Group3 Spacemaker Plus

Group 3

Product and Brand Management

Black & Decker Corporation: Spacemaker Plus Coffeemaker (A) 1. Should Heiner order a recall of the spacemaker Plus coffeemaker? What is the goal of the recall? The Household Products Group, a subsidiary of Black and Decker was formed shortly after the acquisition of the General Electric Houseware Division. This division was later named as the Household Products Group (HPG). Most of HPG’s sales in 1988 (40%) was based on products which were three years old or less. This fact highlights how critical was the new product business for the continued growth of HPG. These new products were largely based on new value added features on the existing appliances. So features such as an automatic shut-off for irons, cordless blenders and powerful vacuum cleaners help when leverage the market potential. In addition they wanted to grow further into the industry with a wide product range from irons, vacuum cleaners, toaster ovens, coffeemakers and toasters. And to do this they heavily relied on ‘providing superior customer satisfaction as the dominant brand of high quality, innovative household products.’ They felt only through such a commitment could they realize their ambitious sales targets. The Spacemaker plus also secured the first-place in the annual award competition for appliance products, based on its aesthetic appeal, functionality, ease of use, and engineering execution from the Appliance Magazine. Not only that, the product was lauded for its aesthetic appeal, functionality, ease of use, and engineering execution, which helped the spacemaker push ahead of Krups and Braun. All of this made the Spacemaker plus a success story for Black & Decker. All the factors highlighted in the above paragraphs made it crucial for Black & Decker to maintain the image of the Spacemaker plus in the market and in front of the customers. Although initial reports did not clearly suggest that there was any major failure in the product. Neither has the Failure Mode Effect Analysis indicate a safety problem arising from fire, shock or cut hazard. On closer inspection it was revealed that, there might have been a problem of clamping the feed from the reservoir to the heater element, which starved the unit of water. This led to overheating and fires despite the presence of the TCOs. Based on the above facts it becomes imperative for Black & Decker to initiate a product recall. Firstly given that their major revenue source was from continuous upgrade of their product lines. This meant that there was not steady product which could draw in sales over a prolonged period of time. If the recall doesn’t happen, it will show Black and Decker in a negative light which can greatly hamper future sales of their products. Second their main focus point for continuous growth in the market was based ‘superior customer satisfaction’. Such an incident would greatly hurt their image in the market as a customer centric brand which could lead to them deviating away from their value proposition. Further as the product had gained a lot of traction in the market, such a negative news would also be equally detrimental to the brand as the positive image portrayed earlier. Finally there was also the hand of CPSC which might force Black & Drucker to start the recall on the basis of the available guidelines to be followed for a recall. This forced recall could really tarnish the brand name in the long run.

Group 3

Product and Brand Management

Given they do follow such a path of recall, the goal served by them would be that their much lauded brand name would be safeguarded from any further damage as discussed in the preceding paragraphs. 2. How should the recall be organized to realize this goal? A product recall is a very sensitive issue for a brand. They cannot be very public about it, and at the same time they cannot run such a process without large scale attention. As a probable defect has been identified and is at a somewhat nascent stage, it is best to initiate the recall as more of an upgrade than a product defect. This is similar to what automotive companies do with cars. The advantage of this is that there won’t be too much discussion over an upgrade and if anything is can be seen from a positive standpoint from the customers. Although the problem here was that, it is cumbersome to estimate how many units were sold off to consumers over this period. There were some warranty claims from the units distributed through chains such as Sears, Penny’s, Best Products and smaller local appliance and departmental stores. A lot many were given as presents for the festival seasons; although the major concern was in regards to the versions which had the option of an overnight timer, leading to risks when left unattended. Although the recall would cost Black & Decker substantial losses, it would be more advantageous to go ahead with the recall to prevent more intangible losses to the brand and future sales. 3. Could HPG have avoided the need for a recall? What might have HPG have done differently? HPG could have been more cautious during the testing phase of the product. Due to the fact that this was a new product they might have been lax during that phase and thus a probable defect has gone unnoticed. They also have a strict policy of not selling a product which did not either meet or exceed Underwriters’ Laboratory. They went ahead with two temperature cut-offs (TCOs) instead of one to reduce the risk of a fire hazard but they might not have done a thorough research, as in spite of take an extra precaution such a problem occurred. 4. What were the recall success factors? Some of the success factors of a successful recall are: 1. Speed In the event of a customer complaint, product recall, or a competitive situation, retrieving products as quickly as possible is imperative. Delayed responses have the potential to expose manufacturers and retailers to possible legal action, brand damage and regulatory scrutiny. Hence in this case it is critical that Black & Decker initiate the recall early, before there are more incidents of fire or any such hazards. 2. Accuracy With a company’s image and reputation on the line, accurately retrieving all affected products is vital for the integrity of the brand. If products remain on shelves, in the warehouse or in homes, a company’s liability increases along with the increased risk of litigation and brand damage. Hence, Black & Decker will have to put in the extra effort and cost, to ensure that all the defective pieces are successfully taken off from the market and off retail shelves.

Group 3

Product and Brand Management

3. Scalability During a retrieval, the number of units that need to be retrieved from anywhere in the world and along the supply chain can vary from one extreme to the next. Companies can experience events that require them to pick up just one product at a customer’s home or alternatively millions from retailers and distributors globally. As mentioned earlier, the distribution of the products is a key issue for Black & Decker, but this is a common problem for all product recalls and has to be taken seriously. 4. Quality In any product retrieval situation a brand’s reputation is already at risk. To protect the integrity of the brand, manufacturers and retailers must ensure that representatives picking up product act as an extension of their team. In a nutshell proper conduct at the customer’s location is very important for Black & Decker.