Black & Decker Power Tools Division

Module Session Course/Theme example Who When Where Case Leads/Due Date T1 8 Winning Through Marketing Management Black & Decker Power Tools Division Joseph G whollyi, VP of Sales and MarketingNoran Archibald, CEO January 1991 Towson, MarylandUnited States November 28, 2012 What Situation/Issues/Risks/ Decision 1. B&D lost its market circumstances of professional-tradesmen tools segment against Makita Electric of Japan 2.Makita held an 80% parcel of land in cordless drills, the single salientst produce category and a 50% professional-tradesmen tools segment share overall comparisond to 9% share of B&D 3. B&D maintained 1 market position in the Consumer and Professional-Industrial segments and only 9% market share in Professional-Tradesmen segment Company Business Model SWOT Competitors PEST (political, economic, social, technological) * B&D was the worlds largest producer of world power tools, power tool accessories, electric lawn and garden tools, and residential security har dware. Power tools market was categorized in three segments i. e. * Professional-Industrial Tools commercial contractors working on large projects where corporation generally buy tools for their employees * Professional-Tradesmen Tools individual contractors such as carpenters, electricians, plumbers, roofers, framers, etc. bought from Home Depot, Ace Hardware etc. * Consumer Tools (35% market share) consumers purchased tools for at home utilisation from circumstances merchants e. . Wal-mart, Kmart and hardware stores * Nolan became CEO in 1986 with 1st profitable course of instruction ($50 million) after 5 consecutive years of losses, growth continued year after year reaching to an operating of income of $500 million in 1990 * 1981 1985 company lost money with a $158. 4 million loss in 1985 * BD $4. 8 billion sales in 1990 (50% revenues from US and 50% from outside world) * Substantial brand equity i. e. 7 in US and 19 in Europe out of 6000 brands * Acquired Emhart corporat ion in 1989 which doubled the revenue and overly increased debt to $4. 2 billion i. e. 80% of the total not bad(p) S * Brand awareness (98%) * Efficient distribution channels * Ranked 1 in two of the three segments * Market penetration in all three segments with separate product lines specifically targeted for each segment * Faster (9%) growth rate in weakest segment Some retailers regarded Makita as arrogant and dictorial * in truth strong product quality for majority of the items W * Poor reputation in Prof-Tradesmen segment * convergence color scheme (Black Charcoal) * Only 9% mkt share in Prof-tradesmen segment * Profitability was near zero * Makita electric, Milwaukee, Ryobi, Skil, Craftsman, Porter-Cable, Bosch P * E * O * Improve poor brand quality perception for tradesmen segment * Product color scheme * Reduce SG+A cost, currently at 25% * T * Increased competition.The top three manufacturers i. e. Makita, Milwaukee and BD offer product lines at 175 SKUs each S * P eer pressure, tradesmen laughed at if they use BD gray things * T * Financials Options Evaluation * 1. Option 1. Harvest Professional-Tradesmen transmit 2. Option 2. Get Behind Black Decker Name with Sub-Branding 3. Option 3. Drop the Black Decker Name from the Professional-Tradesmen Segment 4.Option 4. Launch spic-and-span product line under(a) DeWalt brand in addition to existing BD product line for Professional-Tradesmen segment. This survival of the fittest is similar to filling 3 except under this option a new brand is launched to compete with other suppliers for the targeted market segment. Recommendation Rationale Action / Implementation See answer of Q2 below. See answer of Q3 below. report Learnings Why is this important * Assignment Questions 1.Why is Makita outselling Black and Decker 8 to 1 in an account that gives them equal shelf space? a. Makita provided a good baseline option in all major categories compared to other suppliers who had strengths in p articular product(s) e. g. Skil provided good circular saws. b. Home Depot strategy of stocking 30K items at prices 30% less compare to traditional hardware stores with superior customer service helped Makita to gain marketplace dominance. Makita offered lower prices i. e. 5% lower on average compared to BD products.This also helped Makita to gain good perception from Tradesmen segment buyers as their product quality was reasonably good. 2. What should Joe Galli do? Why? c. I suggest to go with option 4 and use market products under DeWalts brand in addition to existing BD products. This would not hurt existing market share by much and there is great potential of taking away market share from Makita and other suppliers by launching products under a salubrious reputable brand DeWalt in a different color. . Step back and make for a big-picture view of the sort of change process that would accompany your recommendations. What would it take to make this successful? How about Gallis ro le how would you evaluate his ability to be an effective change leader? d. To avoid internal conflict and loosing existing B&D market share, the recommendation is to use DeWalt brand to produce power tools for tradesmen segment in addition to existing B&D products.It would require shrewd and manufacturing power tools in different color, material and shape to differentiate from existing B&D products with a strong marketing & sales campaign with mass retailers like Home Depot, Lowes, etc. Dewalt already has a good brand recognition with top quality perception for the target market segment. Additionally, Galli has past visit of transitioning B&D saw blades to Piranha by B&D therefore it is safer to assume that he can lead this change to introduce new product line under DeWalt brand.