Omnitel Case
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Sonam Shah 9/28/11
Strategic Marketing, Planning & Management
Professor Erdem: Omnitel Pronto Italia Case
1. What was Omnitel’s competitive advantage when the service was launched in December of 1995?
* Omnitel’s strategy to position itself as a telecom company that provided exceptional customer service
* First, the operator’s approach was very friendly and polite to each and every caller
* Second, the company tried minimizing the customers’ waiting time during a call; Most customer service calls were answered within 20 seconds
* Third, Omnitel tried to offer one-time calling to limit the number of times a customer was transferred to different specialists
* Omnitel also strived to maintain a low churn rate of about 10% - 15% a year
2. Why did the launch not perform to expectations?
* There was a state-owned competitor, TIM, already in place and many customers were loyal to the brand
* TIM had positioned cellular phones as a thing of status – if you have one, you are a “somebody.” This position was the general idea among the Italian market and not everyone could afford a cellular phone.
* Price was too high to get the phone and then be bound in a contract.
* Customers hesitant to pay the monthly fee, which they saw as a tax. Along with the monthly fee and activation charges
3. What are the economics of LIBERO?
* OLD REVENUE = [38 minutes X Lit. 1,524] + [150 minutes X Lit. 170] + [Lit. 10,000 for monthly fee] = Lit. 93,412
* LIBERO REVENUE = [38 minutes X Lit. 1,595]+ [155 minutes X Lit. 195] = Lit. 90,835
* Revenue Shortfall = Lit. 93,412 - Lit. 90,835 = Lit. 2,577
* Possible ways to overcome the shortfall: target a segment of cellular phone users, increase peak hour/non-peak hour usage, offer different price points for different types of calls
4. Why is the churn rate so high for many European countries?
* Market penetration...
Strategic Marketing, Planning & Management
Professor Erdem: Omnitel Pronto Italia Case
1. What was Omnitel’s competitive advantage when the service was launched in December of 1995?
* Omnitel’s strategy to position itself as a telecom company that provided exceptional customer service
* First, the operator’s approach was very friendly and polite to each and every caller
* Second, the company tried minimizing the customers’ waiting time during a call; Most customer service calls were answered within 20 seconds
* Third, Omnitel tried to offer one-time calling to limit the number of times a customer was transferred to different specialists
* Omnitel also strived to maintain a low churn rate of about 10% - 15% a year
2. Why did the launch not perform to expectations?
* There was a state-owned competitor, TIM, already in place and many customers were loyal to the brand
* TIM had positioned cellular phones as a thing of status – if you have one, you are a “somebody.” This position was the general idea among the Italian market and not everyone could afford a cellular phone.
* Price was too high to get the phone and then be bound in a contract.
* Customers hesitant to pay the monthly fee, which they saw as a tax. Along with the monthly fee and activation charges
3. What are the economics of LIBERO?
* OLD REVENUE = [38 minutes X Lit. 1,524] + [150 minutes X Lit. 170] + [Lit. 10,000 for monthly fee] = Lit. 93,412
* LIBERO REVENUE = [38 minutes X Lit. 1,595]+ [155 minutes X Lit. 195] = Lit. 90,835
* Revenue Shortfall = Lit. 93,412 - Lit. 90,835 = Lit. 2,577
* Possible ways to overcome the shortfall: target a segment of cellular phone users, increase peak hour/non-peak hour usage, offer different price points for different types of calls
4. Why is the churn rate so high for many European countries?
* Market penetration...