Black and Decker

Black & Decker

Executive Summary

Black & Decker is an established manufacturer of power tools accounting for the highest turnover in the world. It enjoys substantial brand equity and is ranked #7 and #19 in US and Europe, respectively.

It occupies ~30% share of the $1.5 bn U.S. power tools market.The market of power tools is segmented into Consumers (domestic use), Professional Tradesmen (livelihood) and Industrial customers. Black & Decker caters to all 3 segments. It dominates the consumer segment with ~45% segment share. In the industrial segment it occupies ~20%. However, it fares poorly in the professional tradesmen segment with a mere ~9% segment share. This segment is dominated by a new entrant in the US market, Makita, from Japan.

The company is looking for strategies to build share in this market segment. It has been studying buyers' behaviour overtime to mould its marketing strategy accordingly.

Situational Analysis

Black & Decker analysed the situation using the 5C framework. 5C stands for customer, company, competitors, collaborators and context.

Customers

The professional tradesmen segment is targeted largely at electricians, plumbers, carpenters & those working in residential construction. They essentially own the tools to earn a living and hence, use it heavily. Permeation into the consumer market segment has been hindering the tradesmen's perception in the professional segment.

Company

Black & Decker is a trusted household brand known for its good post-sales service and customer support. However, it scores dismally in terms of consumer perception of its quality and durability in the professional segment. The brand faces poorly differentiated product segments between consumers and professionals. Besides, its products follow a black-grey colour scheme uniformly across all segments enhancing this problem of poor product differentiation.

Competition

General perception is that Makita provides a better baseline option in all major categories and the buyers tend to patronize newly emerging distribution channels like Home Depot. Makita charges a premium for high quality over Black & Decker and exploits all available retail channels to market its products. However, they have a sub-standard customer support for their products and treat their channel partners poorly.

Collaborators

Black & Decker has a poor performance in channels that make ~65% of the professional markets viz. Two-step and Home Centres channels. Majority of its sales comes from Warehouse HCs. B&D has left clubs unexploited as a sales channel.

Context

Continuous success in the Consumer and Industrial segments require no major strategy changes. It is generally believed that the tradesman purchases new tools only to replace old tools after substantial use.They look for products different from what is used in the general consumer segment, perhaps directly targeted at their application. The company needs to research further to understand perception/realityin the Tradesmen