Black & Decker

Issue / Task:

Joseph Galli, vice president of sales and marketing for Black and Decker has to decide which one of three marketing plans to use. Either plan need to take market share, in the Professional Tradesmen segment, away from current leader Makita. Black and Decker's strength in the consumer end did not benefit the Professional-Tradesmen segment. Some trades people viewed all Black and Decker products as in home only products and in some cases these same tools would be used for professional jobs where they would fail.

Situation Analysis:

Black and Decker held a 20% share in the Professional-Industrial segment, a 9% share in the Professional-Tradesmen segment and 45%share in the Consumer segment. Overall B&D has held a 30%share of the US Market.

The portable power tools business in the United States was a $1.5 billion market. Products ranged from electric screwdrivers for home do-it yourselfers to heavy-duty miter saws used continuously throughout the day at job sites. The market is segmented into 3. The home do-it yourselfer or nonprofessionals account for $530 million or 35%. The Professional end, which was divided into Industrial and Tradesmen, accounted for $550 million and $420 million.

Consumers for the nonprofessional segment bought their tools at mass merchants such as Wal-Mart and Kmart. The Professional-Industrial segment was mostly commercial contractors on large projects such as office buildings and bridges. The distribution means for this segment included distributors such as W.W. Grainger that provided technical expertise and service. The company rather than the individual users typically purchased tools. The Professional-Tradesmen segment included end users such as electricians, carpenters, roofers and general remodelers. Tools could be purchased at emerging home centers such as The Home Depot and Lowe's in addition to traditional hardware stores like Ace.

Professional-Tradesmen segment, while the smallest in 1990 was growing the fastest at 9% compared with a 7% growth rate for Consumer and no growth for Professional-Industrial.

At the top end in the Professional-Industrial segment, Black and Decker share was on par with that of Milwaukee Electric. At the other end in the Consumer segment Black and Decker name recognition and image helped it to attain a 50% share and the #1 position in the marketplace.

Unfortunately Black and Decker's strengths in the Industrial and Consumer segments did not transfer to the Tradesmen segment where they held a 9% market share in 1990. By comparison Makita, the segment leader, held a 50%, Milwaukee held a 10%, Ryobi 9%, Skil and Craftsmen 5% and Porter-Cable and Bosch a 3% each. Craftsmen were manufactured in part by B&D and marketed by Sears

Makita had staked out leadership positions in just about all products and distribution types within the Professional-Tradesmen segment since in entry into the market in 1978. In the two largest distribution outlets, as defined by percent of sales, Makita held a 55% and 45% share while B&D was less than 10%. In the Membership Clubs outlet Matika held an 85% share while B&D held a 0%.

The typical tradesmen working in residential construction had about $3,000 invested in 10 or so tools of his/her trade. He or she spends and average of $1,000 per year to replace a tool and tool performance was a constant topic at the job site. General perception of tool quality ranged from Makita and Milwaukee representing the highest, Bosch, Porter Cable, Ryobi, Black & Decker and others representing the middle and Wen representing the lowest.

While Makita's position with tradesmen was strong, retailers were not uniformly positive towards them. Some regarded Makita as arrogant and dictorial. They offered no channel protection selling the same products through the entire span of outlets including the discounter Membership Clubs of which B&D decided not to distribute it's Professional-Tradesmen tools to.

While no tradesmen would say product color was a key deciding factor in purchase it was still regarded as a significant product differentiator. Most Consumer tool manufacturers followed the color lead of Black & Decker, which was either black or charcoal grey. B&D policy was to use black for consumer and grey for it's Professional grade products. On the other hand most of the competing Professional manufacturers used highly differentiated colors. Makita used Teal, Milwaukee used Red, Bosch used Dark and Hitachi used Green.

Galli believed that B&D Professional-Tradesmen share problem didn't emanate from product quality. B&D's products in the Professional-Industrial segment were highly regarded. To gather data on this B&D conducted laboratory test on its own and competitive products to assess performance, reliability and durability. Black & Decker offerings were characterized on a scale from weak/underdeveloped to competitive to leadership. Of the 14 major products tested Black & Decker rated in the competitive or better in all except Belt Sanders.

Brand awareness telephone surveys and B&D's annual Image Study showed that in brand awareness Black & Decker carried a 98% rating with Milwaukee at 95%, Skil at 93% Makita at 90%, Bosch at 87%, Hitachi at 77%, Hilti at 73%, Porter Cable at 67% and Ryobi at 50%. Respondents were also asked if they agreed or strongly agreed with the statement "Brand X is one of the best". Milwaukee was rated at 80%, Makita at 67% and Black & Decker at 44%.

SWOT Analysis:

Strength Ð'- Build off of research conducted that showed Tradesmen characterized B&D's offerings on a scale of competitive to leadership.

Weakness Ð'- Detach from Black & Decker name in the Professional-Tradesmen segment as it is seen as a do-it yourself consumer grade product not intended for Tradesmen use.

Opportunity Ð'- Makita's position with retailers is seen as arrogant and dictorial. They are selling the same range of products across outlets.

Threat Ð'- Milwaukee's quality