Case study B&D
Case: HBS Case 595-057
Q1. Why is Makita outselling B&D 8 to 1 in an account that gives them equal shelf space? (Opening paragraph)
Ans. Perception of Quality - Makita have positioned themselves as a premium product in the profession power tool segment. B&D, as a result of its market leadership with 50% market share in consumer market segment, is considered an inferior brand to Makita as tradesman believe that the brand is more geared towards amateur than professional. The consumer and professional market segment are differentiated by skillset of the users of the tool - consumer segment is considered an amature segment requiring low performance tools whereas professional segment requires highest performance tools.
Another related issue is the color of the product. Charcoal grey & Black is generally associated with the consumer brands as most consumer brands including Craftsman, Skill, Wen, and Private Label are sold in this color whereas almost all the professional grade tools are sold in non-charcoal grey/black color. Tradesman are sub-consciously associating BD brand with consumer brand and hence are inclined to choose Makita over B&D.
Q2. Why are Black & Decker 's shares of the two professional segments - Industrial and Tradesmen - so different? Wouldn 't you expect them to be similar?
It is very interesting to see such a wide difference in the acceptance of the B&D product. Here are the reasons I believe explain the difference in share.
Ans. Purchasing Decision - In case of Industrial Segment (IS), the purchasing decision is being made by the few purchasing managers as opposed to tradesman in case of tradesman segment (TS). Managers are looking for different criteria than tradesman. Manager’s value customer service, brand acceptance, cost of tools but also total cost of ownership, and vendor relationships. Tradesmen have probably only one decision making criteria - performance. Given that tools account for $1000 yearly, tradesman are not price
Q1. Why is Makita outselling B&D 8 to 1 in an account that gives them equal shelf space? (Opening paragraph)
Ans. Perception of Quality - Makita have positioned themselves as a premium product in the profession power tool segment. B&D, as a result of its market leadership with 50% market share in consumer market segment, is considered an inferior brand to Makita as tradesman believe that the brand is more geared towards amateur than professional. The consumer and professional market segment are differentiated by skillset of the users of the tool - consumer segment is considered an amature segment requiring low performance tools whereas professional segment requires highest performance tools.
Another related issue is the color of the product. Charcoal grey & Black is generally associated with the consumer brands as most consumer brands including Craftsman, Skill, Wen, and Private Label are sold in this color whereas almost all the professional grade tools are sold in non-charcoal grey/black color. Tradesman are sub-consciously associating BD brand with consumer brand and hence are inclined to choose Makita over B&D.
Q2. Why are Black & Decker 's shares of the two professional segments - Industrial and Tradesmen - so different? Wouldn 't you expect them to be similar?
It is very interesting to see such a wide difference in the acceptance of the B&D product. Here are the reasons I believe explain the difference in share.
Ans. Purchasing Decision - In case of Industrial Segment (IS), the purchasing decision is being made by the few purchasing managers as opposed to tradesman in case of tradesman segment (TS). Managers are looking for different criteria than tradesman. Manager’s value customer service, brand acceptance, cost of tools but also total cost of ownership, and vendor relationships. Tradesmen have probably only one decision making criteria - performance. Given that tools account for $1000 yearly, tradesman are not price