Computron is facing issues regarding pricing for its bid on the Computron 1000X computer for Konig and operating its new Frankfurt plant. The main concerns are that the bid cannot be over 20% of the lowest bid to win the contract, and top management will not allow pricing below a 33.3% markup. Other options are being considered like emphasizing quality over price due to past relationships, or waiting for future bids if this one is not successful. The summary analyzes factors affecting Computron's pricing strategy and how Konig's purchasing vice president may view the problem from a cost perspective.

1. Executive summary
The Computron, Inc. is facing problems regarding pricing the bid for Computron 1000X, future
functioning of Frankfurt plant, impact on production due to current market breakdown.
The main concern about Computron is that if the bid of 1000X should not higher than 20% of least bid to
get the contract. It is strongly recommended to get the bid for functioning of new plant. Various issues
regarding cutting down prices, bidding high or low and its pros-cons, current market situation and the
competitors is discussed here.
Regarding the markup price, the top management is not allowing to go below 33.3%. Though some of
the other options to be consider like on basis of past good relations with Konig explain them the
benefits of high quality regardless the price, other options to be consider for future if bid is not gained
etc. Such options are tested against the production, its cost, benefits to new projects.
Situation Analysis
Referring to current issue Computron is bidding $622,400 to sell its 1000x digital computer to Konig,
which is 43% higher than least bid. A new manufacturing plant in Frankurt plant might have to sit idle for
a couple of months if Computron couldn't win bid. Also Computron 1000X is purpose-built computer
while Konig needs machine with less accuracy and flexibility.
Here are the some other issues:
1. Possible cut price to have a chance:
|Company |Price offered |
|Computron |$622,400 |
|Ruhr Maschinenfabrik |$ 436,00 ...

2. Computron
Computron Inc.
1. What are the consideration affecting the price strategy of Computron? What is the relative of
these considerations? What are the international marketing implications?
Some key factors which Computron has to take into consideration in determining the pricing
strategy of 1000X digital computers in order to propose bidding for Konig are listed below:
1. The price which competitors are most likely to charge.
2. The future prospect of pricing in the long run such as future pricing of the digital computer to
sale to Konig, future pricing for the other customers in the European market. In addition, Konig
might negotiate to lower the price of the other product purchased from Computron or previously
purchased from Computron as well. If the price was set too low, it will determine the price of
Computron in the European market in the future, the company may not be able to increase the
price back.
3. Positioning of the product since Computron currently set the position of their digital computer
with high quality, reliable with premium price. If Computron lowers the price too much, it
might affect their brand positioning.
4. The profit requirement of the company i.e. the 33.3% mark up? Can it be lowered? What's
the acceptable level?
5. The capacity of the new plant in Germany. What's the capacity? Would it be possible to
generate the high volume product and sale with economies of scale instead by taking advantage
of the tax exemption?
The pricing strategy will affect Computron future business (profit and market share) in Germany,
including the other customers around Europe. Future price and profitability of Computron in
Germany and in Europe is the relative consideration.
2. How is the purchasing vice president of Konig likely to think about the problem?
The purchasing president of Konig could have looked at this problem from a pure cost
perspective when making a purchasing decision. The purchasing manager was trying to
leverage the sales...