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Challenger Strategies: Case DNA Finland Ltd. Mathias Tallberg Networking Laboratory, HUT mathias.tallberg@netlab.hut.fi 15.10.2003. Content. The Market Challenger and Challenger Strategies The Mobile Operator Business Case: DNA Finland Ltd. Conclusions Questions?.

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challenger strategies case dna finland ltd

Challenger Strategies:Case DNA Finland Ltd.

Mathias Tallberg

Networking Laboratory, HUT

mathias.tallberg@netlab.hut.fi

15.10.2003

content
Content
  • The Market Challenger and Challenger Strategies
  • The Mobile Operator Business
  • Case: DNA Finland Ltd.
  • Conclusions
  • Questions?
the market challenger and challenger strategies
The Market Challenger and Challenger Strategies
  • The market challenger company challenge and fight other companies for a stronger market position
  • To improve its market standings, a challenger company needs a strategy aimed at building a competitive advantage of its own
  • Can rarely improve its competitive position just by trying harder or by imitating what a leading company in the industry is doing
  • If large market share companies have a significant cost advantage, small market share companies have only two viable options: move to increase the market share or withdraw from the business
  • Attack the market leaders strengths rather than its weaknesses (e.g. if the market leader is not serving the market well enough)
  • Indirect attack by attacking weaknesses or gaps in the market coverage (new geographic markets or poorly served segments)
the mobile operator business
The Mobile Operator Business
  • About big investments and fierce competition
  • Many issues to consider (regulation, investment, technology, marketing, disrtibution channel, organizational, purchasing etc.)
  • Most important: pricing?
  • Pricing offers a rich field of opportunities, but require deep understanding of the business as a whole
  • Falling ARPU nowadays a real problem
  • Traditional mobile network providers vs. mobile service providers
case dna finland ltd
CASE: DNA Finland Ltd.
  • The Finnish Mobile Operator Market
  • DNA Finland Ltd.
    • Suomen 2G
    • Pricing for Voice
    • GPRS Pricing
    • The Acquisition of Telia Mobile Finland
    • The Distribution Channel
case dna finland ltd6
CASE: DNA Finland Ltd.
  • The Finnish Mobile Operator Market
    • Deregulation
    • At the end of 2002 there was 87 mobile subscriptions per 100 inhabitants
    • TeliaSonera, Radiolinja, and Suomen 2G holds licenses for GSM
    • TeliaSonera, Radiolinja, Suomen 2G, and Suomen 3G holds licenses for UMTS
    • Market leaders: TeliaSonera and Radiolinja
    • Market challengers: DNA, Saunalahti Group, Cubio etc.
case dna finland ltd7
CASE: DNA Finland Ltd.
  • The third largest mobile operator utilizing GSM/GPRS
  • Owned by Finnet Ltd.
  • Turnover in 2002 was 111 million €
  • A mobile service provider and its services work in Suomen 2G’s GSM/GPRS network
  • Subscriber base reaches over 700 000
  • DNA’s services mainly targeted for corporate customers and other innovative customers, who are not afraid to try something new…
case dna finland ltd8
CASE: DNA Finland Ltd.
  • DNA funtions as the mobile service operator, Suomen 2G as the mobile network operator
  • DNA:
    • builds the products which are visible to the end-user
    • is responsible for customer service, distribution, pricing, marketing, and billing
    • develops customer relations
    • etc.
  • Suomen 2G:
    • builds and operates a nation-wide GSM/GPRS network and service
    • is responsible for connecting traffic with other networks, roaming agreements, and co-operation, both nationally and internationally
    • mobile service provider customers: DNA, Wireless Maingate, Fujitsu Invia, and PG Free
case dna finland ltd9
CASE: DNA Finland Ltd.
  • Voice Pricing
    • DNA wants its pricing model to be as simple as possible…
    • and of course competitively priced.
    • Operators such as Saunalahti Group and Cubio puts pressure on lowering prices
    • DNA Maraton, a typical challenger pricing policy:
      • Fixed monthly price for calls and SMS’s between DNA subscribers
      • DNA the first operator in the world providing such a service
      • User friendly and clear pricing
case dna finland ltd10
CASE: DNA Finland Ltd.
  • GPRS Pricing
    • Based on a fixed monthly charge (DNA GPRS for consumer customers an exception)
    • Differs from the pricing policies of other mobile operators providing GPRS service in Finland
    • Most affordable GPRS provider in the Finnish market
    • Two types of GPRS service:
      • DNA GPRS
      • DNA WAP-GPRS
    • DNA offered GPRS for a 11 month trial period without limitations to find out if there is customer demand for such a service => there was…
    • Is this the best alternative?
      • not fair
      • congestion
case dna finland ltd11
CASE: DNA Finland Ltd.
  • Acquisition of Telia Mobile Finland
    • May 12, 2003 reached an agreement with TeliaSonera about about the acquisition of Telia Mobile Finland’s operations
    • Now over 700000 mobile subscriber customers
    • The acquisition combined the resources of two challenger mobile operators
    • Over 100 employees lost their jobs
    • Suomen 3G sold, Suomen 2G got the UMTS license from Telia Mobile Finland
  • The Distribution Channel
    • Both traditional and totally new types of distribution channels (e.g. Filmtown, Helios, and R-Kioski)
    • Do not want to wait passively in stores, but wnats to find distributors who customers visit anyway and on a regular basis
    • The network of DNA shops: > 550 today
conclusions
Conclusions
  • Mobile communications is here to stay
  • Decisions on strategies critical
  • DNA has been able to build a strong and wellknown brand fast
  • DNA’s mobile subscriptions have reached the planned 15%
  • The year 2004 will tell if DNA will be able to make positive cash flows as well…