Background
Black and Decker (B&D) is a pioneer in portable power tools. In 1991, it is a $5 billion in sales company with 29% of these sales coming from Power Tools and Accessories. B&D is the world’s larges producer of power tools and the U.S. market overall leader.
Problem Statement
B&D has a strong market share in the consumer and industrial markets, but is weak in the P-T market as it is currently experiencing decreased market share. In this segment, B&D is not generating profits and, at the same time, retailers want more advertising allowances and rebates.
Analysis
The U.S. power tools market is divided into three segments: Consumer (home use buyers), Professional-Tradesmen (P-T) (contractors who purchase their own tools), and Industrial (procuring professional buying in large quantities for industrial usage). The P-T segment is the one experiencing the largest growth potential.
B&D is one of the most powerful brands in power tolls. Its products are generally regarded to have high quality. B&D currently has 45% of the Consumer and 20% of the Industrial markets. However, in the P-T segment B&D holds only 9% of the market and is in near parity with Milwaukee Electric (10%) and trails Makita, which has captured 50% of the market.
Makita was able to grow rapidly in the P-T market as its dominance was aided by the rapid development of a new type of distribution channel, the Home Centers such as Home Depot, which Makita actively sought. B&D, however, was not able to grow quickly in the P-T market due to Tradesman’s perception of its P-T Line.
The Tradesman market perceives B&D as a “Consumer” product that is not on par to handle professional tasks. This is evident in that in studies of brand perceptions in the P-T segment, six manufacturers out-rank B&D, three tie with B&D, and only one is rated with lower quality. On blind trials the quality of B&D P-T products often outranked those of the manufactures whose quality was perceived to be better, implying that B&D’s problem is not of having bad products, but of having a bad reputation.
One factor contributing to the perceived higher quality of Makita and Milwaukee is that both are priced at a premium, and on average, are 5-10% more than B&D. This difference in price contributes to foster the perception by the P-T market that because the competitors’ prod...
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...f B&D P-T line may remain.
The recommended Option 3 is that B&D should go with the established DeWalt and Industrial Yellow. Marketing DeWalt alone is a better choice, as there are negative perceptions of the B&D line concerning reduced quality. Increasing the DeWalt brand awareness and improving the perceived quality will be easier and more successful to accomplish than increasing B&D’s perceived quality at the P-T market.
The color of the new line should be “Industrial Yellow” because other power tool companies have not used this color. It is a bold color, and will stand out compared to the other P-T colors. In the early stages, the positive associations will be associated with the original DeWalt Company’s reputation and safety as this color is used to indicate safety. As the DeWalt line’s positive market perceptions grow, Industrial Yellow will be easier to identify the high-end P-T line and will automatically be associated with high quality goods.
Although not sufficient by itself, Option 4 is also interesting for B&D, since Makita has already damaged relationships with retailers, and retailers “push” of products is an important element in driving sales.
Stirling Bridge had been a thriving power tool business for over 100 years. The company had sold and distributed power tools and equipment all over the U.S., Europe, and third world countries. Recently one of Stirling Bridge’s top selling products, the Braveheart power tool line, came under attack when consumer agencies conducted research and found many consumers who purchased the power tools were experiencing significant harm and personal injury after use. Stirling Bridge (STIRLING BRIDGE) had identified potential safety concerns with their power tools and hired an independent research company to investigate why consumers were being injured using their power tools, well before the company came under the attack of public agencies.
The competitive analysis sought to establish Kendra Scott’s competitive rivalry, buyer power, supplier power, threat of new entrants, and threat of substitutes. Kendra Scott has various major competitors, but it has preserved its leadership in the jewelry industry by maintaining a brand that is associated with superior and consistent customer experience, authenticity, superior core values, and flexibility in responding to changing tastes. The consumers have weak bargaining power largely due to the emotional attachment they have for particular jewelry brands. Besides, they do not rely on market forces and pricing levels to make purchasing decisions. The jewelry company and its main competitors depend on a few suppliers for their raw materials
Considering 4 elements of the marketing mix and the case discussion of the general trends in the industry, it seems that MCB is experiencing problem with place and determining its target market. The case provides many examples of the company's difficulties in gaining more retail locations, maintaining sufficient inventory level, and, the most important, improper positioning of its product, which impeded the MCB to reach its potential customers.
Home Depot’s slogan, “More saving. More Doing.”, promotes Home Depot’s marketing strategy with more appeal for customers with less money to spend. Home Depot carries major brands but also carries Home Depot exclusives and proprietary brands which save customers money. Home Depot carries major brands like Dewalt, Hampton Bay, Homelite, and Martha Stewart Living. They also carry proprietary brands such as Ryobi, Rigid, Behr, LG and Toro.
b. They meet the needs of their target market by building their stores in closer proximity.
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
There are a number of smaller players but lack the public existence and retail footprint of their larger counterparts. With such high levels of market absorption, both HD and LOW enjoy high bargaining power with suppliers of goods. The two companies vary significantly in terms of the strategies they employ to compel consumer traffic. Home Depot centre of attention is customer service, while Lowe’s offers discounts to improve sales. Home Depot has determined on customer service as a driver to grow customer traffic and sales, Lowe has battled mainly on the basis of lower prices. Home Depot has a status for lesser prices and more pro-friendly impression where Lowe’s is trying to capture the traditional do-it-yourself customer by trying to appeal the female customer, who the company declares, is responsible for eighty percent of home improvement
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