By doing so, both companies hoped to retain their customers and increase sales in the face of new competition. SMS Radio and TruRadio, two large incumbent radio retailers, responded to the entry of Waves Inc. into the radio retail business by lowering the prices of their radios and spending more money to improve their radios and on additional marketing.
The pricing strategy and additional investments were intended to create an advantage for the incumbent retailers in terms of product quality, features and brand loyalty. Additionally, the increased marketing investment was designed to draw attention to the retailers' products, creating more visibility and helping to attract new customers.
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