case analysis - black & decker - group 1
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CASE ANALYSISMARKETING MANAGMENT
Group IMahesh Katta 1011250Rahul Ranjit 1011271Sameer Thombare 1011276Shivaprasad Raja 1011285Sourav Khurana 1011279
CASE HISTORY
•Power tools & Accessories•Electric lawn & garden tools•Residential security hardware
PROBLEM STATEMENT
•Market leader in Consumer segment 50%
•20% share in Professional-Industrial Segment
•ONLY 9% share in Professional-Tradesmen Segment High quality products at lower price No Profitability
Joe Galli (VP, Sales & Marketing) wants to increase B&D’s market share in Tradesman Segment
DISCUSSION AGENDA
•What is the cause of B & D’s share vs. Makita’s 50 %?
•How does the buying behaviour impact the situation?
•What is Makita’s competitive strategy?
•What role does Milwaukee play?
•Which action alternative should B & D pursue?
SITUATIONAL ANALYSIS: CUSTOMERS
Customer - Professional Workers• Need
– Reduce manual labour
• Want– Durability/Ruggedness– Efficiency/Throughput– Ease of use/Light Weight
• Demand– High Quality– Premium Brand perception– Pride of ownership
SITUATIONAL ANALYSIS: COMPETITION
•Japanese Brand ; 5% Premium over B & D
•Not present in Consumer Segment. No Channel protection.
•Rapid development in Home Centre mode of distribution; 40% of products
•Baseline options in all major categories -> preferred by workers
•Aggressively pursues & achieves within Professional Tradesman segment.
SITUATIONAL ANALYSIS: COMPETITION
•Market leader in Professional Industry Segment with B & D
•Only high end of the market; 10% premium over B & D
•Best image & Highest Brand perception in Segment
IMPLICATIONS :
•Best tool as far as tradesman are concerned
•Expensive for typical worker, Affordable only to Industry segment
SITUATIONAL ANALYSIS: COMPANY
•Expertise in producing high quality tools•Traditionally in consumer tools segment → ‘consumer brand’•Strong presence in professional industry segment•Strong brand awareness in professional tradesmen segment•Associated with low quality and low durability
SITUATIONAL ANALYSIS: COLLABORATORS
•Offers channel protection to an extent
•Unlike Makita, doesn’t distribute through membership clubs
•Low share in sales from two-step and home centre
•Two major distribution channels (65% market share)
PROBLEM DISCUSSION
Perception issue:
•B&D looked upon as ‘consumer brand’
•Perceived as low in quality and ruggedness
•Low price adds to this perception
PROBLEM DISCUSSION
Tackling the issue:
•Need to demarcate the consumer & tradesmen segments
•Position in tradesmen segment as ‘high quality & rugged’
•This will improve pride of ownership and may improve sales
•Need a marketing mix that addresses these issues
SWOT Analysis
Strength Weakness
Opportunities Threat
SWOT ANALYSIS
STRENGTHS
•High Product Quality - Confirmed by lab tests
• High awareness of power tools brand
•Better service perception than Makita
•Owner of DeWalt brand - having positive awareness rating
WEAKNESS
• B&D brand being associated with household brand
• B&D not attractive to professional tradesman
• Tradesman perceive it to be low quality brand
• Same colour as tools in consumer segment
OPPORTUNITY
• Fastest growing segment : tradesman @ 9%
• Retailers don’t approve of Makita’s distribution strategy
• Yellow colour not used by professional grade tools
THREATS
•Failure of yellow colour could brand it a “lemon”
•Failure of re-branding could affect other segments
OPTIONS AVAILABLE
Profitability Improvement
B & DShare
Improvement
Sub brand
New BrandDeWalt
New name
Repositioning B&D
Decision Point
Price
Cost
PROFITABILITY : PRICE & COST
• Market Share Same or less• Price Increase of 5% increases Op. Income to 4.8m
USD Millions Existing Price 5% Premium
Sales 35 36.75
COGS 22.75 22.75
Gross Profit 12.25 14
SG & A 8.75 9.19
Operating Income
3.5 4.81
• Difficult to reduce cost• Not sustainable. Not optimum
MARKET SHARE : SUB-BRANDING
• Association with Parent brand– May not be effective
• Need to build the sub-brand– Expensive option
MARKET SHARE : RE-BRANDING B&D
• Reposition B&D as a supplier of “High Quality Industrial Grade Tools” from the current image as a “Consumer Brand”
• Positioning the brand at high level will help it to cater to lower levels as well
• However, risky & expensive
MARKET SHARE : NEW BRAND
• Free from the perception issue• However, building a new brand is costly as awareness
of the brand needs to be built• Hence use deWalt brand– High awareness in the target segment– 63% tradesmen consider deWalt ‘one of the best’
compared to 44% for B&D– 58% purchase interest in deWalt ‘serviced and distributed’
by B&D
SOLUTION: MARKETING MIX
• Product– Maintain the same quality– Change the color– Offer under the brand name ‘deWalt’ serviced and
distributed by B&D• Price– Currently lower than competition– May consider rising it to Makita’s price or more
SOLUTION: MARKETING MIX
• Promotion– Promote ‘deWalt’ as ‘high quality and rugged
range of tools ‘ for professional tradesmen– Partner with channel partners to push the sales
• Place– May follow Makita’s strategy of using all
distribution channels– Or, can focus exclusively Home depots and Two
Steps
T H A N K Y O U
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