The Case of Black and Decker|
The Marketing Plan for The Professional Tradesmen Segment Year 1991/1992| |
Gary DiCamillo, Black and Decker’s president of power tools for United States, is reviewing the most recent sales records and figures indicating the professional tradesmen segment’s market share in his office. The research findings are not looking good and surprisingly, he didn’t expect otherwise. It has been almost a decade that this segment is in the bottom half of brand perception. There has not been any more vital time to understand the cause of this setback. This urgency lead him to ask Joseph Galli, the vice president of sales and marketing at Black and Decker, to conduct a thorough research to develop a marketing plan for the year 1991/1992. The new plan is developed to target the major problem in the Professional Tradesmen segment: Low market share among comparatives and no profitability. After a detailed situation and consumer analysis and evaluating the alternatives, John Galli concluded that professional tradesmen segment needs to be repositioned.
After a careful product assessment, Galli realized the professional quality of items produced by B&D is above their major comparatives such as Makita and Milwakee. However, the brand is poorly differentiated from the lower grade products in the consumer segment; the segment which B&D holds the most solid market share among comparatives. The permeation of B&D in consumer segment has tarnished brand perception in professional tradesmen segment; both product lines are offered in the same color: Charcoal Grey! Additionally, due to the already established and extensive negative recognition of professional tradesmen segment among professional buyers of power tool products tagging any product to this brand won’t generate the drastic results that B&D is pursuing. Furthermore, it was Black and Decker’s weak presence in Home Depot, the rapidly growing professional tradesmen product outlet, which was contributing to the problem. They needed to strategically enter this market while emphasizing their position in Home Center and Two-Step distribution channel. Following these realities, Galli knew with almost no profitability in this segment asking for advertising allowances and rebate money is not an option. As a result, he introduced a marketing plan revolving around repositioning the professional tradesmen segment and establishing a new brand entry, backed by B&D service and warranty handling and differentiating products from consumer segment by colorization.
Black and Decker is one of the world’s largest power tool manufactures and the leader of power tool market in United States. In 1991, Black and Decker’s sales record was over $5 billion and the company ranked 7th in brand recognition throughout U.S and 19th in Europe market. The nation’s power tool company leader divides in three segments: consumer, professional industrial and professional tradesmen. The consumer tool segment is offering products for “at home” use and is the most popular division with proximately $250 million in revenue in 1990. The professional industrial targets the corporates that purchase tools in large quantities for the use of professional employees. The revenue for this segment is estimated $110 Million as well. The professional tradesmen segment is the $420 million size division which represents products that professional individuals such as carpenters and contractors purchase to use on the job sites where they are required to take their own tools. However, this segment generated only $35 million revenue in 1990 with almost no profit.
Both consumer and professional industrial segments owned a solid position in the market with 45% and 20% segment shares in power tool market. However, this success did not transfer to the professional tradesmen segment....