In this case, Black & Decker Corporation (B&D) is facing a major challenge in the power tools market. The industry is segmented into three categories; Consumer, Professional-Industrial, and Professional-Tradesmen, and while B&D holds the biggest market share in the Consumer segment, they are trailing far behind in the Professional-Tradesmen segment, with a meager 9% market share. Though this is a growing market segment, B&D is barely making any profits from it, and a new strategy is needed if they are to be competitive and gain market share.
Market research revealed that Black & Decker had excellent market awareness; almost 98% of consumers were familiar with the brand. In the Consumer segment, B&D held almost 50% of the market, and in the Professional-Industrial segment, B&D was perceived to have “high quality, differentiated products, and excellent service”. In contrast, consumers in the Professional-Tradesmen segment perceived B&D tools to be of inferior quality compared to their competitors, even though field tests proved B&D tools are of comparable quality and durability. This discrepancy suggests that Black & Decker is facing a brand image/perception problem, rather than a quality/service problem. Their brand name is strongly associated with consumer products; not good enough for professional, heavy-duty tradesmen work. To address this, Joseph Galli is faced with three options: harvesting the professional-tradesmen lines, sub-branding the products in that category, or dropping the B&D name in favor of a new brand name for that product segment.
While all these options are viable, each involves different risks that must be carefully weighed. Harvesting the segment may seem reasonable at first, but it is in fact an unwise decision, because it does not take into account that this market segment is steadily growing. Therefore, even if B&D is not doing well in that segment now, there is potential to grow and improve, especially considering the fact that B&D...
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