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. Need: 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 Color 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. Answer: Makita’s Strengths: 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. Makita’s Weaknesses: 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 Clubs. Milwaukee’s Strengths: Milwaukee’s strength was demonstrated by various survey results. They were: oRated best (80%) on “one of the best” Agreement Data survey oRated high (95%) on the awareness scale, next to Black ; Decker (98%) oRated best on the “Makes High-Quality Tools” and “Makes Durable/Rugged Tools” (91%) Additionally, Milwaukee’s markets share in Professional-Industrial segment is at parity with B&D. This shows Milwaukee’s competency in power tools.
Milwaukee Weaknesses: Like Makita, Milwaukee’s products were also priced at Premium over B&D. This could be a weakness, as competitors could sell under their price to capture the share. Data in exhibit 2 reveals that either Milwaukee was not participating in the “Membership Club” or was not very effective in it. Question 4: Describe the marketing options available to B&D. What are the pros and cons of each? Answer: There are three marketing options available to B&D.
They are as following: Option 1: Harvest professional-Tradesmen Channels In this option the strategy was to concentrate on the Consumer and Professional-industrial segments and only participate in Professional-Tradesmen segment for profitability. There was no emphasis on capturing the market share. Pros: In this option the focus will be on profitability only, not on market share. Better concentration on the Consumer and Professional-Industrial segments Cons: Taking focus away from a big market (US Market Segment of $420MM) is not a good idea Profitability is good, but B&D should have a strategy to capture the market share. I think that Black & Decker should not harvest Professional-Tradesmen channels because it was the fastest growing segment of the market at 9% rate.
This segment would provide Black & Decker with considerable amount of revenue. Option 2: Get Behind Black & Decker Name with Sub-Branding The approach in this option is to get away from the core Black & Decker brand and establish a new sub brand. Pros: This may differentiate the products to an extent where tradesmen can see it as a different product. This approach was successfully implemented with a circular blade (Piranha) at Black & Decker This may be tried, as there was comparatively less financial cost involved, so the financial risk was limited. Cons: This may not differentiate the Products to the extent where tradesmen can see it as a different product.
The problem here is to disassociate the Black & Decker branding on these products. One needs to go farther away from the core of the Black and Decker brand and then only, a brand differentiation can be achieved. If not successful this may cause embarrassment in the retail channels Linkage of aggressive objectives of doubling the Black & Decker’s Professional-Tradesmen segment share from 9% to about 20% Option 3: Drop the black ; Decker Name from the Professional-Tradesmen Segment This option talks about disassociating the Black ; Decker’s brand name away from Professional-tradesmen segment and use a free standing Brand instead. Pros: This option would provide a proper disassociation from Black & Decker brand Introduction of a Black & Decker’s one of the stable brands (DeWalt) that has no negative association DeWalt got 70 % awareness rating. This in turn means that Black ; Decker will not have to spend money to establish a new brand DeWalt also achieved an “One of the best” agreement percentage of 63% Also scored 58% on the purchase interest by tradesmen in “DaWalt-Serviced and Distributed by Black & Decker’ Cons: It seems that every one at Black & Decker takes a great pride in the #7 “brand Power” position of the Black & Decker name. It will be a challenge to sell the option at Black & Decker.
Linkage of aggressive objectives of doubling the Black & Decker’s Professional-Tradesmen segment share from 9% to about 20% I strongly suggest that Joseph Galli should drop the Black and Decker name from the Professional-Tradesmen segment, sell the products in this category under the DeWalt brand and build more brand awareness for DeWalt