Submitted to:- Submitted by:-

PROF.JOYDEEP BISWAS
ANSHUMAN DAS (22202012)
KSOM, BBSR PREETI CHOURASIA (22202042)
SAGARIKA PATTANAYAK (22202045)
NIKITA DEV (22202038)
SAKSHI KUMARI (22202046)
 PRE-READ 1: Building Loyalty in Business Markets
Even though it may appear paradoxical, the strategies that businesses use in the business market
frequently stand between them and the customers they want. While the top-down strategy may be
effective for consumer goods, it misleads businesses and hinders their efforts to attract and retain
customers in the business market. Additionally, sales efforts are focused on the end user, retail
strategy plays a significant role, and the sales process is short. Business markets, on the other hand,
typically have fewer customers and transactions. In today's business market, managing individual
customers is a challenge but a necessity. Suppliers in many industries are forced to concentrate on a
select group of important customers who made it through his 1990s wave of mergers and
acquisitions. Additionally, vendors focus on a select group of mid-market customers who make up a
portion of their base. Additionally, customers are clamoring for more assistance and support as the
business market becomes more competitive. If suppliers know what each customer wants, they can
only provide these services. Businesses can now collect and analyze customer data for less money
thanks to technological advancements.

The majority of sellers simply make the assumption that customers comprehend the worth of their
goods and services. That is a valid assumption, but it is completely false. Buyers are unable to
quantify the value of many benefits because they do not keep track of every product and service
they receive. For instance, Arrow Electronics began coordinating components of his supply chain for
customers and offering engineering services toward the end of the 1980s. A decade later, electronic
component distributors were shocked to learn that businesses that frequently utilized these services
had not been aware. the fact that Arrow provided them. In a similar vein, an annual survey
conducted by a manufacturer of medical devices revealed that none of the executives who worked
for the company's clients were aware of all of the services it provides to the organization. In point of
fact, the Buyer might not use all of the services that the Supplier offers on a regular basis and might
even stop using some of them when the Supplier starts charging for them. As medical supply
retailers forced customers to pay for each service rather than a single bill, Owens & Minor Hospitals
quickly learned to skip many services. In the business market, keeping customers in the crowd is not
enough to keep them coming back. Additionally, businesses must cultivate relationships with their
clients and cultivate customer loyalty over time. Sadly, more than 80% of businesses monitor
customer loyalty using satisfaction scores. Because there is a weak link between happiness and
loyalty, it does not work in the business market. Also, even though customer satisfaction scores
show how well a company has done in the past, they are not a good predictor of how customers will
behave in the future.

In the market, there are basically four types of buyers: most valuable partners, customers, buyers of
commodities, and underperformers Wesco wanted to provide customers with a comprehensive
selection of goods at low prices while also requiring them to sign long-term purchasing contracts.
Before making a commitment, they wanted to see if developing a relationship with Wesco would
lower the customer's costs for acquiring electricity and operating the electrical system.

PRE – READ 2: Customer Value Propositions in

Business Markets
Take into consideration the situation of an integrated circuit (IC) manufacturer. It wanted to supply a
manufacturer of electronic devices with 5 million units of its next-generation product. The
salesperson for the supplier found out during the negotiation process that he was competing with a
company with a price that was 10 cents cheaper per unit. Each salesperson elaborated on the
advantages of his company's offer. This salesperson's value proposition was based on the personal
service he would provide. Even though the offering was 10 cents more expensive per IC, the
customer, who had constructed a customer value model without the salesperson's knowledge,
discovered that the company's Even though they would be more expensive, the electronics engineer
advised the buying manager to purchase those integrated circuits from the development project
manager.

After developing a rigorous approach to comprehending their customers and how to divide limited
corporate funds among the creation of new products, businesses may be able to make decisions that
are more informed. This was the situation with a company that sold high-performance gas
chromatographs to research and development labs at major corporations, universities, and
government agencies in the Benelux countries. Users of R&D labs were able to maintain excellent
sample integrity with one use of a particular chromograph. The company started selling this
chromograph in its most basic form to a new market in an effort to grow: industrial testing facilities

Although a supplier's product may have a number of technological, economic, social, or service
benefits that make it more valuable to customers, there is a good chance that products from
competitors also have these benefits. As a result, the most important question is, "How do these
value elements compare to those of the next best alternative?" We have discovered that it is helpful
to divide value items into three categories. Points of parity are parts that work or perform nearly the
same way as the next best option. The characteristics that either enhance or degrade the supplier's
offer in comparison to the second-best option are known as points of difference. Things the supplier
disagrees with, such as how their performance or functionality compares to that of the
competition's best substitute, are points of disagreement. Either the supplier views a value element
as a point of parity while the customer views it as a difference in favour of the next best alternative,
or the customer views a value element as a point of parity while the supplier views it as a point of
difference in favour of the next best alternative.

Q2. Which pricing method should Jowers apply to charge Day Trader Journal.com? Why?

Ans- Atlantic Bundles ought to cost $3,500 each, which includes $1,500 for PESA and $2,000 for the
server. The bonuses for Rounds 1 and 2 are listed below.:

• Round 1: At $3500 per unit, an Atlantic Bundle costs the customer $200 more than four Zink
servers ($1700 each). However, the customer will be able to save a lot of money on operational
expenses with the additional $200.

• Round 2: The data presented in exhibit 1 indicate that there will be a savings of $29 per year in
operational activities for each additional dollar spent on purchasing the Atlantic Bundle.

DayTraderJournal.com ultimately saves $5800 as a result of this deal, which represents significant
long-term savings. The value that PESA will bring to DayTraderJournal.com by lowering operating
expenses is shown in Exhibit 2. Additionally, Atlantic Computer will be able to profit from a portion
of the value that the PESA tool will generate by charging $3500 for each Atlantic Bundle unit. Exhibit
2 shows how the share of the total value that was created that was used to figure out the price of
PESA was calculated.

Q3. Think broadly about the top-line revenue implications from each of the four alternative pricing
strategies. Approximately how much money over the next three years will be ‘left on the table’ if
the firm were to give away the software tool away for free (i.e. status-quo pricing) as compared to
the the other three pricing methods?
Ans- According to exhibit 3, Atlantic Computer would lose a significant amount of money by
providing PESA for free if prices remained unchanged. Additionally, the Atlantic Bundle is the
product that has the potential to alter or decrease the market's demand for servers when the
industry as a whole is taken into consideration. As a result, selecting the appropriate pricing for the
Atlantic Bundle is essential. While a lower price may help Atlantic Computer temporarily increase its
market share, a long-term decline in demand will have an effect on both revenue and profitability.

Q4. How is Matzer likely to react to your recommendation

Ans- The $4,200 per unit Atlantic Bundle would not appeal to Matzer. As was mentioned in the case
study, Matzer carried out a thorough evaluation of the market's potential for basic servers. Atlantic
Computer must enter the basic server market if it wants to increase overall sales because demand
for them is expected to rise quickly in the coming years. Against this backdrop, he decided to create
a new basic server product line. This market is now dominated by Ontario Computer, whose lower
prices for servers that best meet customer requirements are a major contributor to its success. As a
result of Matzer's propensity for aggressive marketing, the Atlantic Bundle's $3500 unit price does
not appeal to us.

Q5. How is Cadena’s sales force likely to react to your recommendation? What can Jowers
recommend to get Cadena’s sales force to understand and sell the PESA software effectively?

Ans- They could sell the Atlantic Bundle for $4200 per unit because Cadena's sales force was paid
70% salary and 30% commission (assuming that commission is based on sales, not units sold). They
will earn nearly twice as much commission if they sell the bundle at the recommended price as they
would if they sold it at $2000 per unit. Software tools and server prices are the norm in the industry.
However, there are software tools that add the most value to Atlantic Computers and its customers.
To demonstrate how customers behave and how much PESA can save, communication is so
important. Offering PESA a fair price is one way to convey this. Consequently, in order for Cadena's
sales staff to comprehend PESA's value and sell it at a fair price. All sellers ought to be aware of the
calculations pertaining to the total value that PESA can generate and the pricing strategy for sharing
a portion of that value.

Q6. How are customers in your target market likely to react to your recommended pricing
strategy? What responses can be provided to overcome any objections?

Ans- Customers would not like the recommended pricing for the Atlantic Bundle at first glance
because:

• Atlantic Bundle's cost per server would be significantly higher (double) than Zink's.

• They would rather not pay for the tool because they are unaware of its capabilities.
DayTraderJournal.com's pricing model is a useful tool for displaying the total value of operational
activity generated by the Atlantic Bundle Savings over the server's lifespan. Present this server to the
customer with PESA loaded on it, which reduces the number of servers required for the server. This
will be a source of cost reduction and will be helpful to our customers. Client Small upfront cost
savings, but PESA pays off significant benefits from reduced cost of ownership. Utilize the Atlantic
Bundle for the long term and reap the benefits.

Q7. How is Ontario Zink’s senior management team likely to react to the Atlantic Bundle?

Ans- In order to maximize the Round 1 benefit—savings on acquisition costs—management in

Ontario does not anticipate lowering the price of zinc servers, which has a short-term negative
impact on profitability and a long-term negative impact on market share. Ontario receives forty
percent of the profit at the current price of $1700 per zinc server. assuming it fits his 30% profit
margin from Atlantic Computer's Tron server (excluding PESA). Zink servers no longer qualify for a
price reduction of $100 per server. It is very cost-effective due to the fact that its initial cost is lower
than the Atlantic Bundle's. Despite a decrease in the cost of zinc servers, the number of servers
required to meet processing requirements remains the same. Operating expenses are still high in
comparison to the Atlantic Bundle. DayTraderJournal.com data show that the Atlantic Bundle
Round-2 Benefits (Savings) cost of ownership (cost of ownership) remains high at $8000 annually, as
do the operating costs for the required number of Zinc servers. Therefore, in accordance with game
theory, the most likely course of action for senior management at Zinc Ontario would be to hope
that we can increase the performance of the server that is being bridged to reduce the number of
servers required to achieve the desired level of power. Additionally, favourable responses are
anticipated for short-term marketing campaigns based on low prices and earned price.