MAK-2 - Sec B - Group 3 - Tweeter Case Analysis PDF

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 SHARMA
Tweeter etc
Problem Identification
Following 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 mix
4. 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 Analysis
Consumer 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 Analysis
As 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) strategy
Tweeter 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 Strategy
Tweeter 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.
Alternatives
1. Modification of current APP strategy
2. Dropping the APP strategy and concentrating on the niche market
i.e. mid and high end customer base
3. Increase the awareness amongst customer base by changing the
marketing mix
Critical Evaluation of Alternatives
1. 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 Stand
A combination of Alternative 1 and 3 is best suited which will help Tweeter

face the growing competition.

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Tweeter etc.

KOTHARI NIRALI PANKAJ

Consumer electronics industry

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)

A combination of Alternative 1 and 3 is best suited which will help Tweeter

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