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Omnitel P

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Submitted By mathuz4u
Words 557
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Brief Outline:

Omnitel’s Marketing Director ”Bona” and CEO ”Caio” was planning to discuss about proposal for a new pricing strategy for Italy’s second mobile phone service provider. Omnitel conducted some marketing research and find that customers were very happy with Omnitel’s customer service.

Italian customers do not wanted to pay fixed monthly usage fee and extra activation fee; instead they only wanted to pay a fee only when they used the phone.

TIM (Telecom Italia Mobile) is the state owned company which had a complete monopoly over Italian telecommunications market.

Bona was planning to launch his cell phone under the name “LIBERO” which is free from any monthly charges.

LIBERO Plan:

In Peak hours: Charge- Lit.1595

In Off-Peak hours: Charge- Lit.195

Anticipated average usage: 193 min per month

Outgoing calls: 93 min (13 min at peak and 80 min at off-peak)

Incoming calls: 100 min (25 min at peak and 75 min at off-peak)

Setup Cost = Lit.10000

They are also providing customer a subsidy on handsets in exchange of a contract for a year or two.

Bona was planning to convince Caio to sell cell phones at full price but drop the monthly fee.

Bona wanted to launch a Advertising Campaign with a budget of Lit. 40 billion, because he wanted to completely blanket Italy with LIBERO posters and billboards so that he can change the customer mind-set regarding cellular phones.

Bona do not want to indulge his company in the price war with TIM, since TIM is state owned company and also financially very strong company.

Mobile Telephony Market in Italy:

Initially in 1987 there were 12 state owned telecom companies in Europe. In 1993, European commission declared that by January 1988, all member states would have to open their markets and guarantee competition in the telephony markets.

In 1994, omnitel

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