The Upstart's Assault Case Study
Company Overview
Meridicom is a price leader in communications industry with its top of the line broadband, mobile and landline services. It has largest market share in landline and broadband but very small presence in mobile services. Its major competitors which include big mobile companies, cable TV operators and internet providers follow lead as per the prices set by Meridicom.
Case Assessment
Telzip, small company having 5% market share in landline, has challenged Meridicom by offering life time free broadband to business users who are willing to accept a long term contract. The customers largely being affected in this case are the business users which are currently paying around 450 Euros per year to Meridicom. Though the customers might be enticed by the low cost services, the cost of switching involves changing the landline services as well as the uncertainty about the network speed and services offered. Meridicom’s primary concern is the other competitors following Telzip in offering free services. Broadband is the highest margin fetching and fastest growing unit within Meridicom and already contributes 25% to the revenues.
If Meridicom follows Telzip in providing free services, it is not only killing a high revenue making unit, but also forcing other competitors to dive into the price war. The other competitors are definitely looking up to Meridicom to react to Telzip’s marketing before they make a decision on the pricing policy. The case clearly suggests that Meridicom is a partner of choice for the customers in Broadband and landline with over 60% market share in both even when the competitors offer their services for 10% less price. Meridicom’s core competency lies in the high speed connectivity that the business customers consider crucial for their success. For this very reason, the customers tend to be loyal to Meridicom. However, there seems to be a disconnection between the three units internally. Rather than thriving to achieve the
Meridicom is a price leader in communications industry with its top of the line broadband, mobile and landline services. It has largest market share in landline and broadband but very small presence in mobile services. Its major competitors which include big mobile companies, cable TV operators and internet providers follow lead as per the prices set by Meridicom.
Case Assessment
Telzip, small company having 5% market share in landline, has challenged Meridicom by offering life time free broadband to business users who are willing to accept a long term contract. The customers largely being affected in this case are the business users which are currently paying around 450 Euros per year to Meridicom. Though the customers might be enticed by the low cost services, the cost of switching involves changing the landline services as well as the uncertainty about the network speed and services offered. Meridicom’s primary concern is the other competitors following Telzip in offering free services. Broadband is the highest margin fetching and fastest growing unit within Meridicom and already contributes 25% to the revenues.
If Meridicom follows Telzip in providing free services, it is not only killing a high revenue making unit, but also forcing other competitors to dive into the price war. The other competitors are definitely looking up to Meridicom to react to Telzip’s marketing before they make a decision on the pricing policy. The case clearly suggests that Meridicom is a partner of choice for the customers in Broadband and landline with over 60% market share in both even when the competitors offer their services for 10% less price. Meridicom’s core competency lies in the high speed connectivity that the business customers consider crucial for their success. For this very reason, the customers tend to be loyal to Meridicom. However, there seems to be a disconnection between the three units internally. Rather than thriving to achieve the