In the 1990’s Black and Decker had a great position in the market for their products to appeal to the Professional Industrial segment and the Consumer segment but when it came to the Professional Tradesmen segment they were lacking. Their 9% market share vs. Makita’s 50% market share in the tradesmen segment was incomparable. Makita clearly had a better product in the eyes of the Professional Tradesmen. In the Professional Segment most of the people who buy the products are people who need these tools to make a living such as carpenters, electricians, plumbers, roofers, and general remodelers.
Black and Decker were branded for tools to use at home. Therefore, tradesmen looked at the Black and Decker brand as tools for home use, and not for work. Since they were branded for home use it seemed as if they weren’t made for everyday use, and would not hold up for the wear and tear a carpenter or electrician would need them to.
B&D clearly had a problem with brand association with its consumers. In exhibit 2 it shows that Black and Decker failed in capitalizing in the Membership Club distribution channel which was in the top five profitable distribution channels.
Makita did distribute its tools to membership clubs and it turned out to be very successful channel for them having 85%. Black and Decker had such a lack of profitability in the tradesmen segment due to having the wrong brand perception and inadequate distribution channel, where Makita excelled in both. Buying Behavior in the Tradesman Segment Buying behavior also had an impact on B&D having such a low market share in comparison to Makita.
When tradesmen go out looking for tools they look for quality, performance, functional benefits and product services.
Product color also has an influence when it comes to purchasing. Color is important because the color of your product is one way your product is linked to the company. B&D had grey as their color dull and boring. Tradesmen most often buy their tools from the retail distribution channel like Home Depot, or independently owned stores like ACE hardware. In this segment of the market tradesmen spend about $3000 a year on tools and about $1000 a year to replace tools. Quoted in the article “On the job, people notice what you’re working with, if I came out here with one of those B&D gray things I would be laughed at. Just buy this statement it shows that B&D tools are looked at by tradesmen as tools for the home or tools that are used for hobbies. Even though B&D products are high quality and sold at a good price tradesmen would rather purchase tools that are looked at as professional tools like Makita. Also it has been known for B&D tools to fail on the job. Even though these were tools that were marketed to the consumer segment, it still gave B&D a bad name to tradesmen. Some of B&D’s tools were solely designed for the consumer segment for home use but how was the tradesman suppose to know exactly what tool was for which segment.
To avoid this confusion B&D could possible go out to job sites and provide information about their products that are designated for the tradesmen segment so people will be more informed about their product, or go to the big retail chains and have information sessions. By doing these things it could make their product more attractive to the consumer. Makita’s Competitive Strategy Makita’s competitive strategy has proved to be very successful. It currently has the lead in the tradesmen segment and is looked at as the “top dog” or lead performer. Their brand awareness is at 90% which is important.
This shows that the consumer is well aware of their brand and there are many positive attributes that go along with it. Also, within the tradesmen community Makita has very good positioning. Makita is priced 5% to 10% above B&D but still has good pricing and also offers a membership club where you are eligible for discounts off of their product. When people see they are eligible for a discount they love it. Makita was believed to be “arrogant and dictatorial” this caused retailers to become not so positive about them even though they held such a strong position with tradesmen.
They also had no channel protection. They sold their products to a range of markets from retail to membership clubs. Makita was also known to “trade down”. They would position their product to look attractive to the consumer for example for a gift for Father’s Day. Milwaukee Role in the Segment Milwaukee was more on the same level as B&D. They were an older company selling only in the high end of the market but had great brand awareness of 95%. They held the second position in the tradesmen market with 10% not much different than B&D with 9%.
They had a selling rate of about $200 million per year worldwide. Really $200 million was not that much in comparison to B&D who had sales of $4. 8 billion in 1990, but Milwaukee again was only targeted to the high end market. Milwaukee was considered to be one of the best in results of a survey having 80% of survey takers believe in the statement, where Makita only had 67% and B&D with 44% agree with the statement. In comparison to B&D 91% of people agreed that Milwaukee makes high quality tools where only 43% believed the same for B&D.
When it came to durable tools 91% agreed that Milwaukee made a durable tool, and only 42% thought that of B&D. This survey also showed that most people were proud to own a Milwaukee tool with 86% of people agreeing beating out B&D who only had 36% in agreement. Milwaukee also had higher ratings than B&D for how easy it was to get service for the tools, and how much the company stands behind their products. Even though Milwaukee only has a 1% lead in market share on B&D surveys show it is clear they are favored more than B&D by the consumer in the tradesmen segment.
They have a very stable targeted market so therefore there is not much if any competition between B&D and Milwaukee. B&D’s Alternative Action B&D’s brand strengths have great perception of product quality, service and awareness in the Industrial and Consumer segments but is lacking a great deal in the Tradesmen segment. The brand perception in the Tradesmen segment “you have to stay away from that B&D” is caused because tradesmen believe that B&D products should be used for home use and home use only, they are not a product that should be brought to the job site.
B&D need to focus on recognition of the brand in the Tradesmen segment. They need to drop the B&D name for the Tradesmen segment, leave it for the other to segments, and pick up the DeWalt brand name. They need to position the brand, gain product recognition, and a good brand image to enhance their new product. They also need to work on customer satisfaction and include their product in the proper distribution channels to have success. The DeWalt brand is the leader in sales of large radial arm saws permanently installed at lumber yards and has a 70% brand awareness rating.
They also earned an “Is One of the Best” agreement with 63% in comparison to B&D’s 44%. Also, research showed that purchase intent for DeWalt was at 51%. When marketing the DeWalt brand they should put their product on the shelf at more retail locations and hardware stores to be more competitive to Makita. They also need to change the color. Grey is just not cutting it. Although nobody would say that color is a key factor when purchasing a product it is important because it is used to differentiate different brands.
Using yellow instead of grey will be of great benefit to DeWalt because for one no other company uses that color, and yellow also symbolizes safety on the job site. Using this color could give off a perception that the product is a “safe” one. It is also important when changing image of the product marketed that the DeWalt brand does not show off the same image as the B&D product did in the Tradesmen segment. They already have an advantage with DeWalt because the product already has recognition and awareness in the industrial and tradesmen segments.