Price Wars free essay sample

The key players in the wireless industry are Verizon Wireless, ATT, Sprint, and T-Mobile. With these four companies controlling 90% of the market, there are no other ‘key players’ in the industry. U. S. Cellular is not quite a ‘key player’, however they do hold approximately 2. 4% of the customer nationwide and must be in the overall picture. In addition, the data suggests that the pool of potential people that would get a cell phone is almost entirely saturated so it does not look as if there is any room for additional competition. If a price war will reduce margins, as the case suggests, why would any company ? embrace this strategy? Price is the most attractive marketing gimmick to attract competitors’ customers. As the case told, the cell phone subscribers have nearly topped 260 million in the US and the country’s population is 305 million. The remaining 45 million maybe too young for a cell phone or they have already decided they do not want to have a cell phone. We will write a custom essay sample on Price Wars or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This condition created no more new customer so wireless companies will compete each other to attract its competitors’ customers. Certainly, the existing customers will be reluctant to move to another wireless company without an interesting offering. The existing customers have to change their cell phone number that is not comfortable so the company should attract the competitors’ customer by offering low price. In the middle of rigor competition, the company should put attention to the competitor-based method to set its price. Furthermore, the case told that low price would have a risk of causing harm to their economic bottom line. Thus, the wireless company should formulate the marketing gimmick to compensate its low price. For example, Verizon lowers its voice plans price but in the flip side Verizon eliminates the data plan bonus. In addition, JP Morgan estimates that only 2% of wireless subscribers will end up with lower bills. Price wars do not always harm the companies or reduce margin as a whole business but it will stimulate company’s creativity to create a marketing gimmick to attract competitors’ customers. On what other strategy elements could the wireless companies compete? With a potentially unsustainable pricing war, companies will need find other methods to compete with each other. Currently, ATT and Verizon both battle back and forth between whose networks are bigger and whose 4G data speeds are faster. As the cellular data speeds continue to increase, this will surely continue to remain one of the major competition points between the service providers. Another competition point that is beginning to emerge is the ease and frequency with which customers can upgrade phones. With the capabilities of the new smartphones changing almost daily, customers who want the newest, best phone will be likely to move their contract to a provider who allows them to upgrade more often. These additional services are things that some customers will be willing to pay more for and can offer the service providers a way to help boost the margins that have been hacked by the pricing war. Which wireless provider do you use? Why? Given the benefits of each firms wireless ? program, did you make the best provider choice? Justify your answer. One team-member uses ATT as the wireless provider because his employer pays for the service. The building in which they are located is made of steel, making it problematic for cellular signals to penetrate. Of the four major providers, ATT is the only firm that is able to service our office, which is where the majority of employee phone usage takes place. Due to this functional issue, our wireless provider options were severely limited. Nevertheless, ATT still manages to offer a price break, and as a business this makes the plan more cost effective. Additionally, our employees were utilizing smartphones years ago, when ATT had an unlimited data plan. This plan feature has been extended for our company, which is not available at the same price point with other wireless providers.