Mobilink—Pricing under Competition

Abstract

Mobilink management needs to come up with a response to the entry of Telenor in the Pakistani cellular phone market. Contrary to Mobilink’s expectations and hopes, Telenor entered the market with a lower, and much simpler, pricing strategy. Mobilink being the dominant player (63 per cent market share) needs to think through its options. As a large player, responding too aggressively to this lower price (by a multinational with deep pockets) could lead to a long-term price war in which Mobilink stands to lose the most. On the other hand, a weak response might send the wrong signals not only to Telenor but also to other entrants in the wing. The managers have a variety of pricing options to choose from. Each of them entails different costs based on expected customer response.