Black & Decker Essay -- essays research papers

Background Black and Decker (B&D) is a pioneer in portable power tools. In 1991, it is a $5 billion in sales company with 29% of these sales coming from Power Tools and Accessories. B&D is the world’s larges producer of power tools and the U.S. market overall leader. Problem Statement B&D has a strong market share in the consumer and industrial markets, but is weak in the P-T market as it is currently experiencing decreased market share. In this segment, B&D is not generating profits and, at the same time, retailers want more advertising allowances and rebates. Analysis The U.S. power tools market is divided into three segments: Consumer (home use buyers), Professional-Tradesmen (P-T) (contractors who purchase their own tools), and Industrial (procuring professional buying in large quantities for industrial usage). The P-T segment is the one experiencing the largest growth potential. B&D is one of the most powerful brands in power tolls. Its products are generally regarded to have high quality. B&D currently has 45% of the Consumer and 20% of the Industrial markets. However, in the P-T segment B&D holds only 9% of the market and is in near parity with Milwaukee Electric (10%) and trails Makita, which has captured 50% of the market. Makita was able to grow rapidly in the P-T market as its dominance was aided by the rapid development of a new type of distribution channel, the Home Centers such as Home Depot, which Makita actively sought. B&D, however, was not able to grow quickly in the P-T market due to Tradesman’s perception of its P-T Line. The Tradesman market perceives B&D as a â€Å"Consumer† product that is not on par to handle professional tasks. This is evident in that in studies of brand perceptions in the P-T segment, six manufacturers out-rank B&D, three tie with B&D, and only one is rated with lower quality. On blind trials the quality of B&D P-T products often outranked those of the manufactures whose quality was perceived to be better, implying that B&D’s problem is not of having bad products, but of having a bad reputation. One factor contributing to the perceived higher quality of Makita and Milwaukee is that both are priced at a premium, and on average, are 5-10% more than B&D. This difference in price contributes to foster the perception by the P-T market that because the competitors’ prod... ...f B&D P-T line may remain. The recommended Option 3 is that B&D should go with the established DeWalt and Industrial Yellow. Marketing DeWalt alone is a better choice, as there are negative perceptions of the B&D line concerning reduced quality. Increasing the DeWalt brand awareness and improving the perceived quality will be easier and more successful to accomplish than increasing B&D’s perceived quality at the P-T market. The color of the new line should be â€Å"Industrial Yellow† because other power tool companies have not used this color. It is a bold color, and will stand out compared to the other P-T colors. In the early stages, the positive associations will be associated with the original DeWalt Company’s reputation and safety as this color is used to indicate safety. As the DeWalt line’s positive market perceptions grow, Industrial Yellow will be easier to identify the high-end P-T line and will automatically be associated with high quality goods. Although not sufficient by itself, Option 4 is also interesting for B&D, since Makita has already damaged relationships with retailers, and retailers â€Å"push† of products is an important element in driving sales.