Black and Decker Case Study Analysis
I. Background and Problem Identification
Black and Decker (B&D) was founded in 1910 by Duncan Black and Alonzo Decker. By 1917, B&D had world’s first patent in portable power drills. Since then, B&D has been the world’s largest producer of power tools and power tools accessories. The power tools market in 1990 in the US mainly comprised of three segments-Professional Industrial Tools (PI), Professional-Tradesmen (PT) Tools and Consumer tools. B&D was a market leader in America power tools industry worth $1.5 Billion, with a share of 30%. It was number one in PI and consumer segments with a share of 20% and 45% respectively. However, its share in the fastest growing market segment of Professional-Tradesmen Tools was only 9%. Makita- a Japanese company had captured 50% share in PT market segment within 10 years of its introduction in the US market. Considering the dismal performance in PT segment, the vice president of sales and marketing, Joseph Galli, is faced with a challenge to change the strategy in P-T market segment to increase sales form 9% to nearly 20% in three years, with focus on taking major share away from Makita. Three options available with Joseph Galli for making a decision are: * Harvesting P-T market segment * Sub-Branding in P-T market segment * Re-Branding in P-T market segment
It is important to first identify the issues that are affecting B&D’s performance in the Professional-Tradesmen power tools segment. II. Situation Analysis * Customers: The customers in Professional-Tradesmen market segment want more durable and rugged power tools than Consumer Users market segment. Brand perception and differentiation plays an important role in buyer decision making in this segment. Tradesmen take pride in their work and brand of tools they bring to work. They are ready to pay premium (5% to 10%) for better quality products in order to differentiate themselves form consumer user group. * Competition: B&D’s
Black and Decker (B&D) was founded in 1910 by Duncan Black and Alonzo Decker. By 1917, B&D had world’s first patent in portable power drills. Since then, B&D has been the world’s largest producer of power tools and power tools accessories. The power tools market in 1990 in the US mainly comprised of three segments-Professional Industrial Tools (PI), Professional-Tradesmen (PT) Tools and Consumer tools. B&D was a market leader in America power tools industry worth $1.5 Billion, with a share of 30%. It was number one in PI and consumer segments with a share of 20% and 45% respectively. However, its share in the fastest growing market segment of Professional-Tradesmen Tools was only 9%. Makita- a Japanese company had captured 50% share in PT market segment within 10 years of its introduction in the US market. Considering the dismal performance in PT segment, the vice president of sales and marketing, Joseph Galli, is faced with a challenge to change the strategy in P-T market segment to increase sales form 9% to nearly 20% in three years, with focus on taking major share away from Makita. Three options available with Joseph Galli for making a decision are: * Harvesting P-T market segment * Sub-Branding in P-T market segment * Re-Branding in P-T market segment
It is important to first identify the issues that are affecting B&D’s performance in the Professional-Tradesmen power tools segment. II. Situation Analysis * Customers: The customers in Professional-Tradesmen market segment want more durable and rugged power tools than Consumer Users market segment. Brand perception and differentiation plays an important role in buyer decision making in this segment. Tradesmen take pride in their work and brand of tools they bring to work. They are ready to pay premium (5% to 10%) for better quality products in order to differentiate themselves form consumer user group. * Competition: B&D’s