Blacker and Decker Corporation: Power Tools Division

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Competitor Weakness: It is evident that there are certain weakness of the competitors that Black and Decker is able to use to its advantage. Although Makita is a very popular brand among tradespeople, the company does not have a very strong relationship with its retailers. Makita offers the same products through all its distribution channels which provides no channel protection to any of its distributors. This shows that Black and Decker could offer incentives to retailers for selling products from their Professional-Tradesmen segment in order to form a better relationship with the retailers and entice them to sell the company’s product over Makita’s and other competitors.

Through Table D we are able to see that even the consumers who prefer Makita rated Black and Decker higher in terms of “Easy to get service” and those who preferred Milwaukee rated Black and Decker similarly when it comes to receiving services. The table suggest that Black and Decker has an advantage in the customer service aspect and can use that to gain an edge against its competitors.

Context: Overall Black and Decker is currently enjoying a favorable position with the company headquarters being located in the US market where it is being seen as a high-quality brand. Through being ranked 19 out of 6,000 brands in Europe the company has a sustainable name and revenue in the European market as well.

Recommendations:

After analysis the 5C’s we are now able to decide on which of the three options presented in the case we should proceed with for the issue regarding the Professional-Tradesman segment. The first option that was presented was to harvest the Professional Tradesmen channels where the company would mainly be focusing its own profitability even at the expense of market shares. The possible route with this option is charging premium prices for the company’s current products in the segment and rely on the company’s brand loyalty to retain the remaining customers that are willing to pay the premium price. However, since Black and Decker does not have a strong presence within this segment this may backfire as it is likely that consumer will convert over to the more credible company such as Makita and Milwaukee. As a result, not only will the company lose shares, but its profits too.

Option 2 suggest that the company sub brands, however due to the Black and Decker already having a poor image in the segment for quality and credibility. It is unlikely that through sub-branding Black and Decker will be able to remove this perception of its products being meant for household use. Therefore, sub-branding is not a very viable nor effective way of solving the issue in the Professional-Tradesmen segment.

The final options presented is to drop Black and Decker’s name from the Professional-Tradesman segment appears to be the best possible route as it would wipe off the perception of the company’s current products and allow Black and Decker to reposition itself with a new image in the market.

Action Plan:

Since it has been determined that option 3 is the best possible route with the issue regarding the Professional-Tradesman section. It is recommended that Black and Decker drop the its brand name from the Professional-Tradesman section meaning that products will no longer carry the company’s brand name in this segment anymore. A possible new name that was recommended in the case was “DeWalt” which was purchased by Black and Decker in 1960. Through using DeWalt, which already has a 70% brand awareness with no negative perception in the Professional-Tradesman segment the brand can be used to reposition the Black and Decker’s products Furthermore through a research conducted on the DeWalt brand the results show that there would be a 58% purchase interest if the specific endorsement “Dewalt- Serviced and Distributed by Black and Decker” was mentioned. This in turn could also help raise Black and Decker’s credibility in the overall market.

The next step to take would be to strengthen the company’s relationship with retailers. As mentioned previously Makita does not have a good relationship with many of its distributors, as a result Black and Decker can use this to their advantage and provide incentives such a commission to retailers to entice them to sell the company’s products over the other competitive brands. This in turn may also result in the retailers purchasing higher volume of products from the company if the products are selling well.

With one of the key issues being the appearance of the products specifically the colour. When launching the products under the new name of DeWalt the colour of the professional grade products should be changed to make them differentiable from the consumer grade goods. A viable colour would be yellow, as the colour is highly visible and enhances the concentration of the viewer making the products more appealing and desirable.