Black & Decker Case
1)Why is Makita outselling Black & Decker 8 to 1 in an account which gives them equal shelf space? •Trade is asking for advertising allowances and rebate money on products, profitability in the Tradesmen segment is near zero. •The B&D brand in the Tradesmen segment may be regarded as “weak” due to the fact that B&D dominated the consumer segment. •The “heavy do-it-yourselfers” may have a misconception on the quality/reliability/durability of B&D professional line. These individuals make a living from using these tools and simply cannot risk the aforementioned features. )Why are Black & Decker’s shares of the two professional segments — Industrial and Tradesmen — so different? Wouldn’t you expect them to be similar? •Tradesmen segment is growing faster than the industrial segment. B&D did not initially capture or dominate the tradesmen segment, hence the share differential.
•Decision influencers in the industrial segment viewed B&D as a high-quality brand. Similarly, the consumer segment regarded B&D as a strong brand which helped B&D attain the #1 position in the marketplace. This did not spill over to the tradesmen segment, which needs more differentiation. Strong influencers in outlets such as “Home Depot” educate the consumer to “stay away from B&D”. 3)What, if anything, do you learn from Black & Decker’s consumer research? •B&D uses very similar branding strategies for their tradesmen and consumer segments.
•Brand perception is the main issue with B&D strategy for capturing a larger market share. •Durability/Quality issues are not substantiated. Blind tests of B&D products in the tradesmen segment reveal that B&D products are comparable to other major competitors’ products. In some instances, B&D products are elected as leaders in their product categories. )Joe Galli’s objective is “to develop and gain corporate support for a viable program to challenge Makita for leadership” in the Tradesmen category (p. 1).
To gain support, the minimal share objective would have to be “nearly 20% within three years, with major share ‘take away’ from Makita. ” How realistic is this? •This is realistic due to the fact that there are a number of negative perceptions of Makita’s products including “arrogant & dictatorial”. The problem is that no single brand dominates all the product categories in the tradesmen segment.
This means that product selection may be circumstantial and mostly influenced by tradesmen in-store influencers etc. •Currently, B has ~9% market share, meaning that it would have to take ~11% market share from Makita who has ~50% market share.
Makita has the most to lose in this industry segment. •Since, B is financial strong and is not making much money in the tradesmen segment, the financial risk would be limited. 5)If you think Galli should pursue a “build share” strategy, what actions do you recommend? Does the DeWalt idea have any merit?
How about the subbranding option? •Gallie should pursue a “build share” strategy but only under a different brand. Choosing a different brand name such as DeWalt that already has positive resonance in the tradesmen segment would not only disassociate the current perception of B within that segment, but could help reduce B risk of “embarrassment” in the other two segments in case the DeWalt brand fails. •The sub branding option still carries the B brand with it.
At this point in time the tradesmen segment is not a new & emerging market, but a well developed growing market.
Sub-branding at best could help drive some product categories, but not the overall brand as a whole. •The yellow color choice would help the DeWalt brand truly stick out from the competition. Currently, the most exotic color in the tradesmen segment is teal – Makita’s color. The yellow color choice would less likely backfire since yellow is a familiar job site color associated with safety. 6)Be specific about what you would do and remember you have at least three audiences to please: the consumer (the Tradesman), the retailer, as well as Nolan Archibald and Gary DiCamillo.
Consumer oIntroduce DeWalt brand with yellow coloring oOffer rebates and incentives •Retailer oIntroduce DeWalt with limited supply to generate “pull” oPromote demonstrations of products that demonstrate superiority oMaintain existing B line as a benchmark for DeWalt’s success oSlowly phase out B and replace with DeWalt oOffer volume discounts to large retailers such as Lowes and Home Depot, since this channel is the fastest growing one •Bosses oPresent above and maintain sub-branding exit strategy