Atlantic Computer Case Study Essay

Atlantic Computer developed a product, the Atlantic practice bundling, to meet an emerging sancti singled waiter commercialize. The Atlantic pack together is a Tronn innkeeper coupled with the writ of execution Enhancing horde Accelerator software tool PESA. Atlantic Computer must decide on the condition strategy. Situational AnalysisThe external analysis is as followsCustomers The first customer identified has a ancient remove to host websites, Web Server customer. The second customer identified has a primary need for file servers that help lay aside designers share graphic, text, and layouts, File Sharing customer. Customers in these shares appear to be the ones that result get ahead the to the highest degree from the PESA tool.Competition The primary competition in the market is Ontario who claims 50% of revenue market share with the residual of market comprised of many smaller venders (external threat, addition A). Ontarios business model focuses on driving out non-value added costs and competing largely on charge (value pricing). Its products are sold primarily through the internet.Collaborators The server divergence relies upon a high-touch direct gross gross sales channel at a higher(prenominal) cost than that of online sales. Sales reps gain 70% salary and 30% commission. Context The largest segment of the server industry is the high performance server segment. The segment is expected to demand somewhat 200,000 units next year and is expected to grow at approximately 3% annually over the following two years. The basic server segment is a newer segment with strong forecasted growth of 36% (external opportunity, attachment A). The segment entrust comprise approximately 20% of come in units sold next year at 50,000 units. By the third year of the forecast, the basic server market go out make up approximately 30% of total units sold.The internal analysis is as follows community situation Atlantic is a well-established confedera tion with over 30 years of experience in the server market. The company is known for providing top-notch, highly reliable products and high quality, responsive post-sales assistance (internal strength, Appendix A). Atlantic has concentrate on selling high-end performance servers to large enterprise customers. The Atlantic Bundle was developed to assist the company in emerging into the basic server segment. The product was created to produce a basic server without creating a substitute product to the high performance servers. However, the logic seems flawed as customers would not have viewed the basic server as a substitute to the high-performance servers (internal weakness, Appendix A). In the past, Atlantics sales force gave away software tools.Relative market/competitive position Ontarios Zink server performs at approximately the same level as Atlantics Tronn. Even without the built-in PESA R&D costs the Tronn was priced higher relative to the Zink. Hence, the target market was n arrowed to include customers that require more than one server. PESA supplys the Tronn to perform up to four times faster than its standard speed. The Atlantic Bundle will allow companies to reduce the number of basic servers they must purchase and reduce operating expenses such as electricity charges and software license fees. Mr. Matzer indicated the Atlantic Bundle is the sale they want.Results The gains to customers from the PESA software tool were examined and it was found that the Web Server and File Sharing application segments will gain the most from the tool. The conclusion was based on the benefit to customers of being able to purchase fewer servers and the resulting savings (internal strength, Appendix A).Challenges The primary challenge will be to address whether Atlantic will be successful utilizing its commissioned sales force rather than online sales. other problem arises in how to motivate the sales force and the training required to sell the Atlantic Bundle. Fin ally, software has historically been given away which appears to be the industry norm. Charging for software may alienate customers (internal weakness, Appendix A). Alternative Courses of ActionFree PESA Software with Purchase. Rather than regarding the PESA R&D as a sink cost, I chose to distribute the costs to every server. The price under this channel was determined to be $2,122 (see Appendix B). The primary drawback is that a customer who would have normally purchased the Tronn without the software would be charged a higher price ($2,122 vs. $2,000). Continuing with the tradition and norm of free software, staff would not have to be retrained and customers will not feel alienated. Furthermore, the one-bundle price could easily be transitioned to on-line sales, and the low price will change magnitude market share. The free software could create an illusion of low perceived value. Finally, the cut back price will result in lower profit margins, and it does not take into conside ration the value advantage sure by the customer.Competition Based Pricing. The price under this despatch was determined to be $3,400 (see Appendix C). to a lower place this route, the company will earn more profit per bundle sold. Additionally, minimal effort is required to determine the price. However, the competition based pricing creates indifference between the Atlantic Bundle and its competition. The higher price will also reduce market share and could stir a pricing war. Cost-Plus. The price under this route was determined to be $2,245 (see Appendix D). Atlantic would gain market share under this route as the price is low relative to the benefits the customer receives. Additionally, the pricing will remain the same for the next ternary years. This approach does not take into consideration the value advantage received by the customer. Also, it results in lower profit margins per bundle sold. Value-In-Use.The price under this route was determined to be $3,200 (see Appendix E ). The primary benefit is that the approach is customer focused. The price is justified and the customer will perceive higher value for the price. higher(prenominal) margins will also be earned. However, Atlantic will lose market share under this route at the higher price. Additionally, staff would have to be extensively re-trained and motivated. Customers who primarily purchase online may be reluctant to sit through We can save you money sales pitches.RecommendationThe company should buy the farm with the free PESA software route. The primary benefit is that the company will be able to initiate online sales which will reduce training costs, salaries, and commissions and will make up for the lower profit margins earned. One primary drawback is a customer will be charged a higher price even if they do not require the PESA tool. However, the target market has been narrowed to include customers that require more than one server, because it is incredible that a customer who requires o nly one server will purchase the Tronn over the Zink. The most likely response from Ontario is to lower the price of the Zink to remain competitive. At the low price of $2,122, Ontario would have to lower Zinks price to less than half of the price of the Tronn to fight for market share from the target market. Finally, the lower price feeds into the market-penetration strategy to maximize market share. The issue of perceived low quality can be do by as customers have proven the low-cost strategy utilized by Ontario has not affected their opinions on quality.ConclusionThe free PESA software will allow the company to compete on the same level as Ontario through price and online sales without having to retrain employees, stray from the general rule of providing free software, or introducing sales pitches to customers who will likely be reluctant to take part. The low, competitive price will back market penetration and favor Atlantic should Ontario reduce its prices.