Tweeter Price Competitiveness Essay

With the shift in the end customers demographics, it would be wise for Stihl to consider alternative strategies to supplement their current reliance on independent specialty dealers. A company must always address who the end customer is, when you forget or choose to ignore who the customer is, then you tend to not be able to reach them. The marketing mix (product, price, placement, and promotion) has to be in tune with who the end customer is and what their economic situation might be. The case breaks down the changes or shift in demographics in the form of predictables and unpredictibles.

The key issue for Virgin Mobile USA is to select a pricing strategy that will both attract and retrain subscribers.

There are several markets where it is relatively easy to name every competitor. These are concentrated markets where only a handful of competitors

The three main competitive strategies are cost leadership, differentiation, and price strategy. Cost leadership focuses on acquiring raw material of the highest quality at the lowest price. In return this company can lower production cost with the goal of being the company with the lowest production cost in the industry. Differentiation strategies allow companies to make their products stand out from the others. Differentiation can be actual or perceived. Actual differentiation occurs when the company creates products that are not available elsewhere. Perceived differentiation takes a lot of marketing and advertisement to convince the consumer that this company’s product is superior. Price strategy includes a variety of strategies that cause a particular product to be marketed at the lowest price possible. Price strategy includes skimming where companies set a high initial price only to turn around and lower it. Bundle pricing occurs when several products are offered for one price. Promotional pricing allows other incentives to buy such as buy one get one half off. Using the pricing strategies causes many consumers to actually purchase more believing that they are receiving a “deal” while the company is still profiting. Competitive strategies are always used by companies and are often used together. Companies that understand how to combine competitive strategies fare much

The Intensity of Rivalry among Competitors in an Industry (High): Equally balanced competitors exist within the industry such as BCF and KMD; these firms also face competition from retailers and wholesalers. The growth of the industry is relatively agile in both financial and technological aspects. The intensity or rivalry is further accentuated by relatively high storage and fixed rental costs, extensive product differentiation and minimal switching costs.

3. Describe at least 3 nonprice competition strategies a company could use to convince customers that its product is better than other similar products. Why would those strategies matter to customers? (1-6 sentences. 3.0 points)

Competitive Rivalry: Competitive rivalry is relatively high as seen in previous competitor analysis. There are many competitors in the local market and on the shelf within the mainstream markets.

All segments are critical for the implementation of our company’s strategy because we chose to be broad cost leaders. Cost leaders maintain a presence in all market segments by focusing on low production costs and competitive pricing. With that in mind, one segment is considered to be slightly more important than the others: the low end segment. We will compete in every market segment, but this is one of the most important due to the fact that price is the main consideration of the buying criteria at 53% importance. Our costs will be much lower than our competitors which translates into a lower market price for this product, which is ideal for our customers.

t. How favorably the company’s price compares with the lowest price being charged by a rival in the same geographic region.

The entrance of a new competitor into a market can cause a business to change its marketing strategy. For example, a small electronics store that was the only game in town might have to change its image in the marketplace when a large chain store opens nearby. While the smaller store might not be able to compete in price, it can use advertising to position itself as the friendly, service-oriented local alternative.

In other words, customers are willing to purchase low-tech products as long as their prices are relatively low. As a result, Niche Cost Leadership seems to be the most appropriate strategy for these two segments.

So far APP has been successful as a retention and acquisition strategy. From 1992 to 1996 Tweeter 's core customer market share has grown from 19.6% to 25.2% (Appendix 8 Tweeter). By contrast with the exception of Circuit city (Appendix 10 Circuit city) over the same period the market share for this class of customer has increased by a smaller percentage (Appendix 9 Lechmere) or actually declined (Appendix 11 Other retailers). Since Tweeter has retained its customers and acquired more customers over the years I would say the strategy is applicable and successful for both functions.

The Markstrat world has a population of 250 million people. Through Year 4, the Sonite market consisted of 1.67 million people with an expected growth rate of 53% over the next five years. In order to meet the needs of consumers in the larger growing segments, Company U has developed two products in the Sonite market: SUSI and SULI. SUSI is the lower quality offering, marketed towards Singles and Others who are the most price-sensitive. Others and Singles are projected to have the highest growth rates over the next five years, at 98% and 86% respectively. This is Company U’s target market for SUSI and sales are forecasted to almost double in each segment through Year 10 (Table 1 and Chart 1). SULI is the high quality electronic offering, distributed primarily to Professionals and High Earners who are driven by performance and convenience. Market Share for both Professionals and another market segment, Buffs, are expected to decline through Year 10. The Vodite market currently consists of approximately 200,000 people with an expected growth of 200% through Year 10. The Followers segment of the Vodite market is projected to have the largest growth over the next five years at over 3300%. Company U introduced a Vodite, VUGO, in Year 5 to initially target the Early Adopters segment in turn creating a strong foundation to penetrate the Followers segment through Year 10 with predicted long term sales growth of 17%.

penetration pricing strategy. All indications are that sales will continue to grow. In response to a

70% of Tweeter customers are in the Quality/Service Type but only represented 10% of total market in New England. By having most of customer base in smallest market segment Tweeter needs to create a marketing strategy to satisfy its current customer base in order to become 100% loyal. Value proposition and differentiation will be key drivers in order to keep current customers satisfied. 20% of tweeter customers are price-biters, so these customers could be potentially lost to lower-cost perceived retailers. With APP introduction Tweeter could overcome price competition by offering current customers the peace of mind that they will pay the lowest price without the need of lowering retail prices and continue to offer great customer service. This strategy works perfectly because customers will not see cheap retail prices which could trade down Tweeter’s image of being a high-end quality retailer to a low cost cheap retailer.