Black and Decker Power Tool Division

5 Pages   |   1,142 Words

Case Analysis: Black & Decker

The case depicted competitive positioning of Black & Decker in a highly important product category of Professional-tradesmen segment. Black & Decker divides its product portfolio into three key categories – namely, Industrial, Tradesmen and Consumer markets. Industrial market comprises of large corporations which purchases tools for their workers; Professional markets contains workers like carpenters who purchase tools for their own use at job site; while, Consumers are household individuals. Professional-tradesmen segment comprises of 9% of Black & Decker’s revenue and is a growth sector in power tools category. Interestingly, the profitability of the Industrial category of products is almost zero at this time. The reason for earning no profits in the market segment despite making sizeable sales is increased competition in the segment and the marketing approach of Black & Decker.

Marketing Mix Product offering of Black & Decker in this category comprises of a comprehensive range of power tools ranging from electrical saws, screwdrivers, drills, etc. Target market and consumer psyche are entirely unique for this segment of the business and require implementation of changes in marketing approach. Marketing research has revealed a highly interesting finding that the established brand name of Black & Decker in household (consumer) markets has become a hindrance in professional market. This is because professional tradesmen want themselves to be distinguished from consumer markets.

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Users in this category are unwilling to associate themselves with amateur or home consumer market, to which brand name of Black & Decker is closely associated to. Several tradesmen expressed that showing up with Black & Decker tools at a workplace is a form of ridicule and convey lack of expertise to the clients of particular professional. Currently, the only distinguishing characteristic of the tools designed for these two different markets is the shade of color, which is definitely insufficient difference according to consumer research.

Target market of Black & Decker in Professional tradesmen category comprises of individual decision makers who are working in the capacity of electricians, plumbers, carpenters, framers, and roofers. Prices for products in this category are quite low. Promotion method used in this category is trade discount, retail incentives and limited advertising. Advertising spend is low for the segment, while push strategy at retail is used to a significant degree. Packaging is not considered important in this segment. Place of product offering are independent retail outlets where products of other competitors, like Bosch, Ryobi, Skil and Craftsman, are also sold. Place of retail is important because buyer can easily compare prices and product offering at retail outlet. 

Performance Goals The sales model of Black & Decker and other firms operating in hardware machinery is to provide incentive to salesperson of the company for pushing the product down the chain. The performance goal for salesperson is based on transaction approach. The performance goal is designed in such a manner that it provides incentive to the salesperson only at the time of sales transaction, rather than basing it on servicing of customer after the sales, as well. Performance goals are implemented in isolation for each function of the company and not applied as cross-functional teams.

Branding Recommendations

Black & Decker brand name should be eliminated from product offering for the line of products designed for professional tradesmen. Black & Decker should introduce a sub-brand for professional-tradesmen market. The sub-brand will be positioned as an endorsed brand of parent brand Black & Decker, thereby leveraging equity of the existing brand name, without sacrificing market share in such an important market segment for the company. Promotion and advertising costs will, of course, be high for the firm since it will have to communicate to target market about its new brand. A second less costly option for branding pertaining to professional-tradesmen segment is to re-brand product offering for this segment by introducing several differentiating segment in the category. These differentiating factors can include change in packaging, a prominent change in color of the product or making the equipment sturdier and visibly large in appearance. Yellow can be the preferred color choice for this category of products because it is highly eye-catching and represents energy. The second strategy can also induce the target market in this segment to prefer Black & Decker equipment.
Another branding alternative for Black & Decker is to liquidate professional-tradesmen segment altogether. Quantitative information provided in the case reveals that professional-tradesmen segment of the business has the lowest contribution for Black & Decker and is characterized by way too much competition based on price. In comparison, consumer segment of Black & Decker business is much more loyal because decision making criteria in this segment are highly dependent on established brand equity of the company. By eliminating lower-margin professional-tradesmen business segment, Black & Decker can shift its focus on expansion in consumer market segment for its business. The strategic decision can enable the firm to leverage strength of its brand to a greater degree and to increase its earning in long-term. Positioning of Black & Decker brand as the most durable brand consumer durables category can be extended to new product groups in household appliance category.

The company should be implement the above mentioned branding recommendation should be implemented in conjunction with adequate provision for customer service. Black & Decker should not be perceived as a company which is only concerned with pushing the product down the retail channel to the end consumer; rather it should stand out as an excellent provider of customer service.  Roles of sales person of the company and performance goals of the sales force can be changed by Black & Decker for increasing loyalty of end user. The performance goals of sales person should be extended to provisions of after sales customer service, as well, rather than merely focused on one-time exchange of products. Such performance goals are likely to be beneficial both for sales personnel and consumers of the product.  

Black & Decker can introduce a separate line of products, with a different brand name, which are comparatively lower cost for professional-tradesmen segment of the business. Cost reductions can be attained for this product group by reducing provisions for warranty and service for the new line of product. This tactic is likely to be successful in gaining market share from lower-end competition in professional-tradesmen market.
Timeline the timeline for implementation of the recommendations should be gradual and coherent. Timeline is graphically represented below:
Description                                                Weeks 1 2 3 4 5 6 7 8 9 10 11 12
Planning for new brand                        
Formation of communication strategy for new brand                        
Determination of packaging, promotion too                        
Interaction with retailers about the new brand                        
Launch of new brand                        
Change in performance goals                        
Review of rebranding initiative                        
The timeline depicts the phases of implementation of recommendations in at Black & Decker along with a feedback towards the end, to measure the effectiveness of the new strategy.

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