Omnitel Pronto Italia Case Study Analysis

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Omnitel Pronto Italia Case Study Analysis
Vineet Goyal, Phaniswar C, Sanmati Balaji, Ruchir

Case:
Omnitel Pronot Italia is a private cellular operator. Telecom Italia Mobile (TIM) is a state owned major with 97% of Italy’s 7.5% market penetration due to lack of competition, until Feb 1995 when Omnitel entered the market. Omnitel started commercial operations in December 1995 covering 40% of Italian territory. Omnitel bought a new concept of top class customer service to the Cellular Industry and believed it could make an identity from TIM.

Purpose:
The purpose of this case study is regarding increasing Omnitel’s market share without a price ware and still making a mark in the Industry.

Omnitel’s background:
Omnitel obtains GSM license in December 1994 for 750bn Lit. Began providing service in December 1995.
40% coverage of Italian territory.
Provided quality customer service to differentiate itself from TIM. Avoids price ware with TIM as it is not financially strong.
Usage plans are similar to TIM’s though it is not serving 100% of Italian territory.

Customer Survey & Analysis:
Italian customers are very impulsive shoppers.
They have bought in TIM’s positioning of cellular phones as luxury product. A customer survey indicated their reluctance in paying monthly charges and other activation charges as they considered it as taxation. Customers were happy to pay usage charges and for the handset. They also appreciated Omnitel’s customer service approach and major share under Omnitel’s existing customers are loyal. Customers and prospects wanted different tariffs for local, long distance and international calls.

Telephony Market in Europe:
$150bn European Telecommunication Industry was identified by European Commission in 1987. In 1993 the Commission declared that by January 1998 all member states have to open their markets and guarantee competition in telephony market. Trends as of 1995 : Finland - mature market with penetration of 20%,...
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