The issue at hand is what pricing strategy should be adopted for the "Atlantic Bundle". .
There are 4 alternatives that will be considered for this case. (1) To stick with company tradition in only charging or hardware and include the PESA in the bundle free of charge. (2) Charge a price equal to what a customer would pay for four Ontario Zink servers. (3) Charge a price based on a cost-plus approach based on the development costs of the PESA. (4) Charge a price based on value-in-use pricing, focus on what the consumer is saving and focuses on possession costs. In discussing the criteria for choosing the best alternative we must consider all costs and have a strict focus on what the consumer is demanding. In exhibit 3 all associated costs for servers in general and a comparison of costs between Atlantic and Ontario are listed. In exhibit 4 we are given the results of three different customer profiles including a "web server" basic, "file sharing" basic, and high performance customer. .
Using these research tools we are able to evaluate the different alternatives and choose which will yield the best results in capturing the customers attention on the deal Atlantic Computer is offering. We must also take in consideration that we will need to win over many loyal Ontario Computer repeat customers who have never really considered any of Atlantic's servers before. I believe that in a situation that we mistakenly price the bundle too low, it wouldn't be too much of a hassle as at least we will still be able to turnover all the year's inventory for a positive return. Rather, we need to be cautious to not price the bundle too high. Many consumers with tight budgets will choose the lower priced of the two, which is the whole idea of Ontario's cost leadership plan. This criterion is crucial in evaluating the alternatives as we move on. .
With what was just said I will start with the second option I mentioned, that is pricing the "Atlantic bundle" at the price of 4 Ontario basic servers'.
