Marketing Concepts and Commercialization
Business Case Analysis
Black & Decker
Black & Decker Corporation is one of the largest manufacturers of power tools and accessories, residential security hardware, outdoor tools and numerous other products. The two largest product groups of B&D are power tools & accessories and household products representing 29% and 15% respectively, in terms of sales. During the 90s the portable power tool market accounted for 1.5 Billion and is segmented in 3 major groups, Professional-Industrial Tools, Professional-Tradesmen Tools and Consumer tools.
The Professional-Tradesmen segment is the smallest, at $420 million, but growing at a faster rate of 9% compared to the 7% Consumer tools maintain and no growth for Professional Industrial division. Black & Decker’s Professional-Tradesmen segment shows a substantial low market share. This situation is intolerable because without the success of this segment, B&D goal of being market leader could never be reached.
Problem Identification For Long Term Strategy
Black & Decker needs to address the negative perception the Professional-Tradesmen tools have. Being known as a consumer brand, does not necessarily help the professional-T segment. The perception that all B&D tools are for house shores and the misuses of the consumer tools in the job site, are really taking a toll on the company. B&D low prices in contrast to major competitors reinforce customer perception of the correlation between low prices and low quality.
The Professional tool users want to be observed with equipment considered to be sharp and of high quality. Therefore, this low quality perception needs to be addressed. According to the data from the case, the distribution channels are another issue. The distribution of the Professional-Tradesmen tools have been inefficient and its distribution channels are very limited.
Black & Decker has decided not to use major distribution channels like the discount oriented membership clubs that its largest competitor, Makita has. The Two-step, Home centers and Membership clubs account for 75% of Professional-T sales segment and B&D has less than 10% share in each distribution channel. The company needs to enhance their distributor's relationship, as well as open up to more distribution channels.
Segmentation Of Customers (End Users/Channels)
The Professional-Tradesmen segment is targeted to electricians, plumbers, carpenters and general contractors, overall people that use these power tools to earn a living. These tradesmen buying decisions are based in buying sharp and high quality tools, as well as taking in consideration its differentiation from consumer tools. Due to the perception of B&D being low quality and as a matter of “pride” these users prefer to pay Milwaukee and Makita’s premiums of 10% and 5% respectively. These tradesmen would be a laughing stock, if they were seen with “home” tools in the job site, they would not receive respect from their peers.
Situational Analysis (SWOT)
The situation Analysis of the present concern can be seen in Table 1. The weaknesses are the biggest concern due to the fact that the brand is being associated with the consumer segment. The tradesmen consider B&D as low quality because of the same problem, lack of differentiation. However, the strengths are wide; B&D has a very good brand awareness overall. Besides the wrongful perception their products are high quality and the perception of their good service is intact. Furthermore, Makita’s decreasing customer satisfaction is an opportunity that B&D needs to take advantage of.
Exhibit 1 shows a perceptual map of market share vs. brand awareness. It is very clear that besides the large brand awareness, Black & Decker has failed in obtaining higher market share. Furthermore, Exhibit 2 map illustrates the market share vs. product quality, shows the current position of B&D and its target...
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