THE UPSTART’S ASSAULT – A CASE STUDY
The current Market Share of telecommunication segments are as follows –
Market Segment Meridicom Market Share (%) Revenue Share TelZip Market Share (%) Market Leader
Landline 85 70% 5 Meridicom
Broadband 60 25% 0 Meridicom
Mobile 5 5% 25 Unknown
1. Their Market share suggests that Meridicom is Market Leader in Landline and Broadband segment.
2. They gather customer usage data by controlling connection between local exchange and customer’s home and office, which help them in positioning their future offerings / services.
3. Meridicom is the best known brand in the country and the entire Europe. Business customers ...view middle of the document...
Response should give two messages – one to the Startup (who is the boss! Do not mess with me!) and other to the consumer (their best interest is served by Meridicom). However, before the offer is made, Meridicom must answer the following questions –
o If Meridicom responds, is the competitor willing and able to cut the price again to reestablish the price difference?
o Will the multiple responses required to match TelZip, still cost less than the avoidable sales loss?
Make TelZip lose something too.
Direct TelZip to more price-sensitive, lower-margin customer segments.
Build barriers to TelZip’s movement into the less price-sensitive, more profitable customer segments
o Is Meridicom’s position in other (geographic or segments) markets threatened if TelZip’s gains share? Is the net present value of all markets at risk enough to justify the cost of a response?
Based on the above three questions and the limited data available with us, we propose the Flanking Response by Meridicom, which should be based on their market research inputs related to customers behaviour, usage and billing -
1. Shifting landline for a business consumer needs advance planning, before one switches to the new number. Therefore, Meridicom should focus reactive price cuts to those customers which have smaller business and are likely to be attracted by the competitor’s offer - less quality conscious.
2. Focused reactive price cuts linked to mobile services (where TelZip or other service providers, have the most to lose compared to Meridicom, from cutting the price), like offering corporate mobile connections – with fixed rentals with unlimited usage (as in this segment customers look for predictability of their monthly expenses) - to business landline and broadband customers.
3. Make offers focused to particular geography and demography of customers, which Meridicom could use to its advantage and hurt TelZip’s customer base.
4. Raise the cost to the TelZip of its price cut. TelZip has an existing customer base in Landline Segment, and is discounting only to new customers (who will migrate from Meridicom), therefore, educate the...