B&D Case Analysis
The Black & Decker Corporation has three major segments which are Professional-Industrial tools, Professional-Tradesmen tools and Consumer tools. It is making good profit in Professional-Industrial and Consumer segments but has only 9% share in Professional-Tradesmen, compared to 50% share of Makita (Table A).
One of the reasons of this difference is that due to the popularity of Black & Decker in the Consumer segment, tradesmen view Black & Decker’s products as for use at home rather than professional, according to the brand perception statistics of Professional-Tradesmen segment buyers(Figure C). The other possible reason is that Black & Decker has black/charcoal grey for all their products, compared to Makita that differentiates their professional product line with teal color versus consumer’s black/charcoal grey (Figure D).
Thus, when tradesmen look at the Black & Decker’s Professional-Industrial product line they assume that those are Comsumer segment tools and don’t even consider them as appropriate tools for use in business, even though, according to the professional power tool product assessment results (Figure E), most of Black & Decker’s products are ranked either leading or competitive. 2. Describe buyer behavior of tradesmen Tradesmen always want to look professional in their jobs.
They will care so much about products that they use because those tools may lead to define tradesmen’s skills and how professional they are. However, most of tradesmen think that Black & Decker products are made for households. The strong Black & Decker’s consumer tool products image is deeply embedded in customers’ minds. Thus, tradesmen who are willing to be seen professional try to avoid purchasing Black & Decker’s products. 3. Analyze the competitive situation (strength and weakness of Black & Decker, Makita and Milwakee) Black & Decker
The main strengths of Black & Decker are: since Black & Decker was the first one to receive the patent, it has a benefit of being a first mover in the market of power tools; highly stretched product line and expanded product mix width and depth (which allows the company to cover all types of customers); high product quality per product research data; great distribution system through well-known companes such as W. W. Grainger, Walmart, and K-Mart. It has 45% of market share in the Consumer market and 20% of the Professional-Industrial market.
High market share in these two segments gives a significant amount of funds that can help developing the Professional-Tradesmen segment. In addition, according to Table B, Black & Decker has the highest brand awareness. The main weakness of Black & Decker is that, even though it has high quality, it is not perceived as it is in the Professional-Tradesmen sector. This makes customers look for alternative brands when purchasing Professional-Tradesmen products. One of the reasons of low brand percption is due to using similar color for products in all segments.
This gives customers the impression that Professional-Tradesmen products have the similar quality that Consumer products do. Makita The main strength of Makita is that it has a strong brand perception of Professional-Tradesmen segment and holds approximately 50% of Professional-Tradesmen segment share. This strong perception leads to other beneficial effects. Since general workers in residential construction invest $3,000 in 10 or so “tools of the trade” and spend $1,000 a year on average for replacement, it can have a stable profit through sales of Professional-Tradesmen products.
Another distinctive strength can be that Makita uses unique color which is teal. Since it is easily distinguishable among other products and has high brand perception, many customers would easily select Makita’s product. Makita can also construct a unique brand image color in the mind of customers. However, the main weakness is that it actually does not have strong competitive advantage in product quality. It would be hard to maintain strong perception if customers become aware that the product quality does not exceed competitors’.
According to figure E, Black & Decker actually has more advantage regarding product quality which is a huge threat to Makita. In addition, retailers are not positive toward Makita which can give damage to market share of Makita. Milwaukee The main strength of Milwaukee is that it has high customer loyalty. Table C and D show that Milwakee is regarded one of the best products and high preference rate. This infers that it has more loyal customers compared to other brands. The main weakness is that high brand perception does not lead to purchasing of their products.
According to Figure C, Milwaukee has highest brand perception with Makita. However, Table A shows that Milwaukee’s market of tradesmen segment is much lower than Makita. 4. Choose the action plan on page 10 Option 3 – drop the Black & Decker name from the Professional Tradesmen segment is the best choice among the three options. Although the Black & Decker brand name has positive reputation among consumers, it has a negative brand image among tradesmen. Bad reputation of Black & Decker spreads quickly between tradesmen as they would discuss over work sites.
Even though the portion of Professional-Tradesmen segment in the Black & Decker’s total revenue is small, there is still a possiblilty of its success in the section because it has a relatively high growth rate of about 9%, comparing to Professional-Industry segment’s stagnant growth and Consumer segment’s 7% growth rate. The first and second option are not that optimal as the third option. If Black & Decker chooses the first option, it might result in giving up possible future profit. The second option uses sub brand name while also exposing Black & Decker Brand name to consumers.
However, it might be difficult to conduct this option to consumers who have negative image toward Black & Decker brand name, especially the tradesmen, because Black & Decker`s negative image will also affect the image of sub brands. On the other hand, there is one proven possibility of option number 3. The Black & Decker succeeds in having higher favorability rate at the survey by using the brand name Dewalt which Black & Decker bought in 1960. If Black & Decker conceals its brand name and use that brand name, it can avoid negative effect from unfavorable image and get profit from the Professional-Tradesmen segment.
Statistic also shows that DeWalt had acheived an “Is One of the Best” agreement percent of 63% from tradesmen, comparing to B&D’s 44%. Further research also proves that 51% of tradesmen would have purchase interest in the DeWalt brand. On top of the positive image that DeWalt has among tradesmen, the numbers also shows the there is high interest in the brand. The above concludes that the Black & Decker is better to drop its name from the Professtional-Tradesmen segment and use the brand name DeWalt, proposing that there is a high possibility of the success of DeWalt.