Case name -- B&D.docx - Case name The Black Decker...

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Case name: The Black & Decker Corporation (A): Power Tools Division Student: Xiaowen Hong Student number: 1003205514 Lecture 05 Situation background Black & Decker was founded by Black and Alonzo Decker in 1910 as a machine shop. It was headquartered in Towson, Maryland and became the largest producer in power toll market in 1990. Although it was the leader in consumer segment in this market with 45% market share, it only took 9% market share in professional-tradesmen segment, which had the fastest growth rate at 9% per year. In addition, it suffered a heavy long-term debate due to the acquisition of Emhart company. The vice president of sales and marketing, Galli, wanted to make a decision of competitive strategy among three options: 1) Harvest Professional-Tradesmen Channels; 2) Get Behind Black & Decker Name with Sub-Branding; 3) Drop the Black & Decker Name from the Professional-Tradesmen Segment (Dolan, 2001); in order to build the professional brand image in this market and attain a leadership not only in overall market but also in distinct segments. The Power Tool Market share In the power tool market, there were two main parts which were professional and non- professional segments. For professional segment, there were two segments --- industrial and tradesmen. The industrial was the largest segment in this market at 43%, but it didn’t have any growth rate, which means it may decrease in the future by the erosion of other two segments. For the tradesmen segment, it was the smallest segment with only 28%, but it had the highest growth rate at 9%. This may be one of the reasons why B&D wanted to become a leader in this market --- more potential market shares and profits in the future. On the other hand, the only non-professional segment was consumer segment, which had 35% of market share and 7% growth rate. This was also the major position of B&D in this market. As I mentioned before, B&D was a leader in consumer segment, but it only had 9% market share in professional-tradesmen segment. Compared to its competitor, Makita, 50% market share in same segment. B&D had no competitive advantage in this particular segment. The main reason caused this big difference was brand recognition and image. Due to the strong brand recognition in consumer segment, B&D had strong brand loyalty in home users and when it came to portable home power tools, B&D was the first option in their minds. However, consumer segment was non-professional segment, which means for those people who aimed to look for a professional power tool, they won’t consider B&D as their first choice. Another possible reason was color differentiation. The color of the product may not the main influence on customer behaviours, but B&D had no-color differentiation between its professional and non-professional products --- both for black and grey, how could customer distinguish them? Instead, Makita had a strong color
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