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Black & Decker (A)
Kevin Williams
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B&D Summary
Jan 1991 - #1 producer
$5B Revenue ~ 10% overall profitability
Strong brand identity
High quality products
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B & D Issue
Segment Size B&D Competition
Consumer $530M 45% No threat
Pro-Industrial $550M 20% Milwaukee=20%
Pro-Tradesman $420M 9% Makita = 50%(80% in C/L drills)
Why?
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B&D Analysis
Is it core product quality?
No, see Figure E
Lab and field tests show superior quality
Is it pricing?
No, B&D is 5% to 10% under others
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B&D Analysis
Is it distribution?
B&D has channels covered
Same amount of shelf space
Makitas reputation is ??
Is it promotion/branding?
Brand recognition is strong
Image with tradesmen is horrible
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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
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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.g. Lexus)
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B&D Harvest Strategy
Why? 9% share in segment, $0 profits, little risk
Dominant competitor (8:1)
Unrealistic goals: 2X share in 3 years andincrease Op Inc to 12%
Why not?
Big market and marketing mix is right Competitive openings
Withdrawal may hurt Industrial segment
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Sidebar: Brand vs. sub-brand
When is a new brand appropriate?
What about family/sub-brand?
Examples:Acura, Lexus
P&G, Tide, Lays, Sun Chips
Coca-Cola Why can Nike or GE serve pros and
amateurs with the same brand?
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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
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B&DDeWalt 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
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B&DCompetitive Response
Makita:
Weak on service
Channel is negative
High price
Milwaukee:
Smaller company
Small marketing budget
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B&DOverriding Issues
Cost/benefit? Huge risk.
Goals: 2X market share in 3 years
0% profitability to 12% for entire SBU!
Dominant competitor
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B&DYour decision?
And implementation plan?
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Brand Management
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Brand = Category Company
Find an open category
Give the idea a simple name: energybar, sports drink, PCs sold direct
Create a powerful brand image:PowerBar, Red Bull, Starbucks
Intense PR at launch
Heavy advertising after brand isestablished
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1 Brand for 1 Idea
H&R Block for tax prep
Dell for direct PCs
Polaroid for instant photographyKodak for color film
B&D for consumer
DeWALT for professional
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Brand Extension
Extension may = dilution.
What is the brand promise?
New idea (promise) = new brand.
Companies can be repositioned. Brandscannot.
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Ingredient Branding
Does the customer care?
Can we make him care?
How much of the value do we provide?
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B&DTheir decision
DeWALT!
Success!
40% share in 1994
Makitas share
dropped to < 30%
Sales of $350M
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B&DWhy did it work?
Did the researchunderstood theproblem from a customer standpoint.
Integrated marketing approach:
Product + warranty + service
Focused MarComm campaign
Sales/distribution (75 dedicated reps)
Price
Weak competitive response