doctor

Topics: Brand, Power tool, Hand tool Pages: 25 (3811 words) Published: October 30, 2013
T H E B L A C K 6 OECHER C O R P O R A T I O N (A):
POWER TOOLS OlUlSlON
Joe, I like you guys. But, look, I give Makita 10 feet of
space. I give you 10 feet of space. They outsell you 8 to 1. W h a t are wegoing to do about that?
In January 1991, statements like this no longer surprise
Joseph Galli. Black & Decker's (B&D) vice president of
sales and marketing for power tools had heard similar sentiments expressed by many trade accounts. Maluta Electric of Japan had practically taken over the professional power
tools for tradesmen business since it entered the United
States market a decade ago. "Tradesmen" was one of the
three major segments of the power tools business-the
others being "Consumer" and "Industrial." "Consumer"
represented "at home" use, while both "Tradesmen" and
"Industrial" covered professional users. The distinguishing characteristic of the "Tradesmen" segment was that these buyers, such as a carpenter, bought tools for their
own use on a job site. In "Industrial," the buyer was generally a corporation purchasing tools for use by employees. B late 1990, Makita's success in the Professional-Tradesy
men segment was such that it held an 80% share in cordless drills, the single largest product category, and a 50% segment share overall. B&D had virtually created the
portable power tools business in the United States beginning in the early 1900's. While it maintained the #1 market share position in the Consumer and Professional-Industrial segments, its entry in the relatively new ProfessionalTradesmen segment held only about a 9% share. The trade was asking for advertising allowances and

rebate money on B&D's Tradesmen products and profitability in this segment was near zero. B&D's senior management resolved to put an end to this "no win" game, and Professor Robert J. Dolan prepared this case as the basis for class discussion rather than to illus~rate eithrr effective or ineffective handling o f a n

admitlistrative sitiration. Certain non-public data have been disguised. Copyright O 1995 by the President and Fellows of Harvard College. Harvard Business School Case 9-595-049. To order copies or request permission to reproduce materials, call 1-800-545-768, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means-electronic, mechanical, photocopying, recording, or otherwise-without the permission of Harvard Business School.

Galli set about developing and gaining corporate support
for a viable program to challenge Makita for leadership in
this segment. He could not help but see the irony of a 9%
Tradesmen segment share and no profitability against the
results of two recent research studies; one showing B&D
to be among the powerful brand names in the world; and,
the second establishing B&D's professional tools to be the
highest quality in the industry.

Black 6 Oecker
In 1910, Duncan Black and Alonzo Decker, Sr. started a
machine shop and, in 1917, received a patent on the
world's first portable power drill with pistol grip and
trigger switch; 73 years after receiving its first patent,
B&D was the world's largest producer of power tools,
power tool accessories, electric lawn and garden tools,
and residential security hardware. Headquartered in
Towson, Maryland, B&D's sales reached $4.8 billion in
1990, with nearly 50% of product revenues from outside
the United States. Alonzo G. Decker, Jr. was Honorary
Chairman of the Company and a member of the Board
of Directors. He had been Chairman of the Board and
Chief Executive Officer from 1968 to 1975. Prior to his
becoming CEO, the CEO post had always been held by
his father or co-founder Black. From its roots in power
tools, B&D began a move "from the garage to the house"
in 1979 with the introduction of the very successful
Dustbuster" hand-held...
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