Case Study : Automatic Price Protection Introduced By Tweeter

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• This report is written to determine whether Automatic Price Protection introduced by Tweeter will be a successful strategy to keep the electronic store able to compete in intense competition of electronic store. The trends of APP refunds are increasing every period until it reached cumulatively $783,863 in December 1995. Tweeter market share is considered very low in New England Market. Tweeter was not able to compete with market that has bigger market share and offer cheaper price. • Causes that lead Tweeter to implement APP will be discussed, as well as other problems that are threatened Tweeter condition. • As solution to reduce the issue, the writer recommends Tweeter to fix their APP strategy and some strategies to increase Tweeter…show more content…
They did not use TV advertising in 1993 and they spend second highest on TV advertising in 1996. Lastly on radio, they increased the uses of radio advertising by three times ($375 to $2,750). • Automatic Price Policy o Tweeter established Automatic Price Policy for the purpose to promote that Tweeter is price competitive. o APP is a strategy to enter price-conscious market, by offering a refund scheme that allows customers to claim refund if after they purchased an item in Tweeter, and the customer finds in a local newspaper that the product they have bought is being sold cheaper elsewhere, they can claim a 100 percent refund for the difference. o However, the APP launched by Tweeter also followed by other retailers such as Crazy Eddie, Newmark and Lewis that offer higher percentage of reimbursement for the price gap as well as longer duration. o Cumulative amount of refunds is $783,863 (large amounts of money) also can be proven that Tweeter prices are still more expensive compared to their competitors (exhibit 12). o Based on exhibit 12, we can see that APP program is very costly, that the accumulated rebate reached almost $800,000 (exact amount $783,863 refunded to customer). APP is considered heavy additional expense for Tweeter in their bad financial condition. o However, in exhibit 5, we can see there is a slight increase after Tweeter implement APP = ((3.6%-2.7%)/2.7%)) =

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