Marketing Class: Atlantic Computer: A Bundle Of Pricing Option Case Study

Jason Jowers, a product manager at the Atlantic Computer Inc, had a great responsibility in the company after four months of joining it. Being the youngest product manager with fresh knowledge in management rotations, which included several projects such as business development, project strategy and project management, he had a great responsibility of developing a pricing strategy for the existent ‘Atlantic Bundle’ at the company that was a large manufacturer of high-tech products and servers. The ‘Atlantic Bundle’ was a new PESA software tool and a Tronn server. He acknowledged that it was a great task ahead of him, but was eager and confident to handle the challenge. The initiatory marketing meeting involved elemental individuals of the company. These individuals included Harry Fowler, the director of the new product marketing, Emily Jones, the director of the R&D team of the division and Chris Matzer, the head of the super division. The meeting was elemental to Jowers because it brought about questions concerning the project, issues that could help Jowers in developing a pricing strategy for the project of the ‘Atlantic Bundle’. For instance, Matzer gave an overview of the Tronn, the new server and its significance in meeting the emerging market opportunities in the US. Additionally, Fowler presented significant industry features and the projecting sales for the Tronn. All this information would be necessary in creating a pricing strategy for his project.
Jower’s problem was developing the pricing strategy as a product manager for the new project called the ‘Atlantic Bundle’. To do so, he had to come up with factors and elements that would be critical in developing that pricing strategy. These issues fell under business operations and reflected his awareness of the project. Furthermore, the pricing strategy would affect the company variously. Thus, he had to come with a favorable, efficient and effective strategy. For Jowers to come with the apropos strategy for the project, there was a need for identifying the necessary knowledge. This knowledge would provide an explicit basis on how to form this strategy regarding the operations of the company. To do so, Jowers conducted a secondary research on individual internal reports of the company. These reports would provide a greater review of the market, especially the company’s market. Firstly, he reviewed a document that detailed the history of the company. The Atlantic Computer Inc was a huge player in the computer industry competing in the sever market through selling high-end performance servers to its large enterprise customers. The entire firm particularly the Super Division was significant providers of top-notch and highly reliable products, which aided in developing reputation for the providence of responsive and high quality post-sales assistance. From this information, he figured out that the strategy of the company has been based on product differentiation and customer intimacy. Another important piece of information was a memo written by Matzer on the effects of the internet on markets. However, Jowers focus was on Atlantic Computer’s competitors, particularly Ontario Computer Inc. hiss focus was on the analysis of the necessary server market of these two companies. These comparisons would give him a clear picture on how to handle the pricing strategy of the new project.
Jowers acknowledged the fact that there were many factors affecting the pricing strategy for the project. Firstly, the Server Division had a traditional focus on hardware limiting the emphasis on the development of software tools. These software tools were significant in the enhancement of the performance of the servers. Secondly, the Division relied upon the cost-plus pricing analyses in determining the prices of the servers. Jowers also came to the realization that critical consideration of the customer segments would be elemental to establish the gains accruing to the customers from the PESA software tools.
After careful assessment of these pieces of information, Jowers realized the significance of conveying to the prospective customers. The effects of first-order savings from the purchases of the ‘Atlantic Bundle’ would be caused by the need to buy fewer servers. On the other hand, the effects of the second-order savings would include lower labor costs, license fees of the software and the annual electricity charges.
Planning of the strategy involved several approaches that could be useful to develop a pricing strategy for the ‘Atlantic Bundle’ for exemplary customers. Usually, strategies included cost-plus pricing, competition-based pricing and status-quo pricing. Jowers came up with another pricing strategy for the project, the value-in-use pricing policy. This approach would allow for the identification of the amount of savings that a customer would realize from buying fewer servers, utilizing less electricity and labor and securing fewer licenses of software application. To do so, he would demonstrate the amount of savings that a customer would realize by buying the Atlantic Bundle as compared to buying four servers from Ontario. The value-in-use approach would see him optimizing the value capture of the Atlantic Bundle and describing possible implementation issues that could arise. Moreover, he would give appropriate alternatives that could be proficient since the tradition of the company was based on hardware.