& 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. This segment is
a $530 milllion market. Black & Decker has a 45% market share, with
revenues at $250 million. These consumers use power tools for “at home” use. Consumers
are very loyal because of Black & Decker’s strong brand image. Due to the
fact that they have household products, consumers are influenced by the media
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
image, they still take the lead in the marketplace.
Industrial segment is a $550 million market and in this segment, Black &
Decker have a 20% market share, with revenues 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 a brand that
offers high quality products and great service. Distributers play a huge role in
this because they are able to influence consumers with their technical knowledge,
so they can recommend brands.
Tradesmen segment is a $420 million market and in this segment, Black & Decker
has only a 9% market share, with revenues 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 & 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 & 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
& Decker as the preferred option for power tools. The biggest problem for
Black & 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 & 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 & 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 & Decker
do not have any shares within the Membership Clubs, which has been very
profitable for their international competitor, Makita. Makita, one of the
leaders in the Tradesmen segment, has an 85% share in this segment, which shows
that this channel has been very successful for them.
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 mainly for the use of
the consumer. 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.