Nelson Pilay

Black & Decker

1.0         Introduction

1.1         Purpose of the report

Incorporated in 1910, Black & Decker (B&D) is a global manufacturer of power tools and accessories hardware, home improvement products and technology-based fastening system. Its well-recognised brand name products sold in over 100 countries. In the power tool industry, the company is involved in all the segments; i.e. Professional-Industrial, Professional-Tradesman and Consumer. In the United States market, B&D dominates the industrial and consumer segments. However, it is not the same for the tradesman segment. Makita, a Japanese manufacturer has the largest market share of nearly 50% in the Tradesman segment as compared to B&D’s 9%. Therefore, in this report, I will identify and analyse the key issues that had affected the sales in the Tradesman segment and thereafter, develop a marketing strategy to challenge Makita for leadership in the segment.

1.2         Limitation of the report

There are a number of limitations in this study. First, the fact that most of the results of the studies; i.e. Tradesman appropriate, market segment share, brand awareness and perception, market shares by product type and distribution channel are meant for one year: 1990.Due to the lack of data, I am unable to identify the trend of movement for the above studies, Second, with the absence in average industrial ratio, I am unable to ascertain whether B&D’s debt ratio is acceptable or high. Thirdly, the results on Brand Awareness and Perceptions research (B&D highest score of 98%) are based on telephone surveys. Its annual Image Study programme would potentially involve some bias. Lastly, most of the data reflect perceptions or stated belief of strategy rather than actual behaviour. Ideally, data should be combined with archival data to arrive at a more complete description of strategic marketing.

2.0        Situation Analysis

2.1        The Market

Generally, power tools include any tools contained in a motor that is capable of being guided and supported manually by an operator. Power tools are manufactured for both high-end and lower-end markets covering household or consumer market segments, as well as for professional use in the industrial and Tradesman market segments. By late 1980s, a number of trends began to influence the level and nature of competition in the worldwide power tool industry. Among those were a growing preference for battery-powered tools and globalisation of the industry.

The United States market was also impacted by the change considering the fact that it is one of the largest markets for power tools. In 1990, the US power tool market stood at $1.5 billion. The market is segmented into Professional-Industrial, Professional-Tradesman and Consumer of $550 million, $420 million and $530 million respectively. Among the market segments, the Tradesman market grew by 9% as compared to 7% for Consumer, and zero growth for the Industrial segment.

Only a small number of manufacturers dominated the US market; namely B&D, Makita, Milwaukee, Roybi and Bosch. In the case of B&D, it participated in all the three segments and commanded the lion share of about 30% of the US overall market alone. It remained in the number one position in terms of market shares for both the Consumer and the Professional-Industrial segments. However, the Japanese manufacturer, Makita, dominates the Professional-Tradesman segment with a 50% market share. In this segment, B&D earns the third position with its 9% market share.

2.2        The distribution channel

The distribution channels play a vital role as the tools vary for each of the market segments. In the Consumer segment, the targeted clients are made up of individuals who purchase the tools to carry out light repairs around the house or for hobby purposes of creating household items. This segment is categorised as low-end market since it is targeted at individuals. The products are traditionally sold in mass merchandisers such as Wal-Mart, Kmart and hardware stores. The targeted clients under Professional-Industrial are made up of commercial contractors working on large projects. Therefore, product quality, durability and after-sales service are viewed as important buying criteria. For this segment, tools are marketed through distributors such as W.W. Grainger of Stokie who also provides technical advice and services. The targeted customers under Professional-Tradesman are individuals who use the tools to earn a living such as electricians, plumbers, carpenters and other tradesman working in residential construction. Tools for this segment are sold in home centres, farm outlets and membership clubs.

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In short, increased specialisation in power tools usage combined with the proliferation of applications, have caused manufacturers to establish more direct links to customers. In the case of B&D, they are no different from other manufacturers in marketing their products except that they do not employ membership clubs to market their products in the Tradesman segment.

2.3        The environment factors

B&D have a number of strengths that translate into competitive advantages in both the current and industrial market. It has been in the power tool industry since its inception in 1910. B&D’s brand name is well-known and has become ...

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