Black & Decker
Why is Makita outselling Black & Decker 8 to 1 in an account which gives them equal shelf space? (case opening paragraph)
Why are Black & Decker’s shares of the two professional segments – industrial and Tradesmen – so different? What is a Tradesman looking for in a power tool?
- B&D’s brand recognition, particularly in the home/consumer category, has resulted in tradesmen’s perceptions of the product lacking quality, durability and “street cred.” When compared to both Makita and Milwaukee, both of these brands outscore B&D with professional-tradesmen segment end users in “High-Quality Tools,” “Durable/Rugged Tools,” and “Proud to Own.” The disparity between survey of tradesmen and product assessment shows that the largest issue B&D is facing is brand perception.
- B&D is the only top brand that uses Charcoal Grey for its Professional Grade product. For professional users in the tradesman segment, this only adds to perception that B&D is a brand for consumers, since other top brands use black/charcoal grey for its consumer products.
- Makita sells in Membership Clubs, where B&D would not consider selling at all. The fact that B&D is not on shelves at these locations where tradesmen shop ultimately affects the perception of B&D and may result in tradesmen not considering B&D as a “serious contender” when they make their final purchases where they share equal shelf space.
- Makita provides a good baseline option in all product categories
In Tradesman, this segment gets their information from conjecture on jobs sites and has similar shopping habits to the consumer segment even though their requirements mirror the industrial segment. Their purchasing habits are more dependent upon network effects. Other tradesman disliking B&D lend a negative network effect, and here B&D’s strength in the home works against them.
- B&D’s shares of the two professional segments are so different because of the perception issues above, the purchasers, and the lack of distributor support. B&D’s Industrial segment targets buyers purchasing tools for company employees. These buyers are very knowledgeable and the perceptions above do not affect these buyers, but do for tradesmen who are purchasing tools for their own use.
- The Industrial segment also relies on distributors, like W.W. Grainger, to provide technical expertise, service, and suggestions to buyers. Since industrial buyers make larger purchases, distributors are able to put resources towards educating and advising buyers. The same kind of attention would not be practical for tradesmen, so the misconceptions in this segment persist.
What, if anything, do you learn from B&D’s consumer research?
Joe Galli’s objective is “to develop and gain corporate support for a viable program to challenge Makita for leadership” in the Tradesmen segment (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?
- Lab tests: B&D’s products are in a leadership position in terms of performance, reliability and durability (8/14 products, or 69% weighted by market size)
- Surveys: Brand awareness, “One of the Best,” Specific trats
- B&D (44%) falls significantly behind Milwaukee (80%)and Makita (67%)
- Makita is not investing in “service” and “channel protection”
If you think Galli should pursue a “build share” strategy, what positioning and supporting actions do you recommend?
- Gain 10% market share in 3 years
Be specific about what you would do and remember you have at least three audiences to please:
Given the challenges B&D faces and the information on hand, B&D should consider dropping the Black & Decker name from the Professional-Tradesmen segment and instead use the DeWalt brand for products being sold in this segment.
Tradesman: DeWalt was a market leader in heavy duty tools and would help increase the tools’ brand as one tradesmen are “Proud to Own.” Its quality and durability perceptions would also be increased under the DeWalt brand.
In the “purchase interest” research, 58% of tradesmen were interested in buying tools identified as “DeWalt-Serviced and Distributed by Black & Decker.”
Using the DeWalt brand help increase the tools’ competitiveness with tradesmen who prefer Makita while using the B&D identification to maintain its edge in categories “Easy to Get Service” and “Stands Behind Products.” (product differentiation from Makita)
DeWalt can also be priced at a premium
Retailer: Increasing its appeal to the tradesmen segment would help retailers, who will still be dealing with a trusted partner in B&D, but also start to see a reversal in Makita outselling B&D.
Retailers providing the brands equal shelf space will benefit from the re-branding. They would not feel like they are “wasting” shelf space. As B&D also produces mostly competitive and leading power tools with excellent service, retailers can confidently suggest tools (to more receptive tradesmen) as an alternative to Makita.
B&D can use their enhanced differentiation to offer retailers their coveted channel protection which Makita refused to do.
Nolan Archibald and Gary DiCamillo: the case states that the leadership does not look upon copycat strategies very favorably.
It is important to package this strategy as holistic, touting the benefits across customer segments and the goodwill it will secure with suppliers. Archibald understands the importance of growth, and it is essential to secure a strong foothold in the rapidly growing Tradesman segment.
The launch of DeWalt should be touted as an opportunity to shed the portion of the business diluting the B&D brand and create an opportunity for the company as a whole to build two of America’s leading brands instead of only one.
The use of “Industrial Yellow” would be a good way to use a color that no other power tool brand is using to establish the perception that this tool “belongs” on the job with tradesmen.
Selecting Option 3 and using the DeWalt brand, would not be as effective if the color remained the same, so it is the ideal time to change to “Industrial Yellow” or a non-black/charcoal grey color traditionally associated with DeWalt.