Tweeter: Case Review

Tweeter: Case Review

1. Please describe in words the Automatic Price Protection Plan.

According to the Automatic Price Protection Plan if a customer purchased some product at some store and he/she later discovered that the same product is available at lower price in some other store. Then the customer can return to the store (with some proof)where the product was purchased and get the reimbursement for the difference in price. In standard case the refund should be claimed within 30 days from the date of purchase and 100 % refund on price difference is provided. However the time period and refund amount vary from one store to another. Some retailers claim to refund more than 100 % of the price difference.

The Automatic Price Protection Plan is one of the pricing strategies which were introduced by Tweeter Etc in 1993 to increase the sales, as the company was losing its market share to other stores who offered other marketing sales such as the Weekend sale and discounts in various products. After the introduction of Automatic Price Protection Plan Tweeter further extend. As per the new APP plan Tweeter started analyzing the advertisement in 8 major newspapersand if the price of the electric product offered by other competitorwas less than that of Tweeter ( for the same model) then Tweeter automaticallygenerate the cheque and send it to the customers who have bought the product on higher price from Tweeter. This updated Automatic Price Protection Plan was renamed as the “Regular Price Protection “andthe offer was also extended for 60 days. The APP plan was expanded to Regular Price Protection as under the old APP plan only 5 % of the eligible customers claim for the refund as tracing the price of the products in newspaper and going back to the store was costly and time consuming.

1. For an audio equipment available at Tweeter, the table below presents the weekly price of its lowest priced competitor (see Column 2), Tweeter’s weekly price (see Column 3), and the minimum prevailing price in the given week (see Column 4). The minimum prevailing price is minimum of the prices given in column 2 and column 3 for a given week. Based on your understanding of how APP is implementing at Tweeter, please enter the effective price of the audio equipment under APP plan for each week. (5 points)

The effective Price of the audio equipment which is available at Tweeter has been calculated according to the Automatic Price Protection process followed by Tweeter. According to Tweeter pricing strategy if any customer purchased any items from Tweeter store and later found that the same item is available for lower price in another store then Tweeter will refund 100 % of the price difference. However the Automatic Price Protection was applicable for 30 days from the date of purchase and the value of the product should be more than $ 50 and pricedifference should of at least $ 2.

In first week the lowest price offered by Tweeter’s competitor is $ 90 whereas the same product was priced at $110 at Tweeter.So if any customer purchased the audio equipment from Tweeter for $110 and later found that it is available at $90 in another store, customer can claim for refund for the price difference. Since Tweeter promised to refund 100 % of the price difference, the total refund of $ 20 ($110 - $ 90) should be made. After the refund the effective price of the audio equipment comes down to $ 90 which is equal to the lowest price offered by its competitors. Effective price for other week has also been calculated in similar ways.

1. Now based on your understanding of APP, please write down the APP plan as an “IF ….(conditions) , THEN …. Do” statement. Specifically, fill the following blanks:………………………………. (Write down condition 1) ………………………………… (Write down condition 2) ……………………… …....…. (Write down condition 3) THEN DO ---------------------- (action to be taken when the above conditions are satisfied)ENDIF

On the basis of the Automatic Price Protection followed at Tweeter the APP strategy can be presented in following conditions:

Condition 1: If the price charged at Tweeter is higher than the lowest price charged by the competitor of Tweeter and the value of the product is more than $ 50.

For example:In the first week the price of audio equipment at Tweeter is $ 110 whereas one of the competitors of Tweeter is offering same product at $ 90 which is lower than the price charged by Tweeter.

Condition 2: If the price charged at Tweeter is lower than the lowest price charged by the competitor of Tweeter.

For example : As shown in thetable above , in third week Tweeter charged $ 85 for the audio equipment whereas the lowest price offered by its competitors was $ 95 which was higher than the price charged by Tweeter.

Condition 3: If the price charged at Tweeter is equal to the lowest price charged by the competitor of Tweeter.

Then DO

If Condition 1 is satisfied then 100 % refund of the price difference should be made to the customers.

In case of Tweeter if the price charged by Tweeter are higher for any customer (based on the advertisement in top 8 newspaper) thenTweeter check its database whether any customer have purchased same item at higher price (in last 30 days) and the 100 % refund is done to the customer by issuing a cheque and automatically mailing to the customer.

...