Black and Decker Case Study Analysis

2047 Words Nov 15th, 2011 9 Pages
I. Background and Problem Identification
Black and Decker (B&D) was founded in 1910 by Duncan Black and Alonzo Decker. By 1917, B&D had world’s first patent in portable power drills. Since then, B&D has been the world’s largest producer of power tools and power tools accessories. The power tools market in 1990 in the US mainly comprised of three segments-Professional Industrial Tools (PI), Professional-Tradesmen (PT) Tools and Consumer tools. B&D was a market leader in America power tools industry worth $1.5 Billion, with a share of 30%. It was number one in PI and consumer segments with a share of 20% and 45% respectively. However, its share in the fastest growing market segment of Professional-Tradesmen Tools was only
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* Product Differentiation: It is evident from the case that B&D products in the professional segment were of good quality with 10 out of the 14 products in leadership category (Figure E). Therefore, the problem faced by B&D products in this segment is more of differentiation than of product quality. The consumer level products in black in color are not substantially differentiated from professional level products which were charcoal grey in color (Figure D). This lack of differentiation has adverse influence on the buying decision made by professional tradesmen as they take pride in their work which is more rigorous than “do it yourself” low quality consumer segment. Therefore, the professional tradesmen segment has disassociated itself with Black and Decker brand name despite good quality professional tools manufactured by B&D. * Distribution Channels: B&D’s penetration into the distribution channels is low as compared to its major competitor, Makita. * Pricing: The low prices charged in the P-T segment adds to the perception of low quality brand among the P-T segment. Also, B&D faces problem of low profit margins in this segment compared to others. III. SWOT Analysis
The following table shows strength, weaknesses, opportunities and threats that B&D has in the P-T segment. Strengths | Weakness | *Confirmed high product quality through lab tests
* High Awareness of B&D

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