Saturday, July 20, 2019
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 worldââ¬â¢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 Tradesmanââ¬â¢s perception of its P-T Line. The Tradesman market perceives B&D as a ââ¬Å"Consumerâ⬠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&Dââ¬â¢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 competitorsââ¬â¢ 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&Dââ¬â¢s perceived quality at the P-T market. The color of the new line should be ââ¬Å"Industrial Yellowâ⬠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 Companyââ¬â¢s reputation and safety as this color is used to indicate safety. As the DeWalt lineââ¬â¢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 ââ¬Å"pushâ⬠of products is an important element in driving sales.
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