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Atlantic Computer Pricing Strategy Essay

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To: Atlantic Computer Executive Committee
From: Robert Rupp
Date: October 24, 2012
Re: Pricing Strategy for Tronn Server and PESA Software

Executive Summary
The market for servers is changing, and Atlantic Computer has an exciting product offering well suited to thrive in this new market. Stiff price competition from competitors within this segment, make the organization’s decision on pricing especially critical. Though Atlantic has traditionally used cost-based pricing models, the exceptional performance improvements offered by the bundling of Atlantic’s new hardware and software product, offer a unique opportunity to pursue of new model. The company should utilize a multiple level pricing strategy that incorporates a value-based approach to the hardware software bundle. In doing so, the organization will be able to maximize its profits and margin, while simultaneously reinforcing its brand image, and solidifying a strong position in a growing market.
The exponential growth of the internet and World Wide Web since the 1990’s has led to a shift in the growing market for servers.   Once dominated by academic users performing intensive computational workloads, the server market of the internet generation is geared more toward high volumes of less intensive tasks, like email, file sharing, and web site hosting. Atlantic Computer has developed a new basic server that targets this new segment of the server market, as well as a software product designed to increase the performance of this new breed of lower performance server. Through a successful launch of the new Tronn basic server, and the PESA software tool, the organization has the opportunity to increase its revenue while simultaneously expanding its product mix into a growing business segment and diversifying its product portfolio in a forward looking way.
Situation Analysis
A staple in the market for servers for 30 years, Atlantic Computer has traditionally focused on high...

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