Case Analysis The Upstarts Assault
Submitted By,
27 August 2011
Chinmay Bhogle: 33108 Dhruvish Thakkar: 33188 Kailashyar Uday Kumar: 33162 Pranay Bhatt: 33107 Vaishnavi Nayel: 33168
Summary
Meridicom - Current market leader in providing broadband services
Telzip - A small mobile-network operator entering into the broadband market
by offering free broadband service to business customers who were willing to
leave their current provider and enter into a long term contract. Gerald Segner CEO of Meridicom facing price attack in services due to new offering from Telzip Joseph Ulan - CMO of Meridicom
27 August 2011
Case Analysis : The Upstarts Assault
Summary Continued
Market share of Telzip in landline is 5% and Meridicom is 85%
In mobile market, 25% share of belongs to Telzip and 5% of Meridicom
Within Broadband service : Telzip is a new entrant and Meridicom market share is 65%
Common issue: Divisional heads cared more about their individual turf (department) rather than working together for the greater interest of the organisation
27 August 2011
Case Analysis : The Upstarts Assault
Problem
Launch of new broadband service by Telezip offering lifetime free
subscription and possibility of saving 450 Euros for existing customers by switching from Meridicom Could Telzip become threat to Meridicom? Repercussions: If customers decide to migrate to Telzip, Meridicom will lose their landline revenue and connection between local exchange and their home/office
27 August 2011
Case Analysis : The Upstarts Assault
Decision to be taken
Should Joe ignore or respond to telzips bold move ?
27 August 2011
Case Analysis : The Upstarts Assault
Course of Action
Options available between Joe and other divisional heads reporting to him : Ignore the move of Telzip Offer discounts to customer either by lowering the price or providing value added services Offer something more compelling
27 August 2011
Case Analysis : The Upstarts Assault
Issues Involved
Main issue involved here is that, the move taken by Telzip can create a new price war in the broadband market. Service offering from Meridicom is considered expensive by its existing client base Hence free offer provided by Telzip can attract a large customer base and also force the customer of Meridicom to switch the company. Short Term Problem: Price war initiation Long Term Problem: Loss of customer base of meridicom
27 August 2011
Case Analysis : The Upstarts Assault
Alternative course of action that can be adopted by Joe
The first action he can take is ignoring the move of Telzip as it is a small company and Meridicom is the market leader in broadband market with a share of 60% and customers are already satisfied with its service offering
The next move he can offer is providing greater value add and discounts on the current price so that current customers would prefer not to switch to Telzip.
He can also start to offer free broadband services He can also provide the value added services by charging the same price so that the customers can be delighted
27 August 2011
Case Analysis : The Upstarts Assault
Recommendations
Implement a new incentive scheme for the three division heads within Meridicom, such that upto 50% of their incentive now depends on the overall performance of Meridicom, with the rest 50% depending on their individual division's performance. This will give each division head a direct interest in working cooperatively with their peers for the greater good of the organisation Provide some value added service such as video on demand , games on demand and music on demand to add revenue and also to ensure that the customer does not switch to new services Ensure availability of packages based on price differentiation Packages with different price should differentiate themselves based on value adds such as speed differentiation and volume based The purpose of creating different package is to cater to different customer needs and this will ensure Increase in customer base Increase retention rate Increase in revenue
27 August 2011
Case Analysis : The Upstarts Assault
