This report is to evaluate three marketing strategies presented by Black & Decker. Either to withdraw from the market or to fight for the market shares with the current leader Makita.

Executive Summary

This report is to evaluate three marketing strategies presented by Black & Decker. Either to withdraw from the market or to fight for the market shares with the current leader Makita. B&D is struggling with only 9% market share, but Professional-Tradesmen segment is becoming a profitable market with a 9% increasing rate per year. Thus harvesting Professional-Tradesmen Channels should not be adopted. By analyzing exhibits and SWOT analysis, it is found the least risky option to use one of its established brand Name-DeWalt to cast off its unprofessional brand compared with using a sub-brand which is associated with B&D’s negative brand image in Professional-Tradesmen segment. Moreover, actions of increasing relationships with retailers, especially the membership clubs which occupy 85% market shares of Makita, should be taken.

Problem Overview

Black & Decker, one of the largest power tools producers, leads the market share in supplying households with power tools. In fact, B&D offers three separate lines targeting Professional-Industrial, Tradesmen and Consumer segments. However its superior sale performance in consumer market results in an “unprofessional” brand image within the professional-tradesman segment. In tradesmen’s point of view, products used in the home cannot handle the workload in professional areas, and thus will not use an inferior product. Suffering a low market shares, the vice president Joseph Galli must decide a strategy to increase market share in the Professional-Tradesmen market against their rivals.

Supporting Analysis

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Supporting Analysis

B&D held nearly 30% of share in overall US market, providing diverse product lines to satisfy different needs in three main segments; on the other hand, Makita mainly is focused on one segment. While leading two product segments, B&D trails in the Professional-Tradesmen segment mainly because B&D developed an unfavorable reputation among the Professional-Tradesmen market. According to Tables B, although B&D enjoys 98% of awareness but only 44% of Professional-Tradesmen ranked it as “One of the Best”. They viewed B&D products as the tools used at home rather than tools for their professional career. Furthermore, while competing brands using highly different colors as shown in table D, B&D keeping using the consumer grey color for its Professional-Industrial and Tradesmen grades which recalls of the “unprofessional” brand image. Exhibit 2 shows 85% of Makita’s shares within channel type are distributed by Memberships Clubs, obviously D&B failed to capitalizing the most profitable distribution channel. Since it is a growing market and shows great potential, B&D should fight back rather than harvest the business. Sub-branding might be a risky option because with the B&D logo tradesmen cannot remove the perception of B&D’s unprofessional brand image. From SWOT analysis, B&D should be replaced by DeWalt, which received 70% awareness and scored 63% as “one of the Best” in table C. Consumers are more likely to recognize DeWalt as a new brand rather than associated with D&B. Moreover, by isolating Professional-Tradesmen market, B&D minimize the risk of inviting negative impacts to other segments.

Recommendations

Replace B&D by DeWalt in Professional-Tradesmen segment to eliminate B&D’s negative perception of reduced quality. It is much easier to increase the brand awareness of new DeWalt than changing attitude within tradesmen market.
Change color different form grey grade, industrial yellow stands out form other colors because firstly no other companies are using it, secondly it indicates safety which provide a positive brand image to Professional-Tradesmen segment.
Increasing retailer relationship (especially membership clubs) through providing channel protection and support to retailers.
More commercials and promotions of new brand at the first stage.

SWOT Analysis