Tweeter analysis Essay Example

Tweeter analysis Paper The other points to be discussed will be the strategy of Tweeter going forward to tackle the price competition due to rivals like, Lecher, Circuit City and the WIZ. Problem Identification Tweeter was in a market that was highly competitive and it faced many challenges to sustain itself ranging from price wars to unexpected value perception by the customers, uncertainty about Its APP policy to threats from new entrants. But the major problems can be listed as follows, Difference In the value perception of the customer and that being offered by Tweeter Despite of having competitive prices, why is large amount being returned through Automatic price protection (APP) Evaluate the impact of APP strategy on Bryn Mar Threat from new entrants like Wiz into the New England market Analysis First we will carry out a SOOT analysis for Tweeter In the current market conditions. Secondly, we will see the impact of APP on the buying behavior of the customers. We will analyze the data provided in the various case exhibits and provide recommendations for Tweeter?s future strategy. SOOT Analysis Tweeter started its venture with medium to high-end audio and video equipment ND components. The customers perceived It as a high quality retailer with knowledgeable sales people who offered high level of customer service. But the competitors?w strategy was to capture the customers through low pricing strategy. We will write a custom essay sample on Tweeter analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Tweeter analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Tweeter analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Tweeter was forced to compete on price and even introduce entry-level brands and lower end models of existing brands. It was unable to cash upon this strategy since the customers failed to recognize the competitive price offerings on its products. Looking at Exhibit 14, 54% of the respondents did not know whether the prices offered by Tweeter are higher or lower compared to other big chains Like Lecher Ana Cult CLC TTY. Moreover, AT ten respondents won 010 not Know auto ten A policy also were unaware of the relative prices. Also, 40. 6% customers are not aware of the concept of APP and 37. 9% of the customers do not know that Tweeter has a policy related to APP. So we can say that the value offered by Tweeter was not exactly as perceived by the customers since their promotion strategies did not work as there was always a competitor whose highest price was lower than Tweeter?was lowest offered price. The probability of customers knowing about the introduction of low end products by Tweeter was less considering they did not focus on promotion. Under the Automatic Price Protection policy, Tweeter monitored newspapers on a daily basis for advertisements of competitors present within 25 miles of its vicinity. If an item purchased at Tweeter in the past 30 days was advertised for a lower price, then they automatically mailed a refund check to the consumer for 100% of the difference in the amounts. There were some constraints applied as the items insider are of value above 50$ and the difference is more than 2$. The advantages of APP on Buying Behavior can be ?C Eliminates the need for extensive, price?based search for the customer ?C Break the ?Kiewit for a sale?0 buying mentality ?C Create positive word-of- mouth ?C Good technique for customer conversion and retention The disadvantages of APP on Buying Behavior can be ?C APP is relative complex, difficult to communicate via media ?C Purchase decision of customers is based on prices at face value. So they would prefer a impetigo giving sale or discount instead of APP Looking at the income statement in exhibit 7, since the implementation of APP the gross revenues have increased by 88. 5% from 1993 to 1996 while the net income has increased from -661 k$ in 1993 to kick$ in 1996. Hence, we can see that the top line improvement has not been translated to the bottom line. Looking at exhibit 12, we can observe that APP policy was highly ineffective during the festive months, since it was a custom for the competitors to reduce their prices aiming to maximize their sales and profits. Due to the overlapping products with Tweeter, they had to incur increased payback during these months. Tweeter was losing out a lot on its pricing strategy for cost leadership and current profit minimization by concentrating on the low end product market, whereas it specialized in the medium to high-end market and the customers perceived it to be a high quality retailer offering good customer service. In fact, Tweeter customers perceived that they were paying a premium price for receiving the best customer service in the region. Tweeter acquired Bryn Mar stereo and died as its first venture outside of New England. Bryn Mar was a high-end consumer electronics chain similar to Tweeter and it had also adopted APP policy. But due to low awareness of the policy in the new area, Bryn Mar failed to see an appreciable increase in sales despite adoption of APP policy. Tweeter can handle this issue by concentrating more on promotion of the APP policy and its assured benefits. Considering the channels of distribution, from exhibit 4 1 1, we can observe that the product mix offered by Tweeter at their specialty stores and boutiques for consumer electronic categories Is well In sync Witt ten stores parterre Day ten customers to Duty those products, as 59-64% of market share is captured by the specialty stores. Hence, during expansion in other states outside New England, they should target for opening similar type of stores. From exhibit 8, we can observe that the customer base seeking Quality/Service that forms 10% of the total market prefers Tweeter that is 70% of Tweeter?was market. It has only 20% market share in the price biter segment and it can focus to increase the share in this segment, as these customers focus on absolute best deal looking at verbal factors of price, service and quality. Tweeter can surely cater to these customers. Recommendations Do not target low end products The major mistake that Tweeter committed was introduction of low end products. The competitors of low end products were superstores and mass merchants that mainly concentrated on providing low competitive prices while compromising on customer service and salesperson knowledge. Being a specialty store, Tweeter?was PODS included giving the customer a better shopping experience through excellent customer service and salesperson knowledge. Hence, venturing into APP for low end products mostly resulted in loss. No differentiation on the basis of prices through sales or discounts The customer psychology was to accept prices at face value. They got more attracted by initial savings rather than a money refund at a later stage. Hence though the savings might be same their tendency is to choose a product on sale to a complex offering like APP. Thus, there is no incentive to provide sales or discounts on low end products. This supplements the previous point for Tweeter to back out from sale of low end products. Do not target entry level customers Entry-level customers laid great emphasis on price and not on product quality and customer service. Since Tweeter?was unique offerings did not include low end products, the probability of them choosing Tweeter was minimum. Promotion towards BIB segment The high end products can be catered to customers who value these as a long-term investment like educational institutions, music bands, etc. That form a part of BIB segment. These customers will be willing to pay a premium for high quality. Hence, Tweeter should focus more on this segment.