The Black & Decker Corporation Case Study

The Black & Decker Corporation Household Products Group: Brand Transition

Submitted By: CABAYACRUZ, Jamie Bernadette C. CARPITANOS, Joyce Sophia R. TAN, Krystal Joy D. TAN, Neil Matthew L. ZOZOBRADO, Bethle May M.

Submitted to: Mr. Francis Arroyo

Date: September 22, 2015

The Black & Decker Corporation Household Products Group: Brand Transition Problem Statement How can the Black & Decker brand name be conveyed in the most effective and efficient way to the GE small-appliance line while choosing the right kind of communications program that would facilitate the transfer? Objective The objective for theBlack & Decker Corporation is to strengthen the structure of the company, their product innovation line, communications, promotional programs and advertising for it to be prepared for future endeavors regarding their brand transition with the GE small-appliance line. Brief Description of the Case Black and 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. The Black and Decker Corporation, as the leading worldwide manufacturer of professional and consumer hand-held power tools, produced over 100 products in 21 factories around the world. Theywere confronting two problems in the business in the late 1970s. First, they had lower growth rate for the power tool market worldwide together with increasing foreign competition. Second, their management realized that the American housewares market presented a significant opportunity. In 1979, Black & Decker Corp. produced a new kind of product, which is the Dustbuster. It is a rechargeable hand-held vacuum cleaner. Women mostly purchased this type of product and it was ranged at 60%. It was a success and that prompted to launch their two new rechargeable product which are the Spotliter, a rechargeable flashlight, and Scrub Brusher, a rechargeable cordless scrubber. These three products have helped them in achieving a big amount of revenue. As the year goes by, their sales increased 30% annually between 1983 and 1985.

Their products were able to address the needs of consumers, especially in families. Their products were also able to help households because of its quality, userfriendliness, and effectiveness. On the other hand, GE Housewares Divisions is Black &Decker’s largest competitor in the U.S. electric housewares or small-appliance market. Housewares Divisions sold almost 150 models of products in 14 categories covering food preparation, ovening, garment care, personal care, and home security. GA’s success resulted from continuing attention to product innovation, which is mainly the reason they were ranked first or second in market share. These two big companies culminated in an agreement Black &Decker would acquire the GE Housewares Division and signed a three-year note. Black &Decker acquired seven plants in several countries – the United States, Mexico, Brazil, and Singapore. They also had five distribution centers, sixteen service centers, and sales and management team. Black & Deckerregarding their product line and pricing, they participated in five more broad housewares categories after acquiring the GE division. The housewares market was mature and split. The growth depended on the rate of household formation and new product development. Each year, one-tenth of all small appliances were replaced and the timing of the replacement could be accelerated if they are able to convince the consumers to acquire their high-priced, higher-margin models of a particular appliance. Some Black &Decker executives focused on the price premium of Black &Decker in some specific categories. They advocated o decrease their prices on some models or 1985. The percentage margin became higher of premium models such as the Spacemaker products. Nonetheless, despite Black &Decker’s share leadership position, competitive brands around the globe did not depend on B&D’s in setting their and this fact is agreed by all. B&D’s price premium in the food preparation category was largely due to the premium-priced

Spacemaker

line

of

under-the-cabinet

kitchen

appliances.

Spacemakerline expanded their production by including a toaster oven, drop coffee maker, mixer, and electric knife. They were able to convince one customers or purchasers who were first timers. More important, current owners who were persuaded and convinced traded up with their products. GE’s regular or standard countertop version of the Spacemaker appliances lost share as GE’s competitors slashed or cut prices to maintain their sales volumes in countertop models. However, Spacemaker models were expected to gain sales in the five product categories in which they have competed and contested. Sunbeam, Proctor-Silex, Hamilton Beach and Norelco were B&D’s competitors. These competitors don’t offer the same broad line but all of them are competing with B&D’s each product category. B&D have to compete with specialist competitors in each product line. B&D’s competitors saw that there is problem in term of strongest brand name in the houseware market and there is an opportunity for them to increase their market share. With these, some prices of existing models were reduced, price increase was

not

that

often,

promotional

and

merchandising

allowances

escalated.

Manufacturers decided to introduce new products and decided to enter new product categories. Just like in the case of Norelco and West bend, it was said that they would launch a new line of irons. For the Sunbeam company it was announced that they’ve allocated a huge amount for national advertising, cooperative advertising and sales promotion. They also introduced two new aggressively and heavily advertised products which was introduced at premium price level. With the competitors that B&D’s considers, they also had to content with imitators of some of their products. Believing that the newly acquired product lines would divert B&D’s management and attention. B&D’s imitators doubled their effort to capture the market. B&D’s was traditionally strong in hardware stores. In 1984, B&D accounts carried, on average, 30 B&D stockkeeping units (SKUs).Housewares and hardware buyers at B&D’s major accounts determined twice a year which models they would specify as “basics”. The selected models were carried in distribution for the next six months. There were some models that were not specified as basics that might be occasionally stocked but depends to temporary offers.

Areas of Consideration Strengths 

Black & Decker has a strong distribution since then.



The company has a broad product range and retailer network.



The Black & Decker offered one of the broadest lines of any manufacturer competing in 17 products groups.



Black & Decker’s models were priced competitively within each price or feature segment but overall Black & Decker’s share tended to be stronger in the medium and upper rather than the lower prices ranges.

Weaknesses



Black and Decker is very vulnerable with their products because they make products that can easily be serviced.



The company’s products are generally priced lower.



Black and Decker’s products are easily found.



The company’s products are usually found with their competitors. They do not innovate and try to make their products more enticing.

Opportunities 

The Black & Decker Corporation is the largest competitor in U.S Household market.



Further penetration of the housewares market could generate substantial sales and profits for the company.



Black & Decker is traditionally strong in hardware stores with regards to notably catalogue showrooms and mass merchandisers.



In the effort to uphold technological innovation and increase competitive environment, the electronics industries have a chance to explore E-Learning for their new employees. Threats



Significant impediment to growth was Black & Decker’s limited access to housewares buyers in the major retail chains.



Consumers considered Black & Decker as suitable manufacturer of these products but were largely unaware that Black & Decker already made them.



Black and Decker have four principal competitors in the households segment namely Sunbeam, Proctor-Silex, Hamilton Beach, and Norelco.



The price premium in certain categories left the Black & Decker company vulnerable to lower-priced competition.

Alternative Courses of Action



ACA 1: Name change across the entire product line

First alternative for the Black and Decker Company is to change the name across the entire product line as soon as possible to demonstrate. Communication program should also be facilitated, push & pull programs and media exposure should be considered. Economical: This would cause the company to have huge expenses given the fact that they will have to immediately find a way to change its name or do the brand transition as soon as possible. Reopening a brand name immediately without having to take few considerations can cause drastic and unbearable outcomes. Political: This does not violate any law otherwise stated by a given state or foreign country. Psychological: This would be a bold move for the entire company and the people involved may have to undergo series of meeting or conferences for them to be fully aware of the risks that they will have to encounter. They should also be mindful of the pros and cons that they are about to come along upon the brand transition. Social: For the community, people will have the tendency to be confused or puzzled with the immediate brand transition. Maybe they would have doubts in the products being produced from now on by the Black and Decker if they will not be properly informed by the transition that will happen. 

ACA 2: Pulling power of the Black and Decker brand

This alternative suggests that Black and Decker should delay first the name transfer until the end of the three-year period. With these alternative, push & pull programs and media exposure should be implemented. Economical: As we all know, brand transition would really be costly in the part of the Black and Decker Company. But given this alternative since they will be delaying, the company could prepare the necessary finances in order for them not to incur more losses in the whole run of the brand transition. Political: This does not violate any law otherwise stated by a given state or foreign country. Psychological: For the persons involved this would have a positive effect on them because they will be given sufficient time in order for them to brainstorm their ideas regarding the brand transition. Social: This would have a positive effect in the community since they will be fully aware of the brand transition. Advertisements and promotions will be posted for them to be able to identify the Black and Decker Company products. 

ACA 3: Gradual Transition All the items in one or two product categories would be introduced under the name of Black and Decker name in successive six months periods.With these alternative, push & pull program and media exposure is also recommended.

Economical: This will be costly for the company since they will be dividing their finances into two: First six months and the second and last six months of brand transition. They would have to consider advertising and promoting their products

two times and their finances should also double to be able to compensate this alternative. Political: This does not violate any law otherwise stated by a given state or foreign country. Psychological: This will be a heavy task for the persons involved since they would have to consider two different brand transitions. They would have to plan out everything so they will have a smooth flow. But with great determination and teamwork coming from the employees of the company, this alternative can be pulled-off. Social: Although this would be of good advantage for the buyers of the Black and Decker, this can also create confusion. Considering the fact that they have two brand transitions to do. The consumers should be fully aware of this so confusion will come in the picture. 

ACA 4: Name change first on premium quality items The name change on the first premium quality items in several product categories should be implemented to be followed later by the remaining lowerpriced items in each product line.Push & pull program and media exposure should be considered as communication program in this alternative. Economical: This will be costly for the company since they will be dividing their finances into two: First is for the premium products and the second and the last one will be on the low-priced ones. Meaning, they would have to do two brand transitions for this alternative. They would have to consider advertising and promoting their products two times and their finances should also double to be able to compensate this alternative.

Political: This does not violate any law otherwise stated by a given state or foreign country. Psychological: This will be a heavy task for the persons involved since they would have to consider two different brand transitions. They would have to plan out everything so they will have a smooth flow. But with great determination and teamwork coming from the employees of the company, this alternative can be pulled-off. Social: Although this would be of good advantage for the buyers of the Black and Decker, this can also create confusion. Considering the fact that they have two brand transitions to do. The consumers should be fully aware of this so confusion will come in the picture. 

ACA5: Transition schedule should be linked to new product development Transition schedule should be linked to new product development program. This program would implement name change in a product category only after the product line and packaging had been redesigned and/or when Black and Decker could offer a new product with enhanced features.Push & pull program and media exposure would facilitate the transfer. Economical: This will be costly for the Black and Decker Company since they would have to innovate their products. With this, they have to devise new platforms and plans for the new products that would come along the brand transition. This will have a huge hold on the finances of the company since they would not only have the brand transition itself but also the opening of their new innovation of products. Political: This does not violate any law otherwise stated by a given state or foreign country.

Psychological: This will be stressful on the part of the persons involved since they will not be only thinking on how to do the brand transition but also on how to create new innovations for the products to be presented to the public in line with the brand transitioning. Social: This will have a positive effect on the community since new products under the Black and Decker Company will be presented. They will have a new outlook with the products given by the company because they are not coming from the acquisition of the previous companies. Recommendation The researchers of this study recommend to use the 2 nd alternative presented above. The push and pull marketing is a strategy in attracting the customers to your offered products and services. There are differences in the push marketing and pull marketing. Push marketing involves activities that take your products or services directly to the customers. This refers to many traditional mass marketing approaches. It also involves advertising and direct mailing to your customers. In push marketing, the emphasis in on you, mass advertising is implemented, it is spread demographically, and it is a point-in-time blast. Meanwhile, pull marketing has the same objectives with push marketing, but there are also differences. Accordingly, one of the objectives of pull marketing is attracting interest in products and services that leads to sales. Its goal is to use less time, fewer dollars or expenses, but should be resulting with greater impact. It aims to get your customers to seek out your products and services through an active and exploratory process. Basically, its goal is to influence and attract. Why is pulling power the most recommended by the researchers? Potential customers are difficult to reach, highly skeptical and you need to earn their trust. It focuses on how customer research and buy versus selling to them. The emphasis of pulling power or pull marketing is on them, the customers, and the entire market. This uses 1 to 1 targeting. Also, this gives importance to the continuous and

growing relationships to the customers. The company needs to build the trust to their customers, and they need to make sure that the customers will make the right decision in buying their products for them not to get the feeling of regret, and waste of money.

Action Plan Activity/Plan

Implementing Scheme

Monitoring Scheme

Person(s) Responsible

Target Date

Budget/Resour ces Needed

Change the

By conducting

-Legal

-Kenneth

Within two

This would be

name across

a meeting to

requirement

Homa, B&D’s

weeksif

costlysince they

the entire

discuss about

s needed

vice president

possible

will have to

product line as

the push and

-Signed

of marketing

for their

immediately find

soon as

pull programs

Contracts

-External

brand

a way to do the

possible to

and media

Consultants

name to

brand transition

demonstrate by

exposure of

be

as soon as

using the push

the Black &

conveyed

possible taking

& pull

Decker since it

in the

few

programs and

will solely

most

considerations

media

stand alone

-Management

effective

that would not

exposure kind

after and

Team of

and

cause drastic

of

brainstorm

Housewares

efficient

and unbearable

communication

with all the

Division of

way to the

outcomes.

program.

persons

General

GE small-

responsible to

Electric Co.

appliance

make this

(GE)

line.

activity/plan possible.

- Executives of B&D corporation

Activity/Plan

Implementing Scheme

Monitoring Scheme

Person(s) Responsible

Target Date

Budget/Resour ces Needed

The Black &

By trying to

-Signed

-Kenneth

Within

This would

Decker should

communicate

Contract

Homa, B&D’s

one

really be costly

delay the brand

with the

-Legal

vice president

weekif

almost

transition until

people

requirement

of marketing

possible

millionsbut

the end of the

involved in

s needed

- Executives

for their

given this

three-year

making this

of B&D

brand

alternative since

period by using

alternative

corporation

name to

they will be

the push & pull

possible.

be

delaying, the

conveyed

company could

in the

prepare the

programs and media

- External Consultants

exposure kind

-Management

most

necessary

of

Team of

effective

finances in

communication

Housewares

and

order for them

programs.

Division of

efficient

not to incur

General

way to the

more losses in

Electric Co.

GE small-

the whole run of

(GE)

appliance

the brand

line.

transition.

Activity/Plan

Implementing Scheme

Monitoring Scheme

Person(s) Responsible

Target Date

Budget/Resour ces Needed

Introduce to the

By conducting

- Budget

-Packaging

2 weeks

When

market all the

a meeting with

-Plan on

and graphics

in

advertising a

items in one or

the persons

how to

team

planning

product in

two product

involved to

introduce to

-Kenneth

everything

television the

categories

plan out

the market

Homa, B&D’s

and allot

cost depends on

under the

everything so

all the items

vice president

another

how long will the

name of Black

they will have

in one or two

of marketing

week in

commercial be

and Decker in

a smooth flow.

product

-Financial

analyzing

but 30 seconds

categories

Department

how to

will be enough

influence

for B&D to

six successive months

-Legal

-Executives

requirement

people

advertise their

of B&D

s

watching

product that will

corporation

the ad.

cost around

exposure kind

-Signed

- Research

$200 to $1,500

of

contracts

and

if in local

Development

television

department

station.

through push & pull program and media

communication

Activity/Plan

Implementing Scheme

Monitoring Scheme

Person(s) Responsible

Target Date

Implement the

By making

-Legal

-Packaging

1 month to

Budget/Resour ces Needed There is no

brand

some radical

requirement

and graphics

implement

exact or

transitioning

changes to

s

- Senior

this brand

accurate figures

on the

whatever is

-Plan on

Management

transitioning

of the budget but

premium

needed to

how to do

Team

including the

this will be costly

quality items

adjust for this

this brand

schedule

for the company

first to be

brand

transition

meeting for

since they will be

followed by

transition to

ts operation

doing two brand

the remaining

happen and

-Kenneth

to run

transitions for

lower-priced

schedule a

Homa, B&D’s

smoothly

this alternative.

items in each

meeting for

vice president

since they

They would have

product line.

planning.

of marketing

have to

to consider

- Executives

place the

advertising and

of B&D

customer

promoting their

corporation

benefit front

products two

and center

times and this

at all times.

would result to

-Financial Department

- External Consultants

another cash outflow.

-Management Team of Housewares Division of General Electric Co. (GE)

Activity/Plan

Implementin g Scheme

Monitoring Scheme

Person(s) Responsible

Target Date

Budget/Resourc es Needed

Create a new

By inventing

-copy of the

-Financial

2-3 weeks

This will be

product

new

plan that

Department

so they can

costly since they

development

platforms and

they came

-Kenneth

make some

would not only

program that is

plans for the

up with

Homa, B&D’s

changes

have the brand

linked to the

new products

during the

vice president

already.

transition itself

transition

that would

meeting

of marketing

schedule

come along

-new product

through the

the brand

- Executives

development

new innovation

push & pull

transition

of B&D

program

of products.

program and

through

corporation

media

scheduling of

- External

exposure kind

meetings with

Consultants

of

the persons

-Management

communication

responsible.

Team of

that would

Housewares

facilitate the

Division of

transfer.

General

but also the opening of their

Electric Co. (GE)

Conclusion In

conclusion

with

the

given

discussion

of

the

researchers’

recommendations, this alternative would extremely be an effective way of helping

the current situation of the company involved in this case. It may be costly, but if the strategies will be done efficiently and effectively, then surely, it will really make a great change in the company. -Inbound and outbound tactics must be aligned and coordinated. Lastly, the key is to earn to trust of the customers. To be able to achieve that, Black& Decker must add value in a clear, relevant, and helpful manner.