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Black And Decker Case Analysis

2875 words - 12 pages

Background and IssuesBlack and Decker (B&D) is a household name across America. Having received the patent for the first power drill, they are well known for their power tools. In addition to power tools, B&D is also known for its various household products, like the Dustbuster.While B&D celebrated a nearly 30% stake in the power tools market across America, they had fallen drastically behind market leader Makita's 50% share in the Professional-Tradesmen market segment to just 9%. To get back into competition with Makita, B&D would have to answer several questions about their brand and identity, specifically:1. Is the Professional-Tradesmen segment worth pursuing?2. What is ...view middle of the document...

Assuming sustained growth, in 3 years, the Tradesmen segment will be equal to the Industrial segment, although the Consumer segment will remain larger until 2000. The lack of growth in the Industrial segment, and the existing dominance of B&D in the Consumer segment leave the Tradesmen segment as the only viable option for B&D as a source of revenue growth.Given that B&D has such a large share of the Consumer segment, it can use this success to fuel its growth in the Tradesmen segment. Since 80% of the segment's sales are represented by 3 product types (drills, saws, and sanders), B&D should focus on these segments. Makita dominates the segment, but according to tradesmen, provides only a "good baseline option" while other companies, such as Skil (saws), provided high-quality products within a particular product type.This line of reasoning provides that B&D is in a strong position to grow their presence in the Tradesmen segment. With strong brand awareness, and agreement that they have a good product, B&D has the position to make a move on Makita and Milwaukee, the top two competitors in the segment. From the product assessment (Figure E from the case study) B&D has strong offerings in drills, and to some extent, saws. By focusing on these product types, B&D can grow their presence in the Tradesmen segment. B&D can also focus on manufacturers that provide power tools that have no specific product strength, such as Ryobi or Bosch. B&D can provide higher quality tools at lower cost than these companies, and attempt to forcibly acquire the 12% market share that they represent, which would more than double B&D's share of the segment.Why do Tradesmen have a poor image of B&D?B&D's image has suffered within the Tradesmen segment for several reasons. First, B&D has seen perceived issues with the quality of their products, which have caused tradesmen to lose faith in the B&D product. As noted in the case, these quality perceptions have arisen from the use of Consumer-quality power tools in a professional fashion. Consumer-level tools are not built for the kind of rigorous or sustained use as Tradesmen- and Industrial-level tools. Consequently, the Consumer-level tools will break down, leaving the tradesmen who purchase them feeling that B&D produces an overall inferior product.As demonstrated by the B&D test on product quality (Figure E from the case study), this problem is not one of product quality, but rather one of product differentiation. In 10 of 14 tool portfolios tested, B&D Tradesmen-level products tested into the "leadership" category of quality. B&D Consumer products (black) are not labeled or colored substantially different from Tradesmen- or Industrial-level products (charcoal grey). It is understandably difficult for the potential buyer to determine which product belongs to which class, and purchase one of appropriate quality.This lack of differentiation extends...

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