This form can be used to organize your thoughts about a case. As you perform your analysis remain open to the fact that your interpretation of the facts may change and therefore you should constantly revisit your answers.
Define the Problem: Describe the type of case and what problem(s) or issue(s) should be the focus for your analysis.
It is a decision case, in which Joseph Galli as the vice president of sales and marketing need to propose a solution to the company directors, in order to regain the market share in tradesmen segment.
The major problem is that B&D has enjoyed leading brand name and good quality, but they did not perform as good in tradesmen segment as in consumer segment and industrial segment.
List any outside concepts that can be applied: Write down any principles, frameworks or theories that can be applied to this case.
Porter’s Five Forces model.
3C model (The Customer, Competitors, Corporation)
4P model (marketing matrix, product, price, promotion, place)
List relevant qualitative data: evidence related to or based on the quality or character of something.
B&D has been accepted as one of the most powerful brand in the world, just like Walt Disney, Kodak and NBC. For professional industry segment, the customers view B&D as offering high-quality, differentiated products and excellent services.
B&D’s share problem in tradesmen was not in product quality. B&D’s product quality was very competitive in most of its products.
Tradesmen talk a lot with the tools and their performance during their work. Their perception about the brands is that Makita provided a good baseline option in all major categories and B&D is only for home use, so not professional.
The major products of tradesmen segment are drills, saws and sanders. They accounted for 80% of the total sales. Makita has staked out to leadership positions in all products and distributions within the tradesmen segments.
Homes centers, as one of the distribution channels and currently are taking 25% of tradesmen sales, has been more important for tradesmen segment. Makita’s rise was aided by the quick development of the home centers.
The distributors are asking for more advertising allowances and rebate money on B&D’s tradesmen products and the profitability were near zero in this segment. However Makita tools for tradesmen are priced 10% higher than B&D. The two brands are with similar quality.
Makita also sells its products in discount oriented Membership Clubs. This has made its distributors unsatisficated. B&D will not go into this channel.
DeWalt was a leader in sales of large radial arm saws permanently installed at lumber yards. The DeWalt name had never been used on Portable power tool. However, DeWalt name receives a high awareness rating. The tradesmen tend to choose it as One of the Best and 51% of tradesmen would have some purchase interest.
List relevant quantitative data: evidence related to or based on the amount or number of something.
In 1990, portable power tools in the US was USD 1.5 billion market, industrial tools 550 million, tradesmen tools 420 million and consumer tools 530 million. Tradesmen segment was growing fastest at 9% compared with 7% for consumer and no growth for Industrial.
B&D participated in all 3 segments, with nearly 30% market share in total. B&D enjoyed 20% market Share in industrial tools (110M revenue ) and 45% market share in consumer tools(250M revenue). However the market share of tradesmen was only 9 %( 35M revenue).
Market share for tradesmen segment: Makita 50%, Milwaukee 10%, B&D 9%, Ryobi 9% ……
Market shares of tradesmen by channel type: Two-step 40%, Home Centers 25%, Warehouse home Centers 15%, Membership clubs 10%, Farm outlets 5%. It is noted that home center, as a channel, is developing rapidly recently. Makita market share in all these five channels (nearly 50%) are much higher than B&D(all less than 20%)....
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