The Black & Decker Corporation Household Products Group: Brand Transition

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Harvard Business School Marketing Cases

Black & Decker Corp.: Household Products Group, Brand Transition

Case

© The McGraw−Hill Companies, 2001

Harvard Business School

9-588-015
Rev. October 6, 1992

The Black & Decker Corporation Household Products Group: Brand Transition In April 1984, Black & Decker Corp. (B&D) acquired the Housewares Division of General Electric Co. (GE), combining the GE small-appliance product line with its own household product line to form the Household Products Group. The terms of the acquisition set the stage for a unique marketing challenge. B&D was permitted to manufacture and market appliances carrying the GE name, but only until April 1987. During the intervening three years, B&D would have to replace the GE name on all the acquired models with its own brand name. Immediately after the acquisition, Kenneth Homa, B&D’s vice president of marketing, was assigned responsibility for the brand transition. Homa had to design a marketing program to transfer the B&D name to the GE small-appliance lines without losing market share. Specifically, he had to determine the timing for the transition of the various GE product lines and the roles that advertising and promotion should play in the transition. Homa had been asked to have the proposal for the brand transition completed by June 1Conly a week away. Before he began to formulate the proposal, Homa reviewed the acquisition and the challenges it presented.

The Acquisition
With 1983 sales of $1,167 million, B&D was the leading worldwide manufacturer of professional and consumer hand-held power tools. Over 100 products were produced in 21 factories around the world. By the late 1970s, B&D was confronting two important problems—a slower growth rate for the power tool market worldwide together with increasing foreign competition. At the same time, management realized that the American housewares market presented a significant opportunity. Capitalizing on its expertise in small-motor production1 and cordless appliance technology, B&D introduced the Dustbuster7 in 1979, a rechargeable hand-held vacuum cleaner. The Dustbuster Vac “moved B&D from the garage into the house”; 60% of Dustbuster purchases were made by women. The Dustbuster’s success prompted the launch of two other rechargeable products, the SpotliterJ rechargeable flashlight and the Scrub BrusherJ cordless scrubber. In 1983, these three products generated revenues of over $100 million, almost one-third of B&D’s U.S. consumer product

1In 1983, B&D produced 20 million small motors, four times as many as its closest competitor.

Research Assistant Cynthia Bates prepared this case under the supervision of Professor John A. Quelch as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Professor Minette E. Drumwright prepared this version of the case. Proprietary data have been disguised. Copyright © 1987 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. 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.

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Harvard Business School Marketing Cases

Black & Decker Corp.: Household Products Group, Brand Transition

Case

© The McGraw−Hill Companies, 2001

79

588-015

The Black & Decker Corporation Household Products Group: Brand Transition

sales. Pretax profit margins on these products were estimated at a healthy 10%. Sales of the three products were expected to increase by 30% annually between 1983 and 1985. Consumer demand for these three innovative products led B&D executives to conclude that further penetration of the housewares...
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