Hbs Tweeter Case Analysis

Yingchen Sun, 1002105553

Tweeter etc. is a specialty retail store providing middle and high-end electronic equipment, including flat panel TVs, car radio, and home theater systems and so on. In 1993, the company had adopted a strategy called Automatic Price Protection policy, which is a mechanism designed as a compensation would be made to customers if they find a lower price of the same product in another place in 60 days after buying in Tweeter. However, in the mid-80s, with new competitors enter the market, the company need to reconsider the role of APP and make some adjustments.

However, according to the research, only 22.1% people are aware of that Tweeter offers this policy, the implementation of APP actually caused several misleading information was given to the consumers. First, some consumers may assume that the quality of Tweeter’s product may not be as good as before. Besides, people may think that their high-level products don’t overlap with similar retailers. Luckily, even with these side effects of the policy, the sales still went up after the implementation. If the company still decided to go with the APP policy, adjustments must be made.

First of all, Tweeter divided their customers into 4 segments: Entry-level, Price biter, Convenience, and Quality/service. And according to Herschman’s estimation, 70% of the company’s targeted customers are quality/service customers. The evidence showed that 1/3 of the customers do go to other stores to compare the prices before purchase. Thus, we need to calculate the mean product prices to determine the competitiveness of the price in an objective way.

Mean product price for overlapping products (all data collected from exhibit 13) :

1. 27’’ Color TVs----11 overlap, 3 unique to Tweeter

1. CD Players----7 overlap, 13 unique

1. Camcorders----12 overlap, 1 unique

1. Stereo Speakers----1 overlap, 22 unique

From the tables above, we can see that Tweeter do not have a higher competitiveness than other retailers. Tweeter’s objective is to persuasive consumers that their product is the most cost-efficient, thus, what Tweeter should focus on is strengthen their customer installation since they don’t have the advantage in price.