Cindy Arzola

Black & Decker Case

1. What is the cause of Black and Decker’s 9% market share vs. Makita’s 50%?
Black and Decker’s small market share in the Professional Tradesman Segment as
compared to Makita’s 50% is due to a lack of focus/marketing on B&D’s power tool
segment, customer perceptions, no participation in the “membership clubs” channel and
relatively new entrance into this particular segment of the Power Tools market.
Lack of focus:

 Began the move from “garage to the house” with the Dustbuster
 The B&D franchise was especially strong in cordless vacuums etc, as opposed to
the Power Tools segment which is how the company originated
 The household products line was heavily supported with media advertising
 Only enjoyed $420 million or 28% market share in the Tradesman Segment
Customer Perceptions:

 Customers did not believe B&D tools to be for “heavy” jobs, more of a house
brandevidence of B&D home brands subjected to intense jobs and failing
 B&D did not provide product strengths for its tools across all mediums as did
Makita (according to customers)
Membership Clubs

 B&D did not have any market share in this channel as opposed to Makita who had
an 85% share of the 10% overall market sales for this segment.
New Player in the Professional Tradesman Segment

 B&D focused its efforts in the other top 2 segments within the power tools
industry: Professional Industry and Customer Tools ($550m, $530m)

2. How does the buying behavior of the tradesman impact the situation?
The buying behavior of the tradesman had a significant impact on the 9% market share
that B&D held in the Professional Tradesman segment because it was directly associated
with brand perceptions of the product in which B&D fell at the lower end of the
spectrum. Carpenters, plumbers, electricians needed a tool that they knew was going to
get the job done right without major discrepancies. Tradesman invested about $3000 in
tools of the trade which they were proud to use at their working sites, B&D was not on
this agenda. Not only did tradesman want a reliable hand-tool but they looked for
“product color” as a differentiating factor in the decision making process. Was B&D
using the right color to attract its customer? (we could expand on this more as a group—
 generally involves how confident the worker is in utilizing the B&D brand as a source
for making a “living”
3. What is Makita’s competitive strategy and what role does Milwaukee (the #2 brand
in the segment) play?

Makita had a well-established public image in the Power Tool industry, more specifically
in the Professional Tradesman segment. People perceived the brand as being credible,
reliable and strong. Makita had a distinct advantage over B&D by offering no channel
protection, thus selling its products at membership clubs. Also, customers of the Makita
brand did not have preconceived notions or attitudes because all they knew was that it
produced power tools and nothing else. As opposed to B&D who was involved in
consumer products such as vacuums. Makita also boast relatively lower prices due to the
ability of being able to capitalize on the premises of Home Centers such as Home Depot.
Home Depot overstocks in relatively small areas and provides prices that are 30% less
than the competition which substantially helps Makita stomp the competition.
 Has leadership positions in all of the product lines within the Professional
Tradesman segment

Milwaukee
 Private firm which only sold in the high end of the market at a rate of $200
million per year worldwide
 Held 10% of the Professional Tradesmen Segment
 Customers perceive the brand as high quality
 Priced at premiums, averaging 10%
 91% preferred Milwaukee over B&D in regards to high quality tools, 91% over
B&D for durable tools, 86% are proud to own this brand as opposed to B&D
 95% of Tradespeople are aware of the brand, just below B&D
 80% agree that the brand is one of the best, B&D ranked last

4. Which action alternative should B&D pursue?

Action alternative 3 should be pursued in order to continue to be a competitive force in
the Professional Tradesman market. DeWalt has an established reputation with
tradespeople as being reliable and was recognized as being “one of the best” by 63%. In
addition customers have a brand awareness of 71% for the company and would be more
inclined to purchase the products associated with it if B&D was also involved (58%).
There is no financial risk involved in this proposal as the segment was at no profit with
the B&D brand. B&D could help to strengthen the DeWalt brand with marketing
campaigns which would capitalize on having customers more aware of the brand and
expanding on the “at work” tools that DeWalt lacks. This is preferable as opposed to
investing additional $ into a sub-brand that could potentially be a flop. Separating itself
from the B&D brand in the Professional Tradesman segment and investing that time and
money on the DeWalt image, which is already positively associated to “manly tools”,
would be more sound. (As a group we can decide as to the best alternative—lets work on
 this section to see if we can gather some more in-depth analysis, these are just some
thoughts).

Option 1 would completely eliminate the channel and direct B&D’s focus on the Industrial and
Consumer segments of the Power Tools market. Therefore I would not recommend that this
option is undertaken by the company. First, the Professional Tradesman segment is the fastest
growing at 9% compared to 7% and no growth for the Consumer and Industrial segments
respectively. This represents a big opening for B&D to continue its expansion in the Professional
Tradesman segment and remain competitive in the Power Tool industry which represents a $1.5
billion market.