Omnitel Case Study Essay

1544 Words 7 Pages
Executive Summary

Omnitel Pronto Italia (Italy’s second mobile phone service provider) is faced with an opportunity to introduce a new market driven strategy. One problem it faces is in differentiating itself from Telecom Italia Mobile (TIM), a state owned and operated provider who until Omnitel’s entrance into the market had a monopoly over the Italian telecommunications market. The second issue is implementing a pricing strategy and plans that TIM will not view as price cuts, ultimately setting off a price war.

In an effort to propose a pricing strategy that will create value at the corporate, product and executional levels, Team N has been asked to assess a wealth of market research and data. After thorough evaluation, the team
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The options are to eliminate the monthly fee but charge full price for handsets or offer a heavily subsidized handset, have customers sign a contract in exchange and continue to charge a monthly fee. Of course both options produce a number of pros and cons.

The first option to eliminate the monthly fee but charge full price for the handset would certainly address Omnitel’s challenge to differentiate itself in the market, especially since both players charged monthly fees in the past.

Eliminating the monthly fixed fee could possibly reduce Omnitel’s churn rate. Something the company made every effort to do. Hopefully, by rewarding the market with what it wanted, Omnitel would gain customer loyalty. Charging full price for the handset would be a low issue, since the Italian market was currently conditioned to pay the full price for a handset. This option also afforded Omnitel the opportunity to create an innovative pricing strategy with plans that could not only compete with fixed line rates, but change costs and fixed fees that concerned both prospective and existing customers. Plans could be targeted to “high end” customers as well as those at the lower end. If this option increased the customer’s desire to own an Omnitel phone, it would spark interest among distributors prompting them to carry and sell more handsets.

On the other

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