Cellular Phone in Italia

Omnitel has an interesting decision on their hands right now. Currently they are competing directly with TIM for market share in the Italian cellular phone market. TIM has more experience in the market place and more money to spend. The biggest thing that Omnitel has going for it right now is the fact that they have stellar customer service and that is big in the cell phone industry. The dilemma facing Omnitel right now is how to segment its prospective customers that it wants to get and how to avoid getting into a price war with TIM (who has a lot more money). Omnitel states that it wants to increase its customer base and they want higher end customers, yet they want to do this through giving phone plans with no monthly fees. My question is wouldn't that go against the notion of getting higher end customers? Wouldn't higher end customers be okay with paying a monthly fee upfront? As far as segmentation goes, Omnitel is on the right track as far as its new mentality of advertising the new and great benefits of the phones to get the word out to people. This way they don't have to worry about its contracts and commission with its suppliers. If they get the customers on their side, the suppliers and other links in the supply chain will have to follow. The thing that Bona and Caio need to modify in the Liebro rollout is its segmentation. It is too complicated and it can be reduced to make it simpler.

Omnitel plans on increasing the amount of its market share in Italy and at some point expanding into the rest of Europe and hopefully at some point, the United States. Its main and pretty much only competitor in Italy is TIM. TIM has been around for a while and has a huge stronghold on the cellular phone market. Omnitel can get into the space that no other company has done: to compete with TIM. This is healthy for capitalism and there is an opportunity to obtain customers who are unhappy at TIM and will leave. Tim is known for having very poor customer service and Omnitel has great customer service. They cannot lose this staple in their repertoire. I believe that if they take these steps, they will avoid a price war with TIM.

As far as advertising, Omnitel should go all out and spend as much as they can on advertising. They need to win in negation with the suppliers because they cannot afford to get into a price war with TIM. They can gain more leverage in negotiation by making the customers dictate to the suppliers that they want Omnitel.

There is also the dilemma