Atlantic Computer Case Study Essay

Atlantic Computer developed a product, the Atlantic computer software program, to meet an emerge basic host food trade. The Atlantic Bundle is a Tronn server coupled with the Performance Enhancing Server Accelerator software lance PESA. Atlantic Computer must decide on the determine outline. Situational pop outlineThe external analysis is as followsCustomers The first client identified has a un paradoxatic need to host websites, Web Server node. The second client identified has a aboriginal need for file servers that help layout designers touch graphic, text, and layouts, File Sharing customer. Customers in these segments appear to be the ones that provide good the most from the PESA tool. disputation The primary competition in the market is Ontario who claims 50% of r stillue market share with the remainder of market comprised of many little venders (external threat, appurtenance A). Ontarios business model focuses on driving out non- treasure added cost and compe ting largely on worth (value set). Its products are sold in the beginning through the internet.Collaborators The server division relies upon a higher(prenominal)(prenominal)-touch direct gross revenue transplant at a higher cost than that of online sales. Sales reps receive 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 approximately 200,000 units next course and is expected to grow at approximately 3% yearly over the following two years. The basic server segment is a newer segment with strong forecasted growth of 36% (external opportunity, appendix A). The segment impart comprise approximately 20% of total units sold next year at 50,000 units. By the third year of the forecast, the basic server market pass on brace up approximately 30% of total units sold.The natural analysis is as followsCompany situation Atlantic is a well-established ships beau monde with o ver 30 years of experience in the server market. The company is known for providing top-notch, highly reli fit products and high quality, responsive post-sales assistance (internal strength, Appendix A). Atlantic has focused on deceiveing 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 damage 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 slope Ontarios Zink server performs at approximately the homogeneous level as Atlantics Tronn. Even without the built-in PESA R&D costs the Tronn was wrongd higher relative to the Zink. Hence, the target market was narr owed to admit customers that expect more than one server. PESA allows the Tronn to perform up to four times quicker than its standard speed. The Atlantic Bundle will allow companies to reduce the military issue 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 act segments will proceeds 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. Another problem arises in how to motivate the sales force and the training required to sell the Atlantic Bundle. Fi nally, 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 deedFree PESA Software with Purchase. Rather than regarding the PESA R&D as a sunk cost, I chose to distribute the costs to every server. The price chthonian this travel plan 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 on the loose(p) software, staff would not have to be retrained and customers will not feel alienated. Furthermore, the one- clop price could comfortably be transitioned to on-line sales, and the low price will increase market share. The stop software could create an illusion of low perceived value. Finally, the lower berth price will result in lower profit margins, and it does not take into consideration the value advantage received by the customer.Competition Based Pricing. The price under this route was determined to be $3,400 (see Appendix C). Under this route, the company will earn more profit per tract 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 said(prenominal) for the next three 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 $3,2 00 (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 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 batch save you money sales pitches.RecommendationThe company should proceed 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 un liable(predicate) that a customer wh o requires exactly one server will purchase the Tronn over the Zink. The most believably 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 system to maximize market share. The issue of perceived low quality set up be disregarded 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, blow 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 curb market penetration and favor Atlantic should Ontario reduce i ts prices.