Omnitel Case Study Analysis Rubric

 

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MarketingManagement|7/1/2010

Diagnosis:

Telecom Italia Mobile (TIM) had a monopoly over the Italian Communications Market. It generated 97%

of Italy‟s 7.5% market penetration, also until Omnitel‟s entrance into the market because of the lack of thecompetition, TIM didn‟t incur the huge marketing costs. TIM‟s marketing strategy was primarily directed towards

the uppers echelons of Italian society. Omnitel entered the market in Feb 1995 but they could start the commercialservices in December 1995 with network coverage of 40% of the Italian territory. Ominitel thought of its superiorcustomer care as its competitive advantage over TIM, however they could only acquire 1,80,000 subscribers by May1996. Omnitel was looking for methods to differentiate itself from TIM but at the same time avoiding a price war.

Problem Identification

The problem was twofold, that of building Omnitel‟s market share while avoiding a price war with TIM, and

differentiating brand Omnitel from brand TIM.

5 C Analysis

Company Background:

Omnitel was a

ble to obtain GSM license after liberalization and paid Lit.750 bn in Dec „94 to become Italy‟s

second GSM operator and launched its commercial service in Dec. 95.

They started with a network coverage of 40% of Italian territory.

Market share was 4% of the total Italian telecom market.

Initially they offered plans similar to TIM but prime focus was on its high-quality customer service, which

led to „happy‟ customers and low churn rates.

Financial strength of Omnitel was not as strong as their competitor i.e TIL, hence they avoided getting into aprice war situation.

Competitor Analysis:

The major competitor was Telecom Italia Mobile (TIM) formed in July 1995 after divested from TelecomItalia and was listed separately on Italian stock exchange.

The customer base was over 4 million by the end of first quarter of 1986 and had strong roots in ItalianCellular market.

They offered two types of tariffs:

o

Euro Family

o

Euro Professional

They enjoyed monopoly over Italian telecommunication market until Omnitel‟s

recent entrance; themarketing costs had been lower than its European counterparts.

The distribution channel of TIM was very strong as it had 1,500 exclusive dealers, 20 TIM- owned shopsand 150 Telecom Italia stores, but after the entrance of Omnitel they became more aggressive.

Its marketing strategy was to cater primarily to the high end segment of the Italian society touting cellularphone as a status symbol.

Omnitel Pronto Italia

739 WordsDec 20th, 20113 Pages

Omnitel Pronto Italia Case Analysis Introduction Omnitel is a telecom company based in Italy, which had purchased the GSM license on Dec 1994. In a country where mobile phones are considered as a status symbol, Omnitel focuses on providing superior customer service and therby reducing churn rates. The company has a marketshare of 4% and is capable of giving Telecom Italia Mobile (TIM), the market leader, a close run for their money. The vision of Omnitel is to position cellular phone in a manner akin to wristwatch, which is personal and indispensable. Push Strategy by the monopoly market Leader TIM Vs Pull strategy of the new comer Omnitel: Telecom Italia with a 97% share of the 7.5% market penetration rate in Italy had a sole aim of…show more content…

Beside this Omnitel didn’t subsidize the price of their handset as they were aware of the Italian consumer trend and willingness to pay. With the high quality service Omnitel wanted to develop brand loyalty which further helped for achieving greater penetration. This increases the demand among customers directly pushing the dealers to sell their phones without any negotiations. Europe Telecom Market Europe Cellular penetration rates are relatively modest, value for money due to combination of reduced cost of the service and improved quality of service, All cellular operators in Europe have moved to digitization & the market is a competitive one, hence customer awareness is high which increases the demand in market. Growth prospects are very positive for this market.

Country Name
Scandinavia Finland Sweden Norway U.K Italy

Penetration Subsidies/DC Churn Rate
20% 20% 23.4% 25% 9.3% 7.5% N Y Y Y Y 12% 20.5% 22% 28% 12.5%

Finland has a very interesting data having the lowest churn rate, without any subsidies/dealer commissions and a good penetration rate as compared to the other countries. Finland was the most sophisticated markets in the Europe. Analysis The plan Libero is a very good option for Omnitel to go ahead. Initially with this plan, total average revenue per customer per month is Lit. 90385 is less than when compared to that of TIM’s average revenue per customer per month is Lit. 93412.

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