We were able to identify four possible opinions for Tweeter’s current situations, namely:
1.Mass-market strategy with APP.
2. Mass-market strategy without APP.
3. Niche-market strategy with APP.
4. Niche-market strategy without APP.
To better determine Tweeter’s best course of action we perform a thorough analysis of the different variables affecting Tweeter’s performance. Also, we proceeded to analyze Tweeter’s current situation through a SWOT analysis (Annex 1);we determined the “Pros and Cons” of the different options Tweeter currently has (Annex 2), and, finally; we decided to use a decision grid to support our decision (Annex 3).
As a result of the aforementioned analysis, we have come to the conclusion that adopting a niche marketing strategy and maintaining the APP policy is the best course of action for Tweeter at the present moment.To support this conclusion we took into consideration the fact that, according to the market segmentation, Tweeter is considered as a “Specialty Store” and its most important customers are the “Quality/Service Customers” (Appendix 3). These costumers account for most of Tweeter's costumers (70%) and their major characteristic is that they care about high quality/service and not so much about price(Appendix 3).
In 1992 a high percentage of this class of customers (47.4%), was shopping at other retailers (Lechmere or Circuit City). Tweeter at the time only had 19.6% of this customer category (Appendix 4). On the other hand, Tweeter has not been able to increment the number of Quality/Service Customers buying at their stores. Hence, although said segment is Tweeter’s core customer,they have been unable to capitalize from it; over 63% of this customer class was shopping at Electronic Superstores in 1996.
Therefore, Tweeter should continue as a high-end niche retailer specifically catered to serve the quality service costumers and attract high-end products price biters and high-end convenience customers. The key aspect of this strategy is to increase Tweeter’s corecustomer market share by driving them away from the Electronic/Appliance Superstores.
In order to achieve this strategy, Tweeter will have to attract part of the remaining 63% Quality/Service costumers from their competitors by launching an educational campaign targeted at their core customers with the purpose of increasing awareness of their products and services.
Moreover, Tweetershould reinforce the APP strategy given its success as costumer retention and acquisition strategy. From 1992 to 1996 Tweeter's core customer market share has improved from 19.6% to 25.2% (Appendix 8). On the other hand, over the same period, the competitors’ market share for said class of customer has increased by a smaller percentage (Appendix 9) or actually declined (Appendix 11) in comparisonwith that of Tweeter. The sole exception to this trend is Circuit city (Appendix 10). Since Tweeter has retained its customers and acquired more customers in comparison with its more direct competitors, we are of the opinion that the APP is effective and it should be kept and reinforced. Said objective will be accomplished if Tweeter better educates its customers about APP.
In our opinion,Tweeter has not been able to position and target its APP strategy to the proper class of customer. This opinion is supported by the findings of the survey (exhibit 14), where it was established that a large percentage of tweeter’s clients and potential clients is unaware of or have misconceptions about APP, hence making it less effective. Consequently, if Tweeter does a better job in educating...