Tweeter Case

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1. Is Tweeter price competitive with its competitors: compare objective prices? What about subjective price perceptions? Prior to 1993, when Tweeter introduced Automatic Price Protection (APP), its company strategy and values were based on providing value, good quality and service and it did not compete on price. With the introduction of APP, Tweeter assures customers that they were receiving the best price available on any product. They even added an automated refund, making it superior to its competitors, who required customers to search for any price differentials on their own. By using APP, Tweeter’s prices are benchmarked against the overall market and are therefore, objectively competitive. Despite this, in terms of subjective price perceptions, Tweeter was not price competitive, as the majority of people (only 4.7%), felt that Tweeter offered lower prices. This could be due to customers perceptions formed by the companies past positioning, which places Tweeter as a premium brand, as it emphasized on providing quality and good service. Also, as the majority of respondents were unaware of Tweeter’s APP policy, this could have influenced their perception that Tweeter’s prices were more expensive than competitors.

2. Who should Tweeter target? What is the role of APP in attracting Tweeter’s target consumer? Tweeter should target 2 segments: The Price Biter and The Quality/Service customer. Positioned as a premium brand, which offers mid to high-end electronics with good customer service, this suits the profile of quality/service customers whose primary concern was product quality and customer service while price a secondary consideration. This segment accounts for 10% of the total market and Tweeter is the market leader in this niche segment with them forming 70% of Tweeter’s customers. However, as this segment consists of only 10% of market, Tweeter should also reach out to the ‘Price Biter’ segment by marketing their APP policy. As 20% of their...
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