Omnitel Case

Omnitel Pronto Italia case

  1. What was Omnitel’s advantage when the service was launched in December 1995?

    ← Omnitel’s advantage Vs TIM was a high quality customer service through the call centre. The differentiation was made through:

            • Polite operator’s approach while TIM’s operators were impersonal

            • Minimizing customer waiting time: 85% of Omnitel’s customer service calls were answered in less than 20 seconds. The objective was to have zero waiting time.

            • One-stop calling: trained operators answering all customers’ questions and avoid transferring calls to another operator.

  2. Why did the launch not perform to expectations?

    • Omnitel’s launch didn’t perform to expectations (only 4% of market share) because they didn’t differentiate from the existent operator TIM and didn’t offer new services.

      ← Same than TIM’s pricing strategy leading to customer dissatisfaction :

            ← charging customers 10.000 Lit monthly fee
            ← Same minutes charged rates than TIM

    ← Moreover, the network coverage was limited ( only 40% of Italian territory by end of 1995

    ← The target segment was limited to high-end customers.

    • The customers were satisfied by the high quality service but this doesn’t fit their needs since they are sensitive to the monthly charged fee.

    ←   American shareholders recommended the American model by offering handset subsidies. Americans are rational in their purchase while Italians are impulsive and can afford the purchase of a handset. This model doesn’t fit with the Italian mindset.

    • TIM, as the first historical operator in the Italian market, had implemented a philosophy that cell phone is not for everyone but only for people of certain stature had the right to own.

  3. What are the economics of LIBERO? Specifically, how do the revenues from the new plan compare to those from the existing plan?