Black & Decker Corp Power Tools Division Case Analysis Report

Black & Decker Corp Power Tools Division Case Analysis Report

Prepared by Team 10

Section B 10/4/2011

Marketing Management Case Analysis – Term II

Executive Summary Black & Decker franchise holds nearly 30% market-share overall of The U.S. Power Tools Market. B & D’s research on tradesmen’s perceptions of supplier’s quality has shown that they are ranked in the 3rd tier out of 4 tiers in the marketplace, which is due to the fact that B&D are viewed more as a consumer brand, and perception of tradesmen’s that B&D’s products are of inferior quality, less durable/rugged for the required work conditions. These coupled with the lack of color differentiation makes B & D’s products not product tradesmen are proud to own, reflected in the market-share.

Different options were analyzed to change the negative consumer perception about the B&D products. The most effective option for B&D is to go for a rebranding of products in the professional tradesmen segment of the market while leveraging on the positive points in the existing market segments. This would further enable them to increase their market share in the segment.

Situational Analysis The 5C analysis framework can be adopted to study the position of Black & Decker. 

Company: Black & Decker has been in existence since 1910 and has become synonymous with the power tools segment. It is the market leader with 30% share of the US market. They have pioneered the portable power tools business and ranked 7th strongest brand in US.

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

Collaborators: B&D collaborates with leading distribution channels including two step, Home centres and farm outlets. Consumer segment is catered through retail chains like WalMart and K-Mart.



Customers: B&D’s customer segment can be divided into professional – industrial, professional – tradesman and household – consumer segments. Though it enjoys high presence in the consumer (45%) and industrial (20%) power tools segments, its share in the high growth tradesman segment has been just 9% with the industrial tools segment remaining stagnant. One of the problems faced by B&D has been their difficulty to convince tradesman about the capability of their tools in the high stress work environment and inhibit the usage of consumer tools by tradesman. Even with a high brand awareness of 98% only 44% tradesmen perceive B&D to be one among the best.



Competitors: Makita is the largest competitor to B&D and holds 50% share in the tradesman

market. It promotes its products aggressively through channels like membership clubs where B&D has no presence. Milwaukee is another large competitor whose products are perceived to be high quality and regarded by 80% tradesmen as one of the best. Though both these companies price their products at a premium of 10% to 5%, they enjoy a higher share in the tradesman market compared to B&D. 

Context: Thought B&D produces tools customized to different customer segments, it uses the

same colored tools in both consumer and professional segments. This resemblance in

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appearance leads to a perception of resemblance in performance and hence B&D tools are not trusted to withstand the stress of work environment.

Problem Statement Change the customer perception about their products in Professional-Tradesman segment and increase their market share in Professional-Tradesman segment.

Criteria for Evaluating Options Criteria Eliminate the negative perception from customer’s minds Purchase interest of customers in B&D products Leverage the positive perception of distribution & servicing capabilities of B&D Differentiate between various product lines

Weightage 4 3 2 1

Generation of Options B&D has certain constraint in implementing the action plans – a) They cannot just reduce the prices and compete as this would hurt their already strained margins. The possible and feasible options right now for Black & Decker are given in the table. 1) Harvest Professional-Tradesman Channels

2) Get behind Black & Decker Name with Sub-Branding 3) Drop the Black & Decker Name from the Professional-Tradesman Segment & identify the product as DeWalt 4) Drop the Black & Decker Name & identified as DeWalt - Serviced and distributed by B&D 5) Drop the Black & Decker Name & Marketing Management

B&D will focus on consumer & the professional-Industrial segments and in the Tradesman segment they will focus on profitability even at the expense of market share. They will introduce the producs under the brand name of Piranha®. They can introduce the products in a separate brand name DeWalt® which B&D have acquired long time ago. They will launch the products as DeWalt and use their own servicing & distribution mechanism. They will launch the products as DeWalt and

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use their own manufacturing, servicing & distribution mechanism.

identified as DeWalt Manufactured, serviced and distributed by B&D Evaluation of Options:

The evaluation matrix for the available matrix is given in the following table.

Sr. No.

1

2

3

4

5 6

Options

Harvest ProfessionalTradesman Channels Get behind B&D Name with SubBranding Drop B&D name and launch a new brand Drop B&D name and use existing DeWalt brand DeWalt-Serviced & distributed by B&D DeWaltManufactured & Serviced & distributed by B&D

Eliminate the negative perception (4)

Purchase interest of customers in B&D products (3)

Leverage the positive perception of distribution & servicing capabilities of B&D (2)

Differentiate between various product lines (1)

6

6

2

6

52

4

5

4

2

41

2

4

5

1

31

2

3

6

2

31

1

1

1

4

13

5

2

2

5

35

It has been aassigned weightage to the criteria in order of their importance (Values given in the brackets). Then the options are ranked depending upon the various criteria. After that the composite score for each option are evaluated using the product of criteria weight and rank of the option in that criterion). The option with the least total score is the most fruitful option to achieve the desired objectives.

Decision Making

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Total

Based on the options evaluated on different criteria in the previous section, we see that if the company goes with option 4 i.e. if Black and Decker drops their name from the ProfessionalTradesmen Segment and instead utilize their existing DeWalt brand with the service and distribution advantage of B&D, then that may actually help them regain their market share. The reasons behind this are explained below: 1. Firstly removal of the Black & Decker name will help in removing the negative perception that tradesmen have already associated with their products belonging to this line. 2. The different product lines will be clearly demarcated by this approach which will help in their market segmentation of their products. 3. We are keen on keeping the Black & Decker name for the service and distribution of this new sub-brand so that B&D’s already existing extensive distribution and servicing infrastructure can be leveraged. This will actually be perceived as a value addition to the new sub-brand by the customers. By following this approach, B&D can increase the interest level among tradesmen by 58% which can help in reversing the negative association that people have had with their Tradesmen line of products.

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