Black & Decker Case Study
Despite maintaining a very strong brand name and being #1 in the Consumer & Industrial segments of the power tools market, Black & Decker (B&D) was being significantly outsold by Makita Electric of Japan, who had taken over the Tradesmen segment with 80% market share in cordless drills and 50% overall share in this segment. Tradesmen appeared to perceive the B&D brand as a household product unworthy of their usage given B&D’s success in the Consumer segment and Makita’s dominance of the Two-Step, Home Center, and Membership Club distribution channels popular among tradesmen helped lead to B&D’s share erosion.
While the market share differences between B&D’s Industrial & Tradesmen segments were initially surprising, a closer look revealed that the Industrial segment’s distributors were likely responsible for B&D’s #1 position in this market. W.W. Grainger, which was the largest distributor by far, provided technical expertise, service, and brand recommendations for contractor’s tool requirements. Since these tools were purchased and owned by companies, and since B&D’s product research had proven a leadership and/or competitive quality across various products, most companies would likely have asserted that B&D’s products would be sufficient for their tasks. Conversely, Tradesmen tended to purchase tools on their own. They would be more likely to frequent the membership clubs, two-step, and home center distribution networks, each of which showed superior sales of non-B&D products. Thus, they would likely be more highly recommended by those groups.
Of the options presented, Option 3 offers B&D the best chance of success in reviving its Tradesmen segment. Option 1’s strategy of ceding a $420 million revenue line and 9% market share to competitors would only strengthen the Makita, Milwaukee, and other brands and could potentially endanger B&D’s foothold in the Professional – Industrial segment. Similarly,
While the market share differences between B&D’s Industrial & Tradesmen segments were initially surprising, a closer look revealed that the Industrial segment’s distributors were likely responsible for B&D’s #1 position in this market. W.W. Grainger, which was the largest distributor by far, provided technical expertise, service, and brand recommendations for contractor’s tool requirements. Since these tools were purchased and owned by companies, and since B&D’s product research had proven a leadership and/or competitive quality across various products, most companies would likely have asserted that B&D’s products would be sufficient for their tasks. Conversely, Tradesmen tended to purchase tools on their own. They would be more likely to frequent the membership clubs, two-step, and home center distribution networks, each of which showed superior sales of non-B&D products. Thus, they would likely be more highly recommended by those groups.
Of the options presented, Option 3 offers B&D the best chance of success in reviving its Tradesmen segment. Option 1’s strategy of ceding a $420 million revenue line and 9% market share to competitors would only strengthen the Makita, Milwaukee, and other brands and could potentially endanger B&D’s foothold in the Professional – Industrial segment. Similarly,