Omnitel Pronto Italia

Section-B Group-09

Issues Identified:1. To increase market share of Omnitel in Italy Telecom Industry. 2. Cell phones are considered as status symbol and hence has very low penetration in the market. 3. TIM is offering shares as incentives to dealer who shows increase the sale but Omnitel does not want to offer incentives to dealer , afraid to get into a Price-war with TIM.

Objective:To increase the market share of Omnitel

1.

2.

3.

4.

To create a new market for Omnitel by changing the image of mobile phone as a necessity rather than as a status symbol To use monthly fee cut as a means of increasing market share rather than subsidising cell phones, as customers are willing to spend money to buy cell phone but see monthly fee as the major problem Continue to give superior customer service to retain existing customers Further market segmentation by 1. Providing new plans targeted towards prospective segments Professionals, Middle class and Educated customers 2. Create a plan specific to monthly and specific charge sensitive customers of TIM as this segment is willing to switch and are early adopters and also form the bulk of the market share of personal users

Disadvantages

Increased Advertising budget May initiate the price-war Brand loyal , service sensitive and special tariff customers will not turn up.
One time cost to attract customers and get market share

Advantages

Possible increase in market share. More revenue even only .54% increase in market share than the existing plan.

Libero plan is clearly a profitable venture even for a 0.54% increase in market share as shown in the analysis below.

Market Share Number of Customers 4% 4.54% 5% 5.50% 6% 180000 204191 225000 247500 270000

Revenue From Free Time Plan 9461160000 -

Revenue From Libero Plan 9461189985 10425375000 11467912500 12510450000

Advertising budget in Libero Plan Current revenue in Free time plan

40,000,000,000.00 9,461,160,000.00

Revenue in Libero Plan with 5% market Share

Revenue in Libero Plan with 10% market Share Revenue in Libero Plan with 15% market Share Revenue in Libero Plan with 20% market Share Revenue in Libero Plan with 25% market Share

10,425,375,000.00
20,850,750,000.00 31,276,125,000.00 41,701,500,000.00 52,126,875,000.00