Tweeter etc. is a small, upscale New England retailer of consumer electronics that was founded by Sandy Bloomberg in 1972. During that time, there were two major retailers in Boston, Tech Hi-fi and Lechmere. To avoid direct confrontation, Bloomberg focused on the student market and emphasize a lot more on sophisticated tastes for higher quality stereo components. As time pass by, Tweeter build up their reputation and the public consider the company as a retailer of “high quality, high-end audio components and video equipment, with knowledgeable salespeople who offered high levels of customer service”. Shortly by 1979, Tweeter had expanded to six stores in the Boston area and one in Rhode Island. The demand for high-end stereo and video…show more content… Unlike other retailers in the area, Tweeter does not carry entry to low-end equipment, therefore, their price is not as competitive as others, which result in a loss in profit.
Problem:
In response to the profitability downturn, Tweeter began to carry more variety of products and joined the Progressive Retailers Organization in 1988. Unfortunately, public’s perception toward Tweeter remained unchanged. “Customers continued to view Tweeter as more specialized and more expensive than Lechmere and the other New England retailers”. In order to turn the profit around, the Tweeter’s management team came up with the new strategy on 1993 to restore price credibility at Tweeter. The main emphasis in their new strategy is “Automatic Price Protection”, APP. The objective of APP is to make sure customers are receiving the best price on an given product. “In its typical form, if a consumer purchased a product at one store and later found it for a lower price at another store, the consumer could return to the first store with proof of that lower price and get reimbursed for the difference”. Later on “Tweeter took it upon itself to track the local newspapers and send out rebates. If a consumer purchased an item at Tweeter and it was advertised for less in a major local newspaper within 30 days, Tweeter automatically mailed that consumer a check for the difference.” Tweeter’s shift in strategy was very effective and had a positive effect on financial