The Penetration Strategy of Medicom

Read the case "The Upstart’s Assault" & please answer the following questions:
Case study link : https://hbr.org/2010/07/hbr-case-study-the-upstarts-assault
1-What are the main problems facing ?
2-What are their strategic Options? What are the pros and cons of each?
3-What should they do?

Answer 1. 

In this case study, the main problem is a price war. The upstart assault is a case study of telecom operators. In this case, we have two companies known as Meridicom and Telzip. Medicom is the price leader in the industry. Telzip uses the penetration strategy (Carpenter et al., 2017). It is charging for the landline only and providing value for the low price, however communicating with the customer by quoting free for life.
So here, in this case, the main problem is associated with the price that is a price war between the Telzip and Meridicom Company.

Answer 2. 

The strategic option that can be taken to resolve the problem of a price war is as follows.
As Telzip is using the penetration pricing strategy so this strategy will only work when. Sales volume of service is very sensitive to price, or when no class of buyer willing to pay a higher price to obtain the service.
1.    Prices should be fixed according to the buyer as there is no class of buyers willing to pay a higher price to obtain the service.
2.    Considering and focusing the sale volume of the service as it is very sensitive to price.
Pros- If the Telzip is continuing with the penetration pricing strategy and in long run, it will provide benefits as the customer will become brand loyal. It will lead the customer to realize quality concern which would be the real value for the company.
Cons- if Telzip is continuing in using the penetration strategy then it will make to earn less profit. But this is only for a shorter period of time. 

Answer 3.

Joe should check Telzip service quality if it is equal or more than Meridicom service quality then Telzip should respond to the price war. Or if the Meridicom service quality is higher than the Telzip then Telzip should not respond to the price attack. 
Based on the facts relation between value and price in the service sector, where broadband segment falls in the category value in the service quality rather price. If Joe's find the quality of its company equal or more then he should off the fire with fire as suggested by the sales head.
They should price the product according to the quality of the product and services if the service quality is fine and standard then they have to charge accordingly otherwise they have to charge the price according to the market demand and customer capacity. They should try to focus more on customer satisfaction and be gaining the loyalty of the customer in a way to stay in the market for the longer period of the time. As this will also resolve the price war and unnecessary burden.
 
 

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References 

Carpenter, D., & Moss, D. (2017). Democracy: A Case Study. New Perspectives on Regulation.
The Upstart's Assault Case Study Essay Sample. (2017). Bla Bla Writing. Retrieved 27 February 2018, from https://blablawriting.com/the-upstarts-assault-case-study-essay 

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