Pricing Strategy and Channel Distribution Pricing Strategy

Pricing Strategy and Channel Distribution

Pricing Strategy .

Pricing Tactics

Legal and Ethical Issues Related to the Pricing Tactics .…

Marketing Distribution Channel Analysis

Distribution Strategy Fitting Marketing Objectives & #8230

In this case, Atlantic Computers has a plethora of various pricing strategies available to use for its interesting new server. The server has a unique software component which if it is installed with the server as a package then the server becomes extremely more productive in processing certain computing tasks. In fact, for some users the software used in conjunction with the server can perform as well as four servers from a competing vendor. This position represents the source of the pricing dilemma. The company can used a traditional cost-plus pricing structure or they could focus on value pricing. It is recommended that server and software price be set roughly at a level that would be slightly less than three of the competitor's systems. Furthermore, while the server can be priced through the traditional method, the pricing strategy should focus on the server's software to achieve pricing objectives as this was identified to be the most advantageous strategy for the Atlantic Computer company.

Pricing Strategy

A plethora of various pricing strategies were considered in regards to Atlantic Computers position with the new product group that it plans to bring to market in the near-term. However, the company's situation actual involves two separate products that may or may not be used in conjunction. The server can operate without the software system nearly as well as it can without the software for certain functions. However, for other processing functions the software makes the server nearly four times more productive. Therefore the niche segment for the two products to be used in conjunction would only apply to certain customers and certain applications.

Thus it was determined that each separate product could have its own pricing strategy individually which could work in conjunction to take full advantage of the unique opportunity the server and software provide to the specific niche market that was identified. Furthermore it is recommended that the actual physical server be priced along the lines of a penetration strategy while the software on the other hand could be priced on a skimming strategy. The costs of the conjunction of the two products can also represent a unique strategy that would be tailor to that particular niche market.

Pricing Tactics

The pricing tactics should again be different for each product. The servers were identified to be most likely to maximize profit with either a cost-plus strategy or a competitive strategy. If the production capabilities are sufficient to cover the increase in demand than Atlantic Computers should attempt to still market share from their competitor, Ontario Computers, by making its server price more competitive. Therefore if production can handle the demand then the Tronn basic should be priced at $1,850 dollars which would help with market penetration.

The PESA software tool on the other hand should be priced in regards to a value model. There are two separate segments that would benefit greatly from the software. These segments are the customers who will predominantly use their servers for either file sharing or as web servers. The software tool helps the server run nearly twice as fast for file sharing operations and roughly four times as fast for use as a web server. So theoretically if a customer used two servers for file management with an Ontario system then this could be replaced with one Atlantic server running the PESA tool. The price for the two servers from Ontario would be $3,400. If you subtracted the cost of one Atlantic server from this amount then the balance would be $1,550. This is what the price is recommended to be charged for the PESA tool.

Sales professionals would be able leverage the value of the tool for the file sharing segment fairly easily. If the upfront costs were roughly similar then the customers would most likely consider other issues to base their decision upon. Since the Atlantic system would also provide countless other benefits such as savings in licensing, administrators, energy costs, and other such benefits then this sale would represent a competitive advantage against Ontario Computers. The organizations that intend on using the server as a web server would receive numerous advantages from the Atlantic system and this would overwhelm the competition's capabilities at this price for this segment. Utilizing this approach Atlantic could target these two segments aggressively with their software tool.

Legal and Ethical Issues Related to the Pricing Tactics

There weren't any major ethical limitations to this pricing strategy that were identified when this research was conducted. In fact it is recommended that the margins for the systems service be significantly reduced to be more competitive in the market. This will provide consumers with increased levels of value. In regards to the PESA software tool, the pricing strategy that is suggested is based on value pricing that is specific to niche segments and doesn't pose any significant ethical risks.

Marketing Distribution Channel Analysis

Since the products serve different target markets then it may be beneficial for the firm to utilize a hybrid distribution strategy. The server by itself could utilize more of a push type strategy while the unique niche that the server in combination with the PESA tool fills might make this more appropriate product to be initiated with more of a pull strategy. Since the demographics in the niches are relatively focused then targeted marketing messages should concentrate on the unique features the PESA tool will offer their organization. Also since it is likely that the software tool will be downloadable then this product is virtually exempt from logistical challenges.