Precise Software Solutions
Should Alon plan on introducing Insight at OpenWorld 2000? Why or why not?
Alon should not plan to introduce Insight at OpenWorld 2000. The software solution is not ready to be delivered to the market. The time constraints from the current state of the software to a finished product are very constrictive. Software vendors must maintain the highest of standards for quality and value. Customers are unwilling to accept crashes and problems. Microsoft experienced such problems when it introduced Windows Vista as a successor to Windows XP. Vista had reliability problems from the onset. In fact, the United States government is still operating with Windows XP in many departments. Alon is enthusiastic about the possibilities of Insight, but his excitement should be over creating a high quality product that is ready to go from the day of introduction. Precise Software Solutions could severely damage its reputation by selling Insight before it is ready to go. It would also give competitors an opportunity to study the software and create competing products.
How should Insight be priced?
Alon’s estimated sales price of $250,000 may be appropriate. Yet, most software sales over $25,000 require an executive approval. It is unrealistic to expect that executives will commit such large amounts of their budget to an unfinished software solution. Input costs are not given, so it should be assumed that the estimated sales price allows for an adequate profit. Incentives can be offered to early adopters and current customers as warranted. It is easier to offer incentives than it is to raise the product’s price after introduction. Selling the software solution should be done by helping the customer calculate the money saved by using Insight. Customers will essentially be selling themselves on Insight’s value as the cost evaluations are made. Yet, an unfinished product provides little value to a customer. Alon must understand that the software will receive full value from the customers when it is finished and able to fulfill Insight’s claims.
How should Precise think about segmentation for this new product?
Precise has built Insight to fulfill a specific need for potential customers. The market for Insight already has been cultivated by Precise’s account executives. They pose the best avenue for gaining an opportunity to demonstrate the value that Insight can provide to an organization. Another segment of the market will be for new customers that have never used a Precise Software Solutions product. Insight may also be a new means of introducing prospects to other software products. A superior product will open up doors that have been closed. Precise Software Solutions can also take the finished Insight package and scale it down for use by smaller organizations with smaller budgets. The scaled down version will also help develop brand awareness among the staff in IT departments.