Question 1: B&D leads in two product segments, but trails in the third. Why?
Answer: It seems from the case that there are several reasons why B&D leads in Professional-Industrial and Consumer product segments, but trails in the Professional-Tradesmen segment. It is also clear from the tests performed by Black & Decker that their products were at comparable, or even better at some cases, quality.
Branded as Home Tools: It appears that professional-tradesmen did not want to use the same tools that housewives used at homes (Black & Decker). Tradesmen viewed Black & Decker tools more for home use than being subjected to demands of the job site. This was a perception issue that was hurting Black & Decker big way.
Distribution Channel: It is also evident from the data (Exhibit 2) that Black & Decker lacked in capitalizing one of the most profitable distribution channels i.e. Membership Club. On the other hand, Makita who distributed its product through membership clubs, in which Black & Decker did not take part in, proved to be very successful channel (85%) for Makita.
Color: I believe that the unremarkable grey color did not help Black & Decker. The color was another factor that was strongly linked to the Black & Decker's image. The color factor was very clearly demonstrated by lab tests and also by the comments from professional-tradesmen.
Multiple Segments: Black & Decker was involved with three different segments Professional-Industrial, Professional-Tradesmen, and Consumer. On the other hand, Makita (who entered the market in 1978) focused on only one segment of the market while B&D focused on three.
Question 2: Describe the salient psychological features of the tradesman's buying behavior (values & need states).
Answer: This is
Tradesmen seem to believe that Black & Decker's brand is for Consumer use only. They are well aware of the brand, but regard it as the brand that is more suitable for the tools used at home.
As Black & Decker holds about 45% of the consumer market, it has very good brand recognition. In a tradesmen's mind the association of Black & Decker with consumer segment is so high that they feel that Black & Decker is for home use only and it is not rugged enough to be used professionally.
Strong tools, that can be used professionally
Value: They need to show up for work with tools that make them look professional. If they show up with Black & Decker tools, it may not help in the value that they want to earn in professional environment.
Image among other tradesmen
Question 3: What are the salient strengths and weaknesses of the Makita and Milwaukee brands? Be sure to discuss each brand's strengths and weaknesses.
Leadership position in almost all the products within Professional-Tradesmen segment. ·
Leadership position in all distribution Channel types with in Professional-Tradesmen segment. This was pretty incredible to be in leadership position in almost all the distribution channels. ·
Successful use of Membership Clubs channel, where B&D doesn't even participate. This was one channel where Makita had 80% market share. ·
Concentration on only one segment (Professional-Tradesmen). This provided Makita with focus on only one segment. ·
Perception that Makita provides good baseline options in all major categories, and all other suppliers had particular product strengths. This believe among tradesmen was a major strength for Makita Brand.
One of the Makita's weaknesses was its bad relationship with retailers. Makita was quoted by retailers as "arrogant and dictatorial". This could hurt its retail channel. ·
Secondly Makita's products were priced at Premium over B&D. This could be a weakness, as other competitors could easily sell below its price. ·
Additionally Makita didn't provide any Channel Protection. Same products were being sold via range of outlets including Membership...
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