Tweeter Case Study

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In early 1970’s, Tweeter started out as a retailer of high-end audio and video equipment market and soon expanded into 13 stores throughout New England. By mid 80s, Tweeter gained a reputation for its excellent service, knowledgeable sales people and high quality products. The primary target consumer segments were the quality/service customer. The euphoria of the mid-1980s was, however, short lived due to new competition, growth saturation in certain product segments and overall US economy coming to screeching halt. In response to the profitability downturn in late 1980s, Tweeter attempted to compete on price while adopting innovative pricing strategy – Automatic pricing protection (APP) and targeted the price biter consumer segment too. At first, this strategy seemed to help as sales soared (case exhibit 7), but soon the environment changed again as the big retailers moved in with aggressive pricing strategy. Continuing on such pricing strategy didn’t look sustainable. Further, there were doubts on the effectiveness of APP strategy with the evidences from Bryn Mawr. We think that Tweeter must continue to position itself as the high value retailer and continue with APP strategy to maintain the current market share. However, Tweeter must modify the product offerings to stop the bleeding from APP program and at same time also focus on effectively communicate the strategy to the consumers. While it may be easier to change the product prices in short-term, but not sustainable in long-term for the limited resources and capabilities compared to the competition. Also such reactionary strategies will impact the brand’s positioning. As a first recommendation, Tweeter must reduce the overlapping products in lower end of the market that main competition, the larger discount retailers (i.e. Best Buy, Wiz, Lechmere and Circuit City) offer. Tweeter hardly has any competitive

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