Omnitel Case Study Essay
Omnitel Case Study
The Italian consumer perceived the cellular phone was a possession that was both expensive and exclusive, something that only people of a certain stature had the right to own. Italians, as fashion conscious people, liked to show off to their friends that they have the most fancy, most expensive, most technologically advanced handset available. Above that phones were used as an expression of one's personality.
1. TIM - Telecom Italia Mobile, during 1995-1996 was perceived as a monopoly which possessed 97% of the 7.5% penetration of the cellular telecommunication market in Italy. It's marketing strategy was primarily devoted to the upper class of the Italian society, due to the fact listed above that the Italian consumer perceived the cellular phone as a status symbol and an item of indulgence. As most monopolies TIM was perceived as an impersonal company, with bad customer service, never offering a polite word. …show more content…
19% of TIM's customers were unsatisfied by TIM's technical assistance and plan flexibility.
Omnitel, Italy second GSM operator, who launched its commercial service in December 1995, was perceived as providing high quality customer service.
Omnitel, as the polite operator', was perceived as always answering the customer's calls according to the American approach. Furthermore, the company tried to minimize the customer waiting time, with 85% of Omnitel customers were answered in less than 20 seconds. Above that, in order to improve the service Omnitel operators were trained as "one stop calling", in order to avoid transferring a call to another operator.
2. By May 1996, Omnitel had only signed up 180,000 subscribers, and Omnitel was dissatisfied with its market share of 4%. Though customers were very pleased with the quality of customer service that they received, it had not resulted in a corresponding increase in market share as Omnitel had hoped it
would.
First of all Omnitel needed to alter the psychological barrier that TIM created against cell phones as a whole, with the perception of an exclusive and upper class product.
Secondly, Omnitel had a Distribution problem-
TIM has a chain of stores including 20 TIM-owned shops and 150 Telecom Italia stores. In addition TIM has 1500 exclusive dealers all over Italy.
Omnitel on the other hand, sells through 2000 non-exclusive dealer shops. Those omnitel distributors sell not only cell phones but also electronic goods. Another problem was the Stores location, which did not comply with the Italian impulsive purchase approache toward cellular phone.
Furthermore, due to the Dealers network, Omnitel has a problem communicating directly to end users.
3. In order to position the cellular phone "in a manner akin to the position of the wristwatch" meaning making the cell phone an indispensable and personal day to day product, Omnitel needs to focus on the 25-34 years old that are willing to switch to other operator, and are sensitive to the peak charge and fixed costs and represent 35% of the total personal users. Omnitel in order to approach this segment need to appeal to their problematic issues such as taking away the fixed cost. This complies with the mobile trend in Europe, such as adopting the GSM digital standard, which allows customers to use their cellular phones throughout Europe. These trends will increase subscribers' acquisition costs, thus creating a more competitive market and placing downward pressure on prices.
This plan wouldn't start a price war with TIM because the cell phone would be a popular mass product and not the upper echelon product TIM meant it to be.
Positioning can be something like this - "With an Omnitel phone you won't have to pay a monthly tax "
4. Since the much-detested monthly fee is the main reason that the above segment of customers are willing to change operators, the only choice is to remove the monthly fee. Above that, the Italian customer is impulsive and cares less about paying the full price of the handset. As the monthly fee is removed customers are willing to move to another operator.
This will increase customer base, increase distributor's income from commission, will increase the overall call volume, and ultimately will increase the total revenues and market share. As we chose in #3 above to focus on the customers that are sensitive to fixed costs this will appeal to them.
The Italian consumer perceived the cellular phone was a possession that was both expensive and exclusive, something that only people of a certain stature had the right to own. Italians, as fashion conscious people, liked to show off to their friends that they have the most fancy, most expensive, most technologically advanced handset available. Above that phones were used as an expression of one's personality.
1. TIM - Telecom Italia Mobile, during 1995-1996 was perceived as a monopoly which possessed 97% of the 7.5% penetration of the cellular telecommunication market in Italy. It's marketing strategy was primarily devoted to the upper class of the Italian society, due to the fact listed above that the Italian consumer perceived the cellular phone as a status symbol and an item of indulgence. As most monopolies TIM was perceived as an impersonal company, with bad customer service, never offering a polite word. …show more content…
19% of TIM's customers were unsatisfied by TIM's technical assistance and plan flexibility.
Omnitel, Italy second GSM operator, who launched its commercial service in December 1995, was perceived as providing high quality customer service.
Omnitel, as the polite operator', was perceived as always answering the customer's calls according to the American approach. Furthermore, the company tried to minimize the customer waiting time, with 85% of Omnitel customers were answered in less than 20 seconds. Above that, in order to improve the service Omnitel operators were trained as "one stop calling", in order to avoid transferring a call to another operator.
2. By May 1996, Omnitel had only signed up 180,000 subscribers, and Omnitel was dissatisfied with its market share of 4%. Though customers were very pleased with the quality of customer service that they received, it had not resulted in a corresponding increase in market share as Omnitel had hoped it
would.
First of all Omnitel needed to alter the psychological barrier that TIM created against cell phones as a whole, with the perception of an exclusive and upper class product.
Secondly, Omnitel had a Distribution problem-
TIM has a chain of stores including 20 TIM-owned shops and 150 Telecom Italia stores. In addition TIM has 1500 exclusive dealers all over Italy.
Omnitel on the other hand, sells through 2000 non-exclusive dealer shops. Those omnitel distributors sell not only cell phones but also electronic goods. Another problem was the Stores location, which did not comply with the Italian impulsive purchase approache toward cellular phone.
Furthermore, due to the Dealers network, Omnitel has a problem communicating directly to end users.
3. In order to position the cellular phone "in a manner akin to the position of the wristwatch" meaning making the cell phone an indispensable and personal day to day product, Omnitel needs to focus on the 25-34 years old that are willing to switch to other operator, and are sensitive to the peak charge and fixed costs and represent 35% of the total personal users. Omnitel in order to approach this segment need to appeal to their problematic issues such as taking away the fixed cost. This complies with the mobile trend in Europe, such as adopting the GSM digital standard, which allows customers to use their cellular phones throughout Europe. These trends will increase subscribers' acquisition costs, thus creating a more competitive market and placing downward pressure on prices.
This plan wouldn't start a price war with TIM because the cell phone would be a popular mass product and not the upper echelon product TIM meant it to be.
Positioning can be something like this - "With an Omnitel phone you won't have to pay a monthly tax "
4. Since the much-detested monthly fee is the main reason that the above segment of customers are willing to change operators, the only choice is to remove the monthly fee. Above that, the Italian customer is impulsive and cares less about paying the full price of the handset. As the monthly fee is removed customers are willing to move to another operator.
This will increase customer base, increase distributor's income from commission, will increase the overall call volume, and ultimately will increase the total revenues and market share. As we chose in #3 above to focus on the customers that are sensitive to fixed costs this will appeal to them.