Tweeter etc.

SUBMITTED BY: GROUP 03, Section B 2014PGP038 ANIRUDH MOHTA 2014PGP077 ANUJA B 2014PGP133 HIMANGSHU HATIMURIA 2014PGP169 KOTHARI NIRALI PANKAJ 2014PGP241 PALLAV KUMAR 2014PGP301 RICK ROHAN 2014PGP431 YASHRAJ SHARMATweeter etcProblem IdentificationFollowing are the four major problems which need to be addressed in this case:1. They need to identify if APP (Automatic Price Protection) is the only factor responsible for the doubling of their sales in three years because other firms like Bryn Mawr Studio, the acquisition target of Tweeter were not able to leverage Automatic Price Protection policy.2. The Wiz has recently entered into the market, and is known for its good marketing campaigns slashing the prices and providing huge discounts. Hence the Tweeters management needs to identify if the current APP policy is effective or do they need to revise it.3. As per the 1995 Customer Survey data, around 58% respondents had a false impression about Tweeters prices despite of adopting APP, hence they needed to restructure their marketing mix4. As a result of APP, Tweeter had mailed 29526 rebate checks over the period of 30 months worth $783863. This led to the concern that whether really Tweeters prices were actually competitive.

Situational AnalysisConsumer electronics industry In 1995, consumer electronics was a $30 billion industry in the United States wherein it was believed that the retail margins averaged about 30% across product category. The retail distribution channels are: Specialty electronics stores (Tweeter) Electronics/appliances superstores (Circuit City) Mass merchants ( Wal-Mart) Warehouse clubs (Sams Club) Department stores (Macys) Mail order houses (Sound City)Competitors AnalysisAs far as the competitors are concerned, there were few big players in New England who majorly captured the market share in the Consumer Electronics. The following data gives a clear idea about the players of the industry.1. Lechmere with a market share of 35.6%2. Circuit City with a market share of 18.6%3. Sears with a market share of 8.7%4. Radio Shack and Wal-Mart accounted for another 7.8% each capturing 3.9% of the market. The Wiz which was the third largest consumer electronic retailer chain in the US had recently entered the New England Market and is a major threat to Tweeter owing to its monstrous marketing strategy, intensive customer service and 110% price protection policy.Analysis of Tweeters Strategy 1. Every Day Fair Price Strategy They followed the everyday fair pricing strategy as opposed to the weekend sales strategy followed by competitors which led Tweeter to set its prices competitively.

2. Automatic Price Protection (APP) strategyTweeter offered a price protection strategy better than the competitors by watching the change in price difference on its own and thus reducing the customers burden to find the price difference on their own

3. Marketing Mix StrategyTweeter shifted away from print towards television and radio as well as direct mail and product catalogue

Inspite of their change in strategy 16% people still felt that Tweeter was highly priced whereas 22.1% of people were not even aware of the APP plan.Alternatives1. Modification of current APP strategy2. Dropping the APP strategy and concentrating on the niche market i.e. mid and high end customer base3. Increase the awareness amongst customer base by changing the marketing mixCritical Evaluation of Alternatives1. Alternative 1:From the exhibit 12 we can see that the major refund of checks happened during the month of November, December and January owing to wrap it up early or preholiday sales in these months. In FY 1995, Tweeter spent $319727 in rebate due to APP, which is 11.8% of the operating income. Moreover, out of this spending, $179652 or 56.2% was rebated during holiday season. Hence they can save plenty if APP is modified during this period and can go for aggressive advertising during this season to retain the customers

2. Alternative 2:There will be competitive advantage of being differentiated with smaller operations and storage costs and good customer service would be maintained. However there is a risk that customer would still perceive it as costly and may shift to competitors offering similar products with lower price and low loyalty

3. Alternative 3:From exhibit 14 it is evident that 40.6% of people did not even know about what APP was and even if they knew about 78% people did not that Tweeter follow APP strategy. The customers who were aware of Tweeters APP policy only 41% believed that Tweeter offered products at a lower or same price as compared to its competitors. Thus they need to change their marketing mix and do aggressive advertising through radio and television.Our StandA combination of Alternative 1 and 3 is best suited which will help Tweeter face the growing competition.