CNS Worldwide

  • Reference: HBS-917531-E

  • Year: 2016

  • Number of pages: 9

  • Geographic Setting: United States

  • Publication Date: May 26, 2017

  • Fecha de edición: Jan 31, 2005

  • Source: HBSP (USA)

  • Type of Document: Case

  • Industry Setting: Computer services;Computer storage devices;Computers & electronics

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Description

CNS Worldwide has long been the market share leader in the IaaS cloud server market, yet it has remained unprofitable for years. Industry capacity utilization is low, and prices have declined over 70% over the last decade. CNS is considering withdrawing from the market if it cannot find a way to increase prices. As a large public bid is about to be held, CNS must decide whether to bid and, if so, at what price. This case is intended for use an introductory marketing management course that involves an in-depth analysis of pricing. It can also be used in courses on pricing, business-to-business (B2B) sales, or competitive strategy. The case introduces students to specialized pricing mechanisms, oligopolistic markets, the challenges of avoiding a price war, the concept of price leadership, and the possible effects of a firm taking this role, including what it needs to do to succeed. There is a direct analogy to the airline industry that can be discussed during the last part of the class.

Keywords

Breakeven analysis Capacity utilization Competitive bidding Cost leadership strategy Economics Market signaling Marketing Negotiation Oligopolies Pricing Pricing strategy Technology life cycles