1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

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TWEETER CASE
Topic: Business › Accountability
Sample donated: Charlene Mason
Last updated: March 3, 2019

Should Tweeter continue with its Automatic Price

Protection (APP) policy along with Every-day Fair Pricing
(EDFP)? Tweeter should continue with its current
Marketing strategy based on APP policy and Every-day
Fair pricing.
Their target customer is the Quality/Service oriented
and they should focus on retaining their loyalty. The
shift from having continuous Sales Events to fair pricing Hi!
x
and price protection has been proven successful as I'm Jessica!
same store sales have increased, new stores have
delivered consistent sales and total marketing expense Don't know how to start
has not increased as a % of Sales.Also profitability of your paper? Worry no
more!
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the company has gone back to positive numbers as a writing assistance from
result of the new pricing strategy. By not entering the me.
Sale events, Tweeter will be able to maintain its Click here
reputation of high-end quality service retailer and keep
its current market segment very well satisfied with its
price protection program. 1. Customer Analysis: (a)
What are the challenges that Tweeter faces in the
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market environment that they have to compete in? Use
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

the data in Exhibit 13 to assess whether Tweeter is

price competitive with its competitors when comparing
objective prices?What factors impact the price image of
retail store and how does Tweeter compare with its
competitors? As a retailer of consumer electronics
Tweeter faces several challenges in order to keep
growing its sales and capture new consumers into their
stores.

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As a boutique or specialty retailer of electronics

Tweeter faces direct competition from other
distribution channels in which the same products are
sold. These are Electronic/Appliance Superstores,
Department stores and in less weight Mass merchants
and Warehouse clubs.These bigger retailers
characterize by giving consumers an image of everyday
Hi!
x
low prices which drive them into their stores, generally
offering attractive Sales Event every week. Another I'm Jessica!

challenge Tweeter faces is the entrance of new stores

to the market with the chain Wiz planning to open 8 Don't know how to start
your paper? Worry no
more stores in the New England Market, so this means more!
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Tweeter will need to work a strategy to keep its core writing assistance from
me.
customer loyal and not switching to these new
stores.Bigger retailers carry more products so portfolio Click here
offering to consumers is greater than Tweeter creating
a one stop shop for electronics consumers, which could
drive away customers from Tweeter. Comparing price
Are You competitiveness of Tweeter
on a Short Deadline? against otherWriter
Let a Professional retailers;
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x
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

audio and video products sold across multiple retailers

were analyzed.
Of those 32 products 18 products sold on Tweeter
were sold at the same price or below compared to
Lechmere, Circuit City or Wiz. Only 9 products were
priced higher by Tweeter in % ranging from 4% to 17%
higher and most of the prices were on sale or
advertised.See Exhibit 1 for calculations. Based on
information in exhibit 1, Tweeter has a competitive
position in similar products against the other retailers,
the key is how they could advertise this position so that
consumers think they have competitive prices even
though they are a high-end, high quality retailer. (b)
How do consumers make purchasing decisions in the
electronics market? What are the challenges faced by
Tweeter due to this? Will APP help in overcoming some
of these challenges and how?By conducting Focus
Groups Tweeter identified how consumers made their
decisions in the New England Market. They identified
consumers thought about their purchase decision two
months in advance on average and visited two to three
retailers prior to making the purchase. Most of visits
were driven by newspaper ads and most of them
waited for the product to be advertised in order to
purchase the desired product. Tweeter also found out Hi!
x
that most of the customers who shopped on Tweeter I'm Jessica!
stores also visited Lechmere, Fretter and Sears because
they believed Tweeter was more expensive than other Don't know how to start
retailers. your paper? Worry no
more!
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Finally focus group interviews showed that if price writing assistance from
would not be an issue, most of the customers would me.

prefer to shop on Tweeter. Another key information Click here

they got from the study was customer type: Entry level
customers, The price biter, the convenience customer
and Quality/Service Customer. 70% of Tweeter
Are You customers
on a Short are in the Quality/Service
Deadline? Type
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x
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

represented 10% of total market in New England. By

having most of customer base in smallest market
segment Tweeter needs to create a marketing strategy
to satisfy its current customer base in order to become
100% loyal.Value proposition and differentiation will be
key drivers in order to keep current customers satisfied.
20% of tweeter customers are price-biters, so these
customers could be potentially lost to lower-cost
perceived retailers. With APP introduction Tweeter
could overcome price competition by offering current
customers the peace of mind that they will pay the
lowest price without the need of lowering retail prices
and continue to offer great customer service.This
strategy works perfectly because customers will not see
cheap retail prices which could trade down Tweeter’s
image of being a high-end quality retailer to a low cost
cheap retailer. (c) Which segments of the market is
Tweeter currently targeting? Who is their primary
target? Evaluate Tweeter’s performance with their target
customers? How will APP impact Tweeter’s performance
with their primary target market and other segments?
Tweeter is currently targeting the Quality/Service
oriented customer.Customers who want high-end
products and are willing to have a better shopping
experience with great customer service. They are Hi!
x
outperforming competition in this segment with 70% I'm Jessica!
market share with closest competitor being circuit city
with 15% (out of the 10% quality/service customer Don't know how to start
segment). APP will consolidate loyalty and create a your paper? Worry no
more!
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shield to defend its current customers from writing assistance from
competition. Tweeter primary customer likes quality me.
and service but could be driven away by a lower priced Click here
retailer, so by giving the price guarantee to their current
customers Tweeter could retain them.
Another segment that could be influenced by APP will
Are You be
on the price-biters.
a Short Deadline? Currently Tweeter has
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

customer base in this segment and they could drive

additional consumers who are searching for the lowest
price with APP strategy. In the Pennsylvania market the
new acquired Bryn Mawr stores have not been able to
successfully increase sales with APP but Tweeter CEO
should not worry about this strategy because market
could be different. They should conduct same analysis
done in New England for market segmentation to
understand better their customer and come out with
correct strategy. .
Company Analysis: (a) Enumerate the key objectives
that a retailer might have? In your assessment, which
objectives are challenging for Tweeter to achieve given
the competitive market and customer environment that
they face? Specialty retailers have key objectives that
have to be met in order to be successful. They need to
have good location, credibility, great customer service,
good product offer, competitive prices, financially
feasible margins and they need to bring people to their
stores and make final purchase decision at their
stores.Tweeter faces the challenge of capturing
consumers from other retailers and be the best option
for final purchase decision. Price competition is a major
challenge to Tweeter because it could lose sales, or it
could drop down its current margin by trying to offer Hi!
x
lower cost products trying to compete against bigger I'm Jessica!
retail chains. (b) How does APP help Tweeter in
overcoming these challenges and achieving the Don't know how to start
objectives? Tweeter target customer is very special. your paper? Worry no
more!
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They like to receive good service and like to purchase writing assistance from
good quality products.The threat Tweeter faces by new me.
market entrants is by price reductions to current Click here
products.
Those customers who are a little price sensitive could
switch from Tweeter to other retailers. APP is a great
Are You tool
on athat Tweeter
Short management
Deadline? designedWriter
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

will automatically match a lower advertised priced after

the purchase and send a check for the difference to its
customer. This will help Tweeter keep its current
customer base and don’t lower retail prices keeping
image of high-end quality service retail store. (c) Use the
data in the case to evaluate whether APP has been
effective?List the metrics that you are using and present
your analysis using data in the case. Since the change of
marketing strategy in 1993 sales have grown almost
two times by 1996 from $43M to $82M (estimated). The
new strategy had three components: APP, Everyday-fair
pricing (no more Sales events) and change in
advertising mix from newspaper to Television and
Radio. Same-store sales grew by 50% with new strategy
and the other incremental revenue came from the
seven new stores they opened over the three year
period.With the information given in the case APP is not
the only component of the new marketing strategy, but
a part of a new shift in the marketing strategy.
As a part of the new strategy APP has been effective as
it only represents around 0. 5% of the total revenues.
See Exhibit 2 for Calculations. Sales per store have
increased since the switch to the new strategy, not all of
them could be addressed to APP but as a part of the
new strategy and representing a small expense as a % Hi!
x
of revenues, strategy has proven to be effective. I'm Jessica!

See Exhibit 3 for same store sales.On the financial

performance Tweeter has been able to improve Don't know how to start
your paper? Worry no
margins, not affected by new fair-pricing strategy and more!
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reduce expenses boosting net income from negative writing assistance from
numbers to 4% over sales. See Exhibit 4 for Margin me.

Analysis. 3. Company Analysis: (a) What are the Click here

necessary factors for APP to be sustainable? In order
for the APP program to be sustainable it will have to
create additional sales growth and I will target
Are You maximum
on a Shortbudget for Let
Deadline? APPaunder 1% of sales,
Professional Writernot
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x
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1/1/22, 4:41 PM Tweeter Case - Free Term Papers Example

exceeding the other components of the marketing plan

as Radio and Television advertisement and total
marketing expense.
The policy should also consider check shipping costs, so
that minimum amount check could be modified in case
shipping costs increases. The total amount per check
should also be limited, calculating an average rebate
that will not go below marginal cost of advertised
products. They should maintain the 30 day policy for
rebate granting. Last but not least, overhead costs from
people operating the program should be consistent
with revenue growth as a % of sales and don’t create
any additional overhead costs for Tweeter. (b) Is APP
sustainable for Tweeter? Currently APP represents only
0. 5-0.
% of revenues in first years of operation (Exhibit 2). APP
is sustainable as total sales have increased by 100%,
new stores have good sales and same-stores have
experienced a 50% growth increase since the program
was launched. As part of the new marketing strategy,
advertising has gone down from 8. 9% to 8. 0% as a
percentage of sales so Tweeter has not incurred in
additional marketing expense just a different mix.
So APP has been sustainable for Tweeter in this 3 years
Hi!
x
of operation and has been effective to maintain its
I'm Jessica!
target customer: Quality/Service oriented electronic
goods shopper.
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