and Decker is an American power tool manufacturer that is headquartered in
Towson, Maryland. They are known for having a strong brand image, as well as
having high quality products. However, there is a problem. They are
underperforming in the Professional-Tradesmen segment, for they only have a 9%
share in this segment. The Professional-Tradesmen segment is the fastest
growing segment for the industry of power tools and because they are lacking in
this segment, it hinders their image of being a world leader in power tools. In this
report, I am going to discuss the diagnosis of the problem, the relevant stakeholders,
and my recommendation on which action they should take.
are three major segments of the power tool business: Consumer, Tradesmen, and
Industrial. The Consumer segment is for non-professional users. These non-professional
users account for 35% of the U.S. power tools market. In this segment, Black &
Decker has a 45% market share, with revenues reported to be at $250 million.
These consumers use power tools for “at home” use. Consumers are loyal,
influenced by media and advertising, and usually buy tools from Kmart and
Walmart. Therefore, the tools they want are pretty easy to use and are not used
frequently. Because of their brand recognition and image, they maintain the #1
position in the marketplace.
Industrial segment is a $550 million market and in this segment, Black and
Decker has a 20% market share, with revenues reported to be at $100 million. The
Industrial segment represents professional users. These consumers are mainly
commercial contractors who use power tools for big projects such as office
buildings and bridges as well as company assembly lines. In this segment, brand
popularity is important, which is very helpful for Black and Decker. They are
seen as as a brand that offers high quality products and great service. Distributers
play a huge role because they are able to influence consumers with their
Tradesmen segment is a $420 million market and in this segment, Black & Decker
has only a 9% market share, with revenues reported to be at $35 million. This
segment also represents professional users. The consumers are mainly tradespeople
who use power tools to make a living. These people are electricians, plumbers,
carpenters, framers, roofers, and general remodelers. Even though the Tradesmen
segment is the smallest of the three segments, it happens to be the fastest
growing segment. These consumers care more about the image of the product than brand
are many reasons why the Professional-Tradesmen segment do not see Black and
Decker as the preferred option for power tools. As I talked about previously,
Tradesmen are consumers who use power tools to make a living. They want durable
tools that are going to last them a long time. Because this is their job, it is
very important that their tools don’t fail them. If anything were to break down,
the tradesmen would have to pay for it, which would delay their ability to do
their job, and the customer may look for someone else to get the job done. This
could lead to tradesmen losing their customers, and they cannot afford to do
that. In the Black and Decker case, it is stated that, “the typical plumber,
electrician, or general remodeler working in residential construction had about
$3,000 invested in 10 or so “tools-of-the-trade” (6). This takes me into my
next point about why the Professional-Tradesmen segment does not see Black and
Decker as the preferred option for power tools. The biggest problem for Black
and Decker is the way they are perceived by the Tradesmen segment. Because they
are doing so well in the consumer segment, this hinders their brand image.
Black and Decker is known for selling household appliances such as hand-held
vacuums, irons, mixers, coffee makers, etc. You can buy these appliances at
Kmart and Walmart. Because Black and Decker power tools are found at Kmart and
Walmart, it proves how popular they are with the Consumer segment. It proves
that Black and Decker provide tools for the convenience of the consumer.
Tradesmen view Black and Decker as having products for at home use rather than
on the job. If any of their products failed while the Tradesman were on the job
site, it would create major problems.
color of the Black and Decker power tools is another problem because it does
not match the colors of the other professional tool brands. Because tradesmen
care more about product image than brand quality, color is an important factor
to them. Black & Decker does not have color differentiation in their power
tools. Professional Grades are more highly differentiated in color.
Professional tool brands are using colors that stand out, while Black and
Decker’s power tools are charcoal grey. For example, Makita and Milwaukee, two
of Black and Decker’s top competitors, use colors such as teal and red.
looking at the data from the Black and Decker case, I noticed that Black and
Decker do not take advantage of the Membership Club, which is the one of the
most profitable distribution channels. Makita, one of the leaders in the
Tradesmen segment, distributes its product through membership clubs. Out of the
10% overall market sales for this segment, Makita had an 85% share. This channel
has been very successful for Makita.
The buying behavior of
tradesmen impacts the situation immensely. They put a lot more investment into
their tools and they have a sense of pride about the tools they use on the job.
They are very dependent on these tools, for this is their career. Tradesmen
have the perception that Black & Decker’s brand is only for consumer use.
They believe the brand is meant for any person to use at home. Due to the fact
that Black & Decker maintains about 45% of the consumer segment, it has
very good brand recognition.