DEPARTMENT OF MANAGEMENT SCIENCES

BAHRIA UNIVERSITY, ISLAMABAD

SERVICE MARKETING
Mobilink: Pricing under competition

Submitted to: Mr. Ahmad Tirmiz

Submitted by:

Asfand Yar Mitru

Usama Rauf

MBA 3C
Mobilink Pricing Under Competition
Asfand Yar Mitru
Usama Rauf

Background:

Mobilink started its operation as a first cellular provider to 100% GSM technology in the
country. In 2001, Mobilink had a market share of 40% which they increased to 63% by early
2005. Mobilink offered two brands Indigo and Jazz:- Indigo for postpaid customers while Jazz
for Prepaid customers. In 2003, Mobilink planned to expand rapidly and become the market
leader. But, This rapid expansion leads to the poor quality service amongst customers which
management see as a weakness. Mobilink was facing competition with Pakistan Telecom
Mobile Limited (PTML) which was known as Ufone. Ufone focused on middle and lower
market segment and adopt an aggressive marketing campaign with lowest price offering. This
step coupled with massive investment helps in expansion of business and thus ufone become
the second biggest network in the market. Telenor operated from Norway also started it
buinsess in Pakistan which mobilink management took it as a threat as they had an extensive
experience of cellular industry abroad. At that time, mobile usage business was expanding as
economy was getting better, country`s policy regarading mobile usage and costing (CPP)were
also revised that helps middle class and lower class to use the mobile technology.

Problem :

Mobilink see Telenor as a threat for their business as Telenor adopt low pricing strategy to
enter and penetrate into the market. At First, Telenor offered services in Islamabad and planned
to start its services in other big cities of a country in next few weeks. Mobilink management
thought that their customers may convinced from the Telenor low prices and thus switched to
the Telenor. Moreover, Telenor also offered smart load service of Rs 10-100 which was very
attractive to the cutomers as mobilink offered a usage limit to their cards.

Mobilink had to adopt one pricing strategy MATCH, BEAT and Stay Quite among three
strategies.

Problem Summary and Proposed Strategy

With the low-price strategy and unlimited recharge proposition, Telenor posed a major
challenge to Mobilink for retaining the position of Market leader. We can opt from one of these
3 strategies:

1. Match Telenor
2. Beat Telenor

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Mobilink Pricing Under Competition
Asfand Yar Mitru
Usama Rauf

3. Wait and watch

BEAT TELENOR 1

` This is the strategy which we would pursue for the following reasons:

OPTIONS Proposed On- Estimated On- Proposed Off- Estimated Off-

Net Rate Net Net Rate Net
(Rs/min) Incremental (Rs/min) Incremental
Usage (min) Usage (min)
Wait and See 4.75 0 7.75 0
Match Telenor 1 3.99 6 3.99 10
Match Telenor 2 3.99 6 5.99 4
Match Telenor 3 3.99 6 7.75 0
Beat Telenor 1 3.99 8 5.50 6
Beat Telenor 2 3.50 8 7.75 0

The wait and see strategy is not workable because if the people starts shifting from Mobilink
to Telenor than it is difficult to brought them back. The matching of the strategy will also not
be workable.

Now in accordance with the exhibit, Beat Telenor 1 Strategy can be used to cope up with
Telenor due to following reasons:

The way through which Mobilink can easily beat Telenor is through the price reduction.
The Pakistani people are price sensitive so the reduction in price will stop them from
shifting towards the other networks. This is the way by which they can retain their
previous customers. The new customers will also shift towards the Mobilink due to its
low prices.
Reduced Rates will also help in a way that Telenor is targeting only major cities. So,
rate reduction from Mobilink will target all the 275 cities of its coverage area thus
increasing consumers attraction and use ability in those cities.
Reducing price may result in the decrease in the revenue which they are earning from
their customers. They will reduce their profitability and this will reduce the ARPU.

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Mobilink Pricing Under Competition
Asfand Yar Mitru
Usama Rauf

Apart from lowering prices, Mobilink should work on their customer service. An
effective feedback system should be created, Social interaction with customers should
be focused to prioritize the customer as much as we can.
Also, Mobilink can introduce innovative packages for its customers like customized
packages, customers can choose a package of their own according to their usage in
given budget, this would also not lower the price too much and prioritize the customers.
This can be considered as an innovative feature which Telenor is not offering and can
be a competitive edge.

SWOT Analysis:

A SWOT analysis will be done for our strategy Beat Telenor 1.

Strengths:

Retain old customers

The lower price will attract new customers.
Competitive prices
Large coverage

Weaknesses:

Profitability decreases
Revenue Decreases

Opportunities:

Commitment of customers
Better customer relationship by feedback system
Reduction in costs by laying off un-necessary workforce
Increased Usability frequency

Threats:

Drastic losses due to price change.

Mobilinks brand image gets the impact of acquiring low cost strategy

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Mobilink Pricing Under Competition
Asfand Yar Mitru
Usama Rauf

5 Cs model application to our strategy Beat Telenor 1

Company Customer

Strong user base Target market initially higher

income levels.
High brand reputation
Risk of customer shifting to
Market share raised from 1.5
Telenor for lower prices.
to 1.9 from 1999-2004
Specifically targeting business
sector

Context

Political: Rate is high in

Collaboration
Pakistan due to instability.
Economical: Fluctuations in Mobilink was collaborated by
growth due to government laws Orascom, an Egypt Telecom
of tax. Giant.
Social: It has a wide impact on
the target market.
Technological: Cost incurred
for advancement

Competitor

Telenor: Offering
Rs3.99/minute for all calls.
Also, has a European
image, strong reputation.
Warid: Largest foreign
investor
Ufone: It had a growth
level of 190 compared to
130 of Mobilink.

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Mobilink Pricing Under Competition
Asfand Yar Mitru
Usama Rauf

Exhibit 1 Exhibit 2

Exhibit 3

Exhibit 4

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