Tweeter Price Competitiveness

Tweeter Price Competitiveness

From exhibit 13 in the case it is clear that Tweeter is price competitive in almost the entire range of items and models that it sells. In an objective model by model comparison (see appendix 1 for a sample comparison) Tweeter either matches or betters competitor's prices. Further more when you compare quality and level of service and price paid Tweeter is cheaper than the competition.

However, the competitors run spot sales (not advertised) and advertised sales, which at the point of sale gives the impression that the competition is more competitively priced. More importantly though the competition namely Lechmere, Circuit City and the Wiz all carry lower range and lower priced items in each category i.e. 27" Color TV, Multiple CD Players, Camcorders, and Full size speakers, which allows the competition to offer customers cheaper goods than Tweeter, within each category. This creates a reference point for customers to compare against and makes Tweeter look (subjectively) more expensive to buy from.

So factually Tweeter is competitively priced, however it suffers from an image problem where it is generally perceived as more expensive than the competition which likely dissuades some customers buying from Tweeter and leaves others feeling that they might have obtained their purchase cheaper else where had they tried.

Tweeter's core customers

According to the segmentation in the case Tweeter is a Specialty Store and its most important customers are the Quality/Service Customer (Appendix 3). This group accounts for 70% of Tweeter's clientele. This segment cares about high quali...

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...ry sale price they advertise. So this reaction from the superstores will not draw customers away from Tweeter, and will allow Tweeter to maintain their current customers.

In my opinion Tweeter has not positioned its APP strategy to gain a large market share of the core class of customer. If they do a better job of educating their core customer they will gain a larger share of the market possibly from Other Retailers (current market share 11.30%). With a 30% margin this can add up to $5,369,760 (11.30 x 475,200) to their bottom line per year.

In educating their customers about APP Tweeter must communicate how the program works for the customer and actively give information about how much customers have saved from the program, this will help retain their current customers and as more people learn about the program help grow Tweeter's share of their core market.