Black & Decker (A

)

Kevin Williams

B&D Summary

Jan 1991 - #1 producer $5B Revenue ~ 10% overall profitability Strong brand identity High quality products

B & D Issue Segment Consumer Pro-Industrial Pro-Tradesman Size B&D $530M 45% Competition No threat $550M 20% Milwaukee=20% $420M 9% Makita = 50% (80% in C/L drills) Why? .

B&D is 5% to 10% under others . see Figure E  Lab and field tests show superior quality   Is it pricing?  No.B&D Analysis  Is it core product quality? No.

B&D Analysis  Is it distribution? B&D has channels covered  Same amount of shelf space  Makita’s reputation is ??   Is it promotion/branding? Brand recognition is strong  Image with tradesmen is horrible  .

B&D Brand Image  Great in consumer and industrial Negative in tradesman due to: Strength in consumer segment  Strength in household products  Competitors are specialty brands  Color/Low price → low quality  Unstated needs: image/status/style   .

g.B&D Alternatives for Action  Harvest from Tradesman segment Build share: Sub-brand strategy (B&D Piranha)  New brand strategy (DeWalt)  Really new brand strategy (e. Lexus)   .

$0 profits. little risk  Dominant competitor (8:1)  Unrealistic goals: 2X share in 3 years and increase Op Inc to 12%   Why not? Big market and marketing mix is ―right‖  Competitive openings  Withdrawal may hurt Industrial segment  .B&D Harvest Strategy  Why? 9% share in segment.

sub-brand When is a new brand appropriate?  What about family/sub-brand?  Examples:  Acura. Tide. Lexus  P&G. Lays. Sun Chips  Coca-Cola   Why can Nike or GE serve pro’s and amateurs with the same brand? .Sidebar: Brand vs.

B&D Piranha Strategy  Why? Continue to leverage B&D brand equity  Alonzo Decker  Has worked with other products   Why not? Customers may ―read‖ right through it  Cost  .

B&D – DeWalt Strategy  Why? No consumer connotation  Good awareness to build from  Can reposition (re-price) entire line   Why not? Brand previously de-emphasized  Alonzo Decker  Cost  .

B&D – Competitive Response  Makita: Weak on service  Channel is negative  High price   Milwaukee: Smaller company  Small marketing budget  .

Goals: 2X market share in 3 years  0% profitability to 12% for entire SBU!    Dominant competitor .B&D – Overriding Issues  Cost/benefit? Huge risk.

B&D – Your decision? And implementation plan? .

Brand Management .

Brand = Category ≠ Company Find an open category  Give the idea a simple name: energy bar. PC’s sold direct  Create a powerful brand image: PowerBar. Starbucks  Intense PR at launch  Heavy advertising after brand is established  . Red Bull. sports drink.

1 Brand for 1 Idea  H&R Block for tax prep  Dell for direct PC’s  Polaroid for instant photography  Kodak for color film  B&D for consumer  DeWALT for professional .

   . Brands cannot. What is the brand promise? New idea (promise) = new brand.Brand Extension  Extension may = dilution. Companies can be repositioned.

Ingredient Branding  Does the customer care? Can we make him care? How much of the value do we provide?   .

B&D – Their decision   DeWALT! Success!    40% share in 1994 Makita’s share dropped to < 30% Sales of $350M .

B&D – Why did it work? Did the research—understood the problem from a customer standpoint.  Integrated marketing approach:  Product + warranty + service  Focused MarComm campaign  Sales/distribution (75 dedicated reps)  Price   Weak competitive response .