Tweeter - Problem Definition

Problem definition

Tweeter ect. is a big retailer of consumer electronics in New England. From 1991 to 1996, the number of store and annual sales revenue had significant growth, which, Bloomberg believed, was because of the Automatic Price Protection strategy. However, the company is worried about APP’s impacts on profitability and whether the policy will be continuously effective in market where there is expected tough competition from the consumer electronics giant The Wiz.

Alternatives

1. Change brand position: the current position of Tweeter is to provide high quality, high-end audio components and video equipment as well as good services. Although the company charges almost the same price as similar stores such as Lechmere and Circuit City, customers will very likely to perceive Tweeter as an expensive store. Of those who know about Tweeter’s prices, more than one third people think they are higher than those of Tweeter’s competitors’. Therefore, the company could change its slogan to “No one can beat our price” to give customers a precise and direct image of low price.

Pros: Popularize and enhance the effect of APP. Also help to change the brand image from a high-end expensive store to an inexpensive one. As a result, new brand image could attract more customers.

Cons: Changing slogan may have negative effects on brand awareness and brand image. Also, brand image is hard to change since it takes a long time and need to be done quite deliberately.

2. Expand product lines: Focusing only on high-end consumer electronics sweeps away a big portion in the market. From the Exhibit 13- product line and price comparisons across major New England retailers we can see that Tweeter sells very limited models in its product range while its competitors sell much more. Therefore it is necessary for Tweeter to expand its product line to three dimensions: low-end, middle-end and high-end product.

Pros: This alternative helps to eliminate targeted customer boundary;