Black and Decker Joseph Galli, VP Sales

Black and Decker

Joseph Galli, VP Sales and Marketing for Power Tools

Strategic Marketing Management Services

RE:

Market Share Issues re: Makita

Mr. Galli:

Per your request, we have done an analysis on the market share for Professional Tradesman tools between Black and Decker and Makita Tools. While B&D holds a substantial amount of market share in the portable power tools, Professional-Industrial and Consumer segments, a critical issue is the low comparative share in the fastest growing market, that of the Professional-Tradesman (See Figure 1). While B&D has remained a clear market leader for consumers, the lower than average perception of the product line by Professional-Tradesmen has lowered the share to 9%, with Makita, relatively new to the arena, at a solid 50%.

Demographically and psychographically, the buying behaviors of the tradesmen show that they spend an average of $1,000/annum on tools, usually replacing a broken or outdated model. This is a major purchase for this segment, and the subject of a great deal of conversation at the job site, as well as clear word of mouth advertising and recommendations. Makita seems to be the market leader in this sector for a variety of reasons: 1) Color and Style more appealing to the heavy use crowd, product seems more rugged; 2) Makita pushes the membership clubs and discount buying service niche; 3) Expands the market with no channel protection (e.g. home shopping network, etc.); 4) Offers trade ins for old equipment, and 5) Promotes the brand as "rugged," "long lasting" and designed specifically for the working professional.

Your mandate was to find a way to increase the market share for this important niche by at least double within 36 months. You have been presented with three options: Harvest Professional-Tradesmen Channels (Focus on the consumer, some cannibalization from consumer to Professional-Tradesmen would occur); Sub-Brand and push B&D Name, and remove the B&D Name from this segment as a sub-brand. The issue of the name is somewhat psychological, some of the research stated that tradesmen see B&D as a kitchen appliance manufacturer, but not necessarily a long-term solid set of working tools for the professional.

To drop the B&D name would essentially usurp decades of brand building within the marketplace. This would likely receive very little support internally, and in the long run would not be cost-effective. Instead, since you already have the experience with the transition of saw blades from B&D to "Piranha by Black and Decker," it seems that an intense sub-branding program with appropriate roll out would be a cogent strategy. Instead of using a brand name that already may have some associations, it would be best to retarget the niche with a brand that spoke to the needs of this market: reliable, rugged, secure, cost-effective and long-lasting. Since the market share is under 10% now, you would risk little with the potential for a greater reward.

Our suggestions are as follows:

Rebrand the niche tools as PowerPro -- Tools for the Working Professional.

Change the coloration of the product to black and yellow, common on job sites and easy to spot.

When possible, reinforce the grip of each tool with a higher grade of plastic.

Brand the product through construction journals, etc. -- find projects that might solely use the product and push that marketing, "The workmen at Chicago's FifthSquare high-rise need a product that will last through any weather and keep on working -- PowerPro, tools for the working professional."