Case Analysis for the Black & Decker Corporation

Case analysis for the Black & Decker Corporation

----Branding

Summarize

Case type: Decision Case

What is Black & Decker?

• Black & Decker is a corporation, which carried business on the power tools as well as the power tool accessories, household products, information system and services, outdoor products and security hardware started from the patent on the world’s first portable power drill with pistol grip and trigger switch.
• Three market segments:

The Consumer segmentation where customers were those ammeters using Black & Decker’s products at home for approximately once a year.

The Professional Tradesman where customers were buyers such as carpenters, bought tools for their own use on the job site.

The Professional Industrial where buyers were generally a corporation purchasing tools for use by employees.

• Product

Low Sales in Professional Tradesman Segment

Although Black & Decker did well in Professional-Industrial and Consumer segments, it did not do well in the Professional-Tradesmen segment and the approximate Segment Shares in 1990 was only 9%, which was far lower than the leading competitor, Makita and Milwaukee, whose market shares was 50% and 10% respectively.

Causes of the low sales includes:

• Poor Branding image among the tradesman: The Black & Decker performed so well in the Consumer segment that it led the image of the brand among the tradesmen that the product was for the ammeters and were not professional. They were ashamed to obtain Black & Decker’s products.
• The competitors did quite well and would be explained in detals in the following Competition part.

Competition

The Black & Decker did quite well and was almost the leading business in its Professional-Industrial and the Consumer segment, however, it was facing fierce competition in the Professional-Tradesman segment. The leading business owned a segment share of approximately up to 50% and 10% for the Makita and Milwaukee respectively.

• Makita’s competitive strategy

Among the tradesmen, Makita enjoyed the highest perceptions of suppliers’ quality. Since the consumers, specifically speaking, the tradesmen, were not absolutely rational, Makita created their high branding image through:

1. Makita staked out leadership positions in virtually all products and distribution types within the Professional-Tradesmen segment.
2. Makita satisfied the needs of the tradesmen by providing a good baseline option in all major categories.
3. Pricing at premiums over B&D, averaging 10%. By keeping the price of the product artificially high, tradesmen were left the image of the product of Makita with a high quality and professional, encouraging favorable perceptions among the buyers.
4. The Home Centers strategy with price about 30% less than the traditional hardware store, while also providing superior customer services.

• The role of Milwaukee: A substitution for the Makita as others supplier that had its particular product strength.

Influence on Consumer Behavior

• Consumer Characteristics:

The consumers in the Professional-Tradesmen were typically the tradesmen, who were lived on their techniques to make a life. Thus, their demand for the product quality was quite high, and they would prefer the products of a “professional” branding.