The Black & Decker Corporation (A): Power Tools Division Case Solution

1. Why is Makita outselling Black & Decker 8 to 1 in an account which gives them equal shelf space?

Makita has responded really well to the developing segment of tradesmen, as opposed to Black & Decker. It appears that in the professional segment, Black & Decker has put all its efforts in gaining share in the Industrial segment and has attained a measurable success in the segment, with little focus on the requirements of the tradesmen such as carpenters and plumbers. What can also be assumed is that Makita, being a much newer company than Black & Decker, enjoys a reputation of being young and dynamic and more responsive to changing requirements of their customers.

Moreover, relationship management with key accounts, such as The Home Depot is extremely important to generate sales. Currently not being in a strong financial position and market share where the tradesmen segment is concerned, B&D should do more favors to the key account rather than expect better margins for itself. Makita stands in a better position in this case because of its already-attained success in the segment and can push the key accounts for more favorable offers aimed at its customers. Therefore, in such a given scenario, it is easier for Makita to outsell Black & Decker.

2. Why are Black & Decker's shares of the two professional segments - Industrial and Tradesmen - so different? Wouldn't you expect them to be similar?

No, the two professional segments are expected to yield different outcomes for Black & Decker, owing to its own performance. Firstly, being a newer segment, it is assumed that the tradesmen enjoyed more focus and attention by other firms such as Makita. While B&D was tied up consolidating its position and share in the consumer and professional industrial segments, the Japanese competitor was quick to gain ground on tradesmen segment, producing innovative items for professionals such as carpenters and plumbers.

Moreover, it was not just dynamism of rival firms, which allowed Black & Decker to hold only a small share, but it was also the expertise of the rivals such as Makita in comprehending the requirements of the customer base and produces and innovate products as needed. Hence, Black & Decker was not immediately equipped to cater to a segment that was away from its immediate expertise of meeting requirements for the professional-industrial segment. However, B&D's focus on professional-industrial tools seems justified as it is the most lucrative segment of the power tools market in the United States.

3. What, if anything, do you learn from B&D's consumer research?

What can be accessed from the consumer research is that Black & Decker (B&D) is viewed as an old entity and having an ‘old' brand, suitable for meeting fundamental requirements of the household sector. It does not have the innovation and sophistication which would be required by the professional-tradesmen segment. It must be noted that professionals in this field (the tradesmen) are in tough competition with each other to land up a work contract. Hence, they look for more innovative and dynamic solutions in the form of power tools to give a better service to their eventual customer who expects them to come prepared with a handy set of power tools to perform the needed tasks.

Moreover, even with reasonable quality specifications compared to its rivals, Black & Decker ranks lower than its competitors on actual usage of the products. An important statistic depicted in the consumer research is that Black & Decker enjoys the highest awareness among the trades' people, as opposed to its competitors. However, the dilemma for B&D is that awareness is not converted to being rated "the best" by the buyers, where it ranks the lowest. Such a rating comes for Black & Decker because the buyers cannot relate to its products, that is; they do not feel proud and do not own their products. It provides a convenient service but is unable to provide durability.

4. Joe Galli's objective is "to develop and gain corporate support for a viable program to challenge Makita for leadership" in the Tradesmen segment (pg 1). To gain support, the minimal share objective would have to be "nearly 20% within three years, with major share "takeaway" from Makita." How realistic is this?

I do not think that such a proposition by Joseph Galli is reasonable and realistic. The vice president of sales and marketing must also consider that with such an optimistic plan, the rival Makita would not be sitting comfortably and watching the show; it would come up with its own marketing and pricing strategies to strengthen its current market share. Within the next three years, if Black & Decker is able to attain 15% share by getting a slice away from Makita, it should be considered a reasonable achievement with more positives coming for the company in the future.

However, one cannot totally blame Joseph Gilli for his approach. The company and its power tools division feel embarrassed to currently stand at a market share positioning of less than 10 percent in this segment. Only if they can manage to make the competitors panic and make them go for a hasty move will they be in a position to have a higher market share in the segment, but gaining more market share would come in relation to a multitude of factors that Black & Decker needs to influence, such as getting favorable positions at key accounts such as The Home Depot.

5. If you think Galli should pursue a "build share" strategy, what actions do you recommend? Does the DeWalt idea have any merit? How about the sub-branding option?

The DeWalt idea seems a plausible option. Among the three options involving the brand name of DeWalt, I do not think removing the parent name Black & Decker and only using "DeWalt" would lead to positive results for the company. This is because Black & Decker holds a legacy for being in the market since over a hundred years. Such a thing should be treasured as an asset and used to its benefit by the company. The idea with the most merit among the DeWalt options is using the identification of "DeWalt- Serviced and Distributed by Black & Decker." Such identification would mean that DeWalt itself is being portrayed as a powerful brand but does have Black & Decker in what can be termed a supporting role of service and effective distribution.