MK2 Group 10 SectionA Tweeter

7/28/2019 MK2 Group 10 SectionA Tweeter

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Marketing II Assignment

Case Analysis of

Tweeter etc.Submitted to Prof. Jaysimha by Group 10, Section A, PGP 1

Submitted by:

Anjali Bhushan 2011PGP549

Karthikeyan R. 2011PGP684

Rahul Bakshi 2011PGP807

Mehta Dhruval Bhavenbhai 2011PGP721

Saurabh Tandon 2011PGP857

Vikash Thakur 2011PGP938


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Problem I dentif ication:

a) Tweeter was unable to change public perception despite Automatic Price Protection Policy.They continued to view it as more expensive.

b) Brymn Mawr which was acquired by Tweeter failed to see any significant improvement in salesafter APP which created a doubt in minds of Tweeters management about the success of APP

Policy in Tweeter.

c) In the summer of 1996, Wiz opened a new 50000 square feet retail outlet in Massachusetts.Bloomberg, CEO of Tweeter, wondered how effective the APP policy after the intense

competition from players likes Wiz.

d) For Majority of the Tweeters Consumer (Entry Level and Price-Bitter) price was an importantfactor while purchasing.

e) Target audience of Tweeter was constituted of a very small portion of overall population.

Situational Analysis:

Macro Environment: During the mid 1980s demand for high-end stereo and video devices was high.

This growth in addition to strong regional and national economies and by the introduction of new

technologies like VCR and CD Players improved the industry position. These conditions helped

Tweeters positioning at the high-end of the audio and video market.

Micro Environment: The main competition for Tweeter was coming from Lechmere, Circuit City andthe Wiz. They were pioneered in low-cost products in each category. Tweeter was unable to change

the perception of the consumer despite several steps like the introduction of APP, changing the

period from 30 days to 60 days. Tweeter was competitively priced. They were providing products at

low rate with good customer services and high quality products.

Three factors contributed to overall decline in the New England electronics market in late 1980s and

early 1990s.

1. New competitive entrants like Fretter Superstores and Highland Superstores.2. Household penetration for colour televisions, VCRs and many other home electronics.3. Impact of US Economy during the 1987 and 1988 in New England which was hardest hit.


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Al ternate Strategy -

1. Aggressively Market APP- The customer survey data shows that only about 30% of the potential

customers know what APP actually means. Also of those who knew about the APP only 22% knew

that Twitter offered APP. Thus it can be seen that there was low awareness among potentialcustomers.

In a fiercely competitive market like consumer electronics industry with new rivals like 'The Wiz'

entering it is very important to let the customers know about the stores competitive offerings. The

entry of 'The Wiz', know for its monstrous marketing campaigns touting rock bottom prices,

especially threatens Tweeter's market position as most customers buying decision depends on Price

and the price is often perception driven.

2. Carry Entry-level products - As the customers decision was mainly based on Price of the product

and competitors were advertising with low cost products in print media it was driving many

customers away. By increasing the range of products offered Tweeter would be able to carter to

price sensitive Entry-level customers and also an opportunity to change its perception among

potential customers.

3. Campaign to change Brand Image - The perception of Tweeter among customers was that of a

retailer of high quality, high-end audio components and video equipment, with knowledgeable

salespeople who offered high levels of customer service. However, when it comes to price

customers thought it to be expensive than the competitors in spite of their competitive pricing and

APP.

To change this, the company should run campaigns in print media, as competitors were giving

advertisements about low cost products which was leading customer perception of low cost

offerings, along with increasing focus on Radio, direct mail and in-store promotions.

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1993 1994 1995

$ Value of Checks

$ Value of Checks


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As can be observed with the value of checks being paid back to customers that there is an increase in

payment of checks during the year end in the Wrap it Up Early sale or the Pre -Holiday sale. So to

overcome that, Tweeter needs to work on their strategy of providing the APP promotion round the

year. They can create and advertising policy in which the APP is not applied during the year endsales.

By revoking the APP during year-end sales, they will be able to cut the expenditure because of re-

payment of checks by 57.8 %.

Loss during Nov-Dec each year = 453624

Overall loss by payment of checks = 783863

% loss during nov-dec = (453624/78363)*100

= 57.8%

Alternative strategy-2

1992 1993 1994 1995 1996

Sales 41140 43714 55164 70305 82400

Operating

Profit

37 -661 1387 2702 3600

OperatingMargin

0.089937 -1.5121 2.514321 3.843254 4.368932

CAGR 94.80894 33.23464

The operating margin for FY 1996 is 4.3% while CAGR of Operating Profit growth is 33.23%

Cost of APP is =780000/ (12*29) =320000 per year i.e 0.39 % of Sales

So without APP the Operating Margin is =4.368+0.39=4.758%

Also the recent entry ofNobody Beats the Wiz, which is known for its monstrous marketingcampaigns that will put further downward pressure on margins.

Change is strategy

Since Tweeter is mostly into retailing high value products for which there is huge probability that the

price will fall by $2 in the 30 days after the purchase and so it often triggers APP cheques so its

better to change it to 2 % i.e if the price decreases by more than 2 % in the next 30 days then only

APP cheque is triggered. This will help to reduce the cost of the scheme and also would not dilute

the effect of marketing campaign.

Documents

MK2 Group 10 SectionA Tweeter