Assignment 2: Atlantic Computer Co.

A report submitted to
Professor Rajesh Pandit

In partial fulfilment of the requirement of the course

Business-to-Business Marketing
(B2BM)

By
Sriram Ravichandran
Roll No. 2011249

On
23 - 07 - 2021
 ATLANTIC COMPUTER CO.

1. Provide an overview of the market segments and their potential (300 words)

- Server industry mainly has two major segments. Segment of High-Performance

Servers (HPS), which is the largest segment. The second being of Basic Servers
(BS) – which is developing with the penetration of Internet.

- High-Performance Servers (HPS) – conventionally used to run applications that

are complex in nature. This includes Business Intelligence (BI), SCM, and ERP.
Over the next 4 quarters, 200k units will be demanded by this segment. The
expected growth in the segment is 3% annually over next 2 years.

- The market share by revenue of Atlantis is about 20%, which makes it a strong
competitor in the segment.

- Basic Servers (BS) – The CAGR for this segment is expected to be around 36%
between Year 2001 and Year 2003, where the initial demand for BS in 2001 will
be about 50k units.

- BS delivers capabilities for basic computing. This may be used to perform simple
task like repeatedly displaying website information.

2. Calculate the cost+ (cost plus) pricing for 2 Servers + 2PESAs bundle (1 table/ copy-
paste from excel sheet calculations)

Cost+ (cost plus) pricing for 2 Servers + 2PESAs bundle

 
Table 1 PESA Projected Sales
Year 2001 2002 2003
9200
Demand (in units) 50000 70000 0
Share of Atlanta 4% 9% 14%
1288
Expected Sales 2000 6300 0
Expected PESA sales 1000 3150 6440
Total Expected PESA sales for 3 years 10590

Table 2 Basic Data

Basic Server Cost $ 1,538.00
HPS Cost $ 7,586.00
R&D cost (PESA) $ 20,00,000.00
PESA expected sales 10590.00 (Table 1)
Cost for PESA per server $ 188.86
 Table 3 Cost+ pricing (Base price + Cost of PESA bundle)
For Basic servers
Base cost + PESA $ 1,726.86 (Table 2)
Markup of 30% $ 518.06
Total $ 2,244.91
For 2 Basic servers $ 4,489.83
For High-performance servers
Base cost + PESA $ 7,774.86 (Table 2)
Markup of 30% $ 2,332.46
Total $ 10,107.31
For 2 High-performance servers $ 20,214.63

3.       What would be the sales team's reaction to value-based pricing for the bundle? (300
words)

- Value based pricing captures the perception of the customers and the value
addition that is brought in by the product. As it does not involve any cost metrics,
it is better for the sales team to pitch on the value addition to the customer.

- The idea of Cost and Markup reduces and hence negotiation in terms of percentage
might reduce.

- Value-based pricing will allow the sales team to pitch at the higher end of price
bracket which may eventually lead to higher revenue per piece sold and higher
commission (30%).