Black & Decker is a manufacturing firm that specializes in the production of power accessories and tools, as well as home items, security hardware, and outdoor equipment. In the Black & Decker Corporation: Power Tools Division case, there exists competition amongst Makita Electric and B&D in three important sectors of the power tool business— Tradesmen, industrialists, and consumers. Despite having a significant market share in the industrial and consumer divisions, B&D is significantly behind Makita Electric in the professional tradesman area. There is room for them to grow their market share in the tradesmen category. B&D intends to grab market share away from Makita Electric by employing the most effective marketing strategy (Dolan, 2001).
Central problem
Black & Decker established a power tool firm in the United States in the early 1900s. Consumer, as well as Professional-Industrial categories, accounted for the lion’s share of market share for this company. When B&D arrived, they held a 9 percent share of the market in the Professional-Tradesmen sector. By contrast, current research indicates that B & D has a 9% market share and low profitability, despite having one of the strongest brands in the world as well as generating industry-leading products. Debts totaled $4.2 billion, or nearly 84 percent of the company’s total capital (Dolan, 2001). MakitaElectric of Japan has consolidated its market position in the Professional-Tradesmen segment. B & D faces stiff competition from Milwaukee in this market as well. Even though the goods sold by B & D merchants were losing revenue, the company demanded additional advertising financing as well as cash rebates. As a result, the B & D marketing strategy was reworked in order to increase the share of the market in the Professional-Tradesmen sector.
Analysis of the situation
Market analysis
An estimated 1.5 billion dollars is spent annually on power tools in the US every year. The construction industry uses miter saws, while the general public uses electric screwdrivers. The two markets for tools are vastly different. Plumbers and electricians, for example, are part of the tradesman market, which comprises people who utilize tools daily. It is more important for tradesmen to use reliable, strong, and versatile tools. There is no way they can afford to buy new equipment each month since they wear out too quickly. They require a tool which has been specifically created and checked for daily use. A total of $550 million was spent on industrial tools in the professional market back in 1990. Another $420 million was earned by construction companies who work for the public industry by doing work at home. For personal use, another 530 million dollars was purchased.
External market
B& D works in a competitive market with several formidable competitors. Milwaukee Electric, Makita, Porter-Cable, and Bosch are the company’s most significant competitors in the industrial sector. They are regarded as having high-quality items and providing outstanding customer service in this business. Craftsman, Wen, and Skil are the companies that compete most directly with them in the consumer market. These companies enjoy widespread brand recognition as well as regulate roughly half of the entire industry. Makita accounts for more than fifty percent of the market in the tradesman group, whereas Black and Decker has around 9 percent (Dolan, 2001).
Internal market
As soon as Black and Decker noticed that their general view of their equipment in the tradesman business had deteriorated, they developed a range of more lasting items and were designed in a different color to distinguish them in the marketplace. They were certain that tradesmen might notice the difference in color between the items while making a purchasing choice because many other merchants used a similar strategy to distinguish between different grades of tools. B&D undertook two investigations to make sure the quality of the new product was not the reason for their failure in the tradesmen market, and the results were positive. In these investigations, which included laboratory and on-site testing, it was discovered that the eminence of the new line-up of Tradesman tools was comparable to that of other brands. The new range of items did not perform worse than the existing products (Dolan, 2001). This demonstrated that this was not the product’s quality that was the problem, indicating it is more likely the impression of the good’s quality that might be the root of their problem.
Black & Decker possesses a significant following in both the industrial as well as consumer markets They have a solid reputation in the marketplace and are among the highly trusted brands in the industry (Dolan, 2001). There is no significant difference between consumer-grade items as well as tradesman or professional-grade goods, aside from the price, a tiny color variation, and the location in which these goods are sold. Because the only difference between the old and new product lines is the color. It is not a strong enough indication to inform experts that the line of products has been enhanced and is built to endure everyday usage in the workplace. When communicating with tradesmen, it might be critical for Black and Decker to convey the message that the new product of goods has been thoroughly tested to endure day to day usage and is similar to these other products or brands in the market, like Makita. They must reclaim their repute and regain a greater portion of the market in order to succeed.
Decision Criteria and Alternatives
The firm has three main options for addressing the current issue in the tradesman market. The first and most prudent course of action is to focus on other segments rather than the tradesman sector. This could also mean a complete exit from the business. As a second option for resolving the issue, sub-branding for professional tradesmen could differentiate higher-quality tools from lower-quality ones. This could mean that the products receive a new name or color under which they will be sold. Thirdly, the goods could be marketed under a dissimilar brand name unrelated to the Black and Decker line of products. However, this would not assist the brand’s image or perception of quality. The firm’s standing in the industry will not be enhanced in any way. Additionally, the new brand is highly improbable to quickly gain traction in the tradesman market, as tradesmen place a premium on purchasing high-quality tools. The sector is not receptive to newcomers, and entry is difficult. The firm will suffer this obstacle by introducing a new name line of products.
Black and Decker can refocus its efforts on other sectors of the industry. This, however, will not be sufficient to achieve the firm’s ultimate aim of increasing its market share. They can only make a difference in the tradesman industry since they have already profited in other markets. They would not increase their share in the market if they shifted their focus to another segment or exited this one. Their actions may have a detrimental effect on the market’s perception of quality. Other segments of the industry are likely to see negligible if any, market gains. Additionally, they have substantial involvement in a number of many other markets. Expanding sales in other industries could be possible if Black and Decker are able to successfully capture the tradesman market as well as establish a reputation for quality for their brand.
Preferably, a sub-brand aimed at tradespeople would be created with a new brand name and color scheme. Yellow is a widely used industrial color and thus is the most likely selection here. The new tradesman line will be heavily promoted to demonstrate its strength and durability. Wal-Mart and other large-box retailers will be unable to stock the item. It might be easier to tell the difference between the brand and the commercial-grade line through this. This effort will increase the company’s quality recognition. Branding which is more tailored to the tradesman would then assist in differentiating it from customer counterpart. Furthermore, other market sections can embrace the brand as they seek longer-lasting tools. Moreover, this may result in a greater market share. The idea will alter the way the industry views the product.
References
Dolan, R.J. (2001). The black & decker corporation (A): Power tools division. Harvard Business School. Case 9-595-57.
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