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Black & Decker Case Study

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BLACK & DECKER CASE

Problem Statement:
With Black & Decker being one among the most powerful brand names in the world and establishing its professional tools to be the highest quality in the industry, B&D failed to make an impact in the Professional-tradesmen segment. B&D was known for offering high quality, differentiated products and excellent service in the Professional-Industrial segment whereas its brand recognition, and image helped it attain the #1 position in the market place for Consumer segment. B&D occupied only 9% of the total share as against Makita who was leading the Professional-Tradesmen segment with 50% market share. Though B&D leads in the other two segments, it could not capture the tradesmen segment due to the following reasons. B&D was branded more as home tools; it lacked in capitalizing one of the most profitable distribution channels (membership clubs) whereas the same channel proved to be very successful for Makita (85%); the unremarkable grey color did not help B&D; and while B&D was focused in three segments, Makita was focused on only one segment of the market. Therefore, Joseph Galli, Vice president of sales and marketing for B&D, has to decide which one of the three marketing strategies must be implemented to take, the market share in the Professional-Tradesmen segment, away from the current leader Makita.
Recommendation:
I would recommend B&D to use the strategy of Re-branding i.e; using DeWalt name and the color yellow in order to regain Professional-Tradesmen segment market share. The reasons behind the above recommendation are explained in the following paragraphs
Option 1 requires B&D to focus only on the Consumer and Professional-industrial markets while ignoring tradesmen market. Since the tradesmen segment market is growing at a larger rate than the consumer and Industrial segments, alienating that market would give rise to more losses in the future. Dropping the tradesmen segment would also decrease brand awareness for B&D which might increase the sales of competitors as consumers (home tools) may base their purchasing decisions on what the expert uses.
Option 2 of sub-branding might theoretically raise its brand image but the potential for sub-branding may be a risky option. This is based on the fact that currently 98% of the tradespeople are aware of the brand and only 44% agree it’s ‘one of the best’. Therefore trades people will not be able to change their attitude towards the sub-brand as they recognize B&D as the creator and this will not increase the market share as expected.
The recommended Option 3 of Re-branding the tools with DeWalt and industrial yellow for the Professional-tradesmen segment can cast off the negative branding image from quality products. B&D’s product quality is strongly competitive in the large majority of product categories when compared to the other brands. Since B&D is suffering from Brand name image in this segment it would be wise to re-brand in that segment. The DeWalt received 70% awareness and also 63% agreed that it ‘Is one of the best’ in the research study thereby confirming that it is a suitable replacement name. The industrial yellow color is a bold color representing safety which is not used by any other power tool brands. Hence it would have positive associations. As the DeWalt line’s positive market perception grow, the color will be easier to identify the professional –tradesmen segment line and will be automatically associated with high quality goods. This option could eliminate the following threats. Losing market share is not applicable as it is only 9% and hence does not leave any problem; By isolating the B&D name from tradesmen segment with a new brand name, the risk of damage to other two segments is minimal; and if DeWalt fails, then the retailers and consumers will associate the failure with DeWalt than with B&D. Thus DeWalt should replace the B&D name and change the color to industrial yellow so that the professional tradesmen segment tools can be recognized as brand new.
SWOT ANALYSIS for Black & Decker:
Strengths Weakness * Product performance - Low Share (9%) in growth segment * Awareness - Poor Brand Image * DeWalt Brand
Opportunities Threats * Huge upside to market share growth - Share decline with brand image decline * New Brand lacks existing associations - Spill over to other brands: Negative image and embarrassment

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