SAJAL JAIN|15299

1.

TWEETER Etc.

28/09/2015

Describe the environmental changes that forced Tweeter to change its pricing strategy in the 80's - 90's.

Following were the major factor

2.

New competitive entrants, especially at the lower end of the retail market

Limited future growth for the product categories due to saturated markets

Stagnation of the US economy.

Consumers increased focus on price in their purchasing process, even though Tweeter sold middle and high end
products

Week end sales campaign that cut prices on select items and reduced sales during week days

Discuss the issues involved in using Pricing as an avenue to changing the overall Marketing Strategy.

Prevalence of Price Competition prevalent in later stage of a product life cycle or in highly commoditized market

Mismatch between the consumers perceived value of the product and its actual price

Tweeter caters to a very niche segment (10% of the market) who considers quality above price. Lowering the price
would impact consumers perceived value

Behavior of the competitors

o
o

3.

The competitor matches every price change.

The competitor has his own objectives to maximize profit.

It is important to anticipate the competitors move in regard to our price changes.

Discuss the issues involved in implementing a Promotion Pricing Plan vs EDLP vs. Lowest Price Guarantee

PROS

Promotion Pricing Plan

o Large volumes can
be cleared rapidly

o
o

CONS

To be Followed?
4.

Price war with

financially strong
competitors likely

EDLP
Avoid price war with
financially strong opponents
Value pricing
Everyday low price should be
lower or equal to the discount
price offered by competitor,
reduced margin

No

Yes

o
o
o
o
o

Lowest Price Guarantee

Customer retention
lessens purchase regret
competitive pricing
highlighted
Expensive
Change in technology may
reduce the price,
economically not a very
feasible option
No

Is the Pricing Mechanism adopted by Tweeter sustainable in the long run? Why / Why not?

No, the Pricing Mechanism adopted by Tweeter not sustainable

in the longer run because of the following reasons

Technological advancements would rapidly change the

price of electronics. The decrease in price in 60 days
will be high and hence Tweeter will lose a lot of money
The adjacent figure depicts the % decrease in iPhone
4s, 4 and 3gs before and after announcement of
iPhone 5. Clearly APP is not a good strategy on the
long run
EDLP can be implemented but Tweeter would have to
create a separate line of stores which compete on the
price component whereas Tweeter should target the
niche Audience for whom customer experience is the
prime mover.