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    Ahmed Gabri: Marketing Management - Omnitel Pronto Italia Case

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    Ahmed Gabri
    Omnitel Pronto Italia entered the Italian mobile telecommunications market as the sole competitor to the state-owned incumbent Telecom Italia Mobile (TIM). TIM had advantages as the earlier entrant with a monopoly until 1995, including an established large client base and stronger financial position due to state ownership. Omnitel considered competing through price cuts but could not afford it against TIM. Its options were subsidizing handset prices while keeping monthly fees fixed like TIM, or introducing a new "Libero" payment system where customers pay as they use the service instead of a monthly fee. Market research found customers resented fixed monthly fees as a tax and valued costs over brand, so the "Libero" option

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    Ahmed Gabri: Marketing Management - Omnitel Pronto Italia Case

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    Omnitel Pronto Italia entered the Italian mobile telecommunications market as the sole competitor to the state-owned incumbent Telecom Italia Mobile (TIM). TIM had advantages as the earlier entrant with a monopoly until 1995, including an established large client base and stronger financial position due to state ownership. Omnitel considered competing through price cuts but could not afford it against TIM. Its options were subsidizing handset prices while keeping monthly fees fixed like TIM, or introducing a new "Libero" payment system where customers pay as they use the service instead of a monthly fee. Market research found customers resented fixed monthly fees as a tax and valued costs over brand, so the "Libero" option

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    Marketing Case

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    Omnitel Pronto

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    Omnitel Pronto Italia entered the Italian mobile telecommunications market as the sole competitor to the state-owned incumbent Telecom Italia Mobile (TIM). TIM had advantages as the earlier entrant with a monopoly until 1995, including an established large client base and stronger financial position due to state ownership. Omnitel considered competing through price cuts but could not afford it against TIM. Its options were subsidizing handset prices while keeping monthly fees fixed like TIM, or introducing a new "Libero" payment system where customers pay as they use the service instead of a monthly fee. Market research found customers resented fixed monthly fees as a tax and valued costs over brand, so the "Libero" option

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views3 pages

    Ahmed Gabri: Marketing Management - Omnitel Pronto Italia Case

    Uploaded by

    Ahmed Gabri
    Omnitel Pronto Italia entered the Italian mobile telecommunications market as the sole competitor to the state-owned incumbent Telecom Italia Mobile (TIM). TIM had advantages as the earlier entrant with a monopoly until 1995, including an established large client base and stronger financial position due to state ownership. Omnitel considered competing through price cuts but could not afford it against TIM. Its options were subsidizing handset prices while keeping monthly fees fixed like TIM, or introducing a new "Libero" payment system where customers pay as they use the service instead of a monthly fee. Market research found customers resented fixed monthly fees as a tax and valued costs over brand, so the "Libero" option

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    THE UNIVERSITY OF CHICAGO BOOTH

    SCHOOL OF BUSINESS

    Ahmed Gabri
    Marketing Management Omnitel
    Pronto Italia Case
    AHMED GABRI

    Upon their entry into the mobile telecommunications market in Italy,


    Omnitel Pronto Italia was the sole competitor against the state owned
    telecommunications giant Telecom Italia Mobile (TIM). TIM had several advantages
    over Omnitel, the main two were:
    First, due to its earlier presence in the market through its mother company
    Telecom Italia, TIM had enjoyed the luxury of being the sole provider of mobile
    phone services in Italy until the establishment of Omnitel in 1995. This monopoly
    gave TIM a head start over Omnitel, where it was able to establish & maintain a
    large client base.
    Second, TIM had a significantly stronger financial position than Omnitels.
    This was mainly due to the fact that TIM was state owned, and its precedence in
    the market and the large revenues they enjoyed from their monopoly days.
    Omnitels main issue was that it wanted to acquire a larger market share,
    but was unsure of how to carry out without using price cutting strategies.
    Omnitels management team knew that they cannot afford competing against TIM
    in a price cutting war, as TIM was financially stronger as mentioned before.
    Omnitel had two main solutions to consider. First, was to charge customers
    with a fixed monthly subscription, same way as TIM, but subsidize the price of
    handsets.
    The second solution was to introduce a completely different and radical
    system of payment. Market research carried out by Fabrizio Bona - Omnitels
    marketing director showed that customers resented the fact that they had to
    pay a fixed monthly amount, and viewed it as a form of Tax. This system was
    given the name Libero, meaning free in Italian.
    Looking at the market research findings and the data presented under
    Value Based Segmentation, one thing was clear. Although Italians did view the
    mobile phone as a status symbol and a privilege for the wealthy, money and costs

    came first. This is apparent in the lesser importance of Brand when compared to
    costs such as Activation Costs, Monthly Charge.etc. Combine this with the
    overwhelming

    resentment

    of

    the

    fixed

    monthly

    fees,

    my

    personal

    recommendation would be to carry out the Libero proposal, for it would generate
    a large client base, thus increasing Omnitels market share. Future profits will also
    increase due to the growing popularity of mobile services throughout Europe as
    forecasted by various professional analysts.

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