming years.