Introduction
Black & Decker (B&D) is a power-tools manufacturing company that deals with tradesmen, industrial and consumer power tools. Duncan Black and Alonzo Decker founded the company in 1910 as a machine shop situated in Towson, Maryland.
The company did not have an effective marketing strategy for its products. Therefore, it lost a sizeable market share to its competition. By 1991, the company was enjoying 9% of the market share in consumer power tools while the largest market share went to Makita.
The marketing department at Black & Decker worked tirelessly to rectify the situation. However, the management team resisted the implementation of its proposals terming it as infeasible. Joseph Galli, the vice president of the marketing department, championed the effort to rescue the company.
He came up with proposals, though he feared that the management would refuse to implement them. Eventually, he ended up altering the proposals to suit the demands of the management.
Problem identification
The company lost a significant market share of professional power tools to Makita and Milwaukee. Customers’ views concerning B&D’s product were discouraging. Consequently, the company required reorganizing its production and marketing strategy to address these challenges.
Majority of the tradesmen thought that the company manufactured consumer products rather than power tools. In the end, they ended up not using the company’s products as expected.
There were debates in the construction sites concerning failure of B&D’s products while Makita’s products did well in the same job. Both the company and consumers contributed to the misunderstanding of B&D’s products witnessed in the market. The company failed to sensitize constructors on the uses of its products in different jobs. On the other hand, customers used the products to carryout the wrong jobs.
Black & Decker used a poor pricing mechanism for its products relative to the mechanisms used by both Milwaukee and Makita. Both competitors priced their products on premium that averaged between 10 percent and 5 percent. However, Makita did not have a good consumer brands reputation. Majority of the consumers referred to it as dictatorial and arrogant for not having channel protection.
Market Analysis
Internal Analysis
Various internal factors affect the company’s marketing strategy. The main one being willingness to spearhead the company to achieve competitive advantage. Galli felt a need to carryout a copycat strategy as an endeavor to enhance the performance of tradesmen products. However, he faced stiff resistance from internal players. Many players perceived the strategy as unethical and costly.
Nevertheless, the company was ready to adopt any strategy that would help its products to achieve competitive advantage in the market. Research and development department offered considerable assistance in carrying out market research concerning quality of other substitutes. The research was expensive; however, the company was willing to incur the cost for the sake of increasing its market share.
Marketing department is extremely crucial for the success of a business. Therefore, organizations ought to equip their departments with requisite resources. Galli had an idea of developing a new brand name for professional-tradesmen segment. However, he feared that majority of the stakeholders would not welcome the idea.
This indicated a failure of the company to respect the marketing department by giving it freedom to share ideas on what might help to enhance product performance.
Marketing department needs to make efforts in trying to convince the stakeholders about the importance of changing consumer perception and attitudes towards the company and its brands. Such efforts would help in changing the brand image, which plays a vital role in determining the size of the company’s market share.
Consumer Analysis
Galli noticed that consumers had a negative perception towards B&D’s products. The perception emanated from the abuse of company’s brands by professionals. They used consumer brands rather than industrial tools in industrial jobs. Black & Decker’s products were of high quality, and research proved that they were of better quality compared to those of competitors.
The company had put in place channels for consumer protection besides producing high quality products. On the other hand, in spite of Makita enjoying the largest market share, it did not establish consumer protection measures.
The pricing mechanism, which B&D applied, accelerated consumers’ negative perception towards its brands. Consumers viewed the company as focused on making profit at the expense of quality of its products. Accordingly, Galli believed that a change in pricing mechanism would go a long way towards the improvement of the B&D’s performance in the consumer power product’s market.
Results of consumer analysis found that buyers lacked willingness to purchase B&D’s products. In addition, there was negative attitude towards the company’s products, which called for a need to change the brand name as an effort to save the company’s poor market perception.
Hence, it could have been prudent for the company to adopt a new brand name that could assist in transformation of the consumers’ negative perception about the company.
Galli noticed that the company’s brand name had a poor reputation, which contributed to the decrease of the market share. Therefore, the company needed to develop strategies that would help to reverse the negative perception that consumers had about its products.
However, he had two principal ideas in mind, which were, coming up with a new brand name and developing a sub-brand name that would dominate in some products. However, his brilliant ideas were prone to serious resistance from the stakeholders, who in this case were the company’s managers and employees.
Environmental Analysis
Black &Decker needed to consider two forms of environment that affected its marketing strategies. They included internal and external business environments. To begin with, internal environment comprised of all factors that originated from within the company. They included management, control, production process and business policies.
The company’s internal environment did not give the marketing department full support that it needed to transform the poor performance of business products. Under such conditions, management ought to cooperate with the marketing department, which has sole responsibility of changing customers’ perception towards the company’s product. Hence, Galli required convincing the managers on the importance of going by his ideas.
External business environment is made up of all issues that a business has no power over them. It comprises of competitors, customers, culture and beliefs, and geographical factors. The business only requires coming up with strategies to cope with these factors.
B&D operated under stiff competition, especially from Makita and Milwaukee. Over the years, consumers had developed negative attitudes and beliefs towards the company’s products, which also contributed immensely to the poor performance of its products in the market.
SWOT Analysis
SWOT is an abbreviation for strengths, weaknesses, opportunities, and threats. Business organizations perform SWOT analysis to improve competitiveness by comparing their SWOTs to those of the strongest competitors. The strongest competitor, in the case of B&D is Makita, which holds the largest market share in the tradesmen tool business.
Makita has various sources of business strength. The company is a multinational whose origin is in Japan. It has various sources of capital, being a multinational company. With this, it has the ability to increase its capital strength even when business is not performing well in the U.S market.
In addition, the company concentrated more on tradesmen business than on any other businesses in the same industry. Focusing on a single business helped the company to understand the needs of the targeted customers.
Makita did not use distribution methods that were common to other businesses. It used a unique method of distribution that eliminated the intermediaries, such as the distributors. The method was effective for the company since it helped it to get direct communication with consumers. However, consumers complained of their insecurity, whereby the company was not there to address their issues whenever the tools failed.
On the other hand, B&D had its strengths. The company was a multinational with numerous subsidiaries in Europe. Hence, it had adequate capital just like Makita. It also dealt with numerous forms of businesses in the industry, which helped in risk diversification and hence, easing risk management. Unfortunately, it did not concentrate on a single line of products, as it was the case with Makita.
Instead, it drew its attention to a number of products. This led to B&D losing market share in areas that competitors gave much attention to quality of one product. Ironically, failure to concentrate on the same product was a significant strength for B&D.
Considering weaknesses, Makita’s products were of poor quality compared to those of Black &Decker. In addition, it concentrated on a single product line and ignored others, which led to decrease of its profit margin. This indicates that the company had the ability to lead in the industry but failed after concentrating on a single production line.
Makita did not give job opportunities to the distributors because it marketed its products. Distributors are essential for the business, as they understand the market better than the producer does.
In addition, they increase the market base of the company’s products by reaching to consumers that the producer could reach. This indicates that the company had the potential to reach a bigger market, but failed after declining to work with intermediaries.
B&D did a terrible business mistake by failing to sensitize the target customers on how to use its products. The company ought to have acted swiftly after realizing that consumers were using its products for the wrong jobs. It had the ability to come up with products for industrial jobs, and to increase its market share hence, retaining a good reputation in the market.
Makita had an opportunity to dominate the entire industry after B&D became incapacitated. The company ought to have produced high quality products to draw all customers close.
However, it failed to dominate the industry after opting to rely heavily on tradesmen tool, and hence, neglecting other products that could have done well in the industry. B&D also had an opportunity to dominate the market because its products were of high quality. However, it could not because it failed to correct the consumers’ mistake at the outset.
Competition is the worst threat that a business faces during its operations. Both companies were afraid of each other as each had a potential to dominate the market. The problem with the two companies lied in product development and market strategies.
Makita needed to include distributors in its marketing strategy and to improve the quality of its products to dominate the market. On the other hand, B&D required changing the consumers’ perception by sensitizing them on the uses of its products. Moreover, the company required changing the brand names.
Evaluation of 4P’s
4P’s is an abbreviation for price, product, place, and promotion. It is an essential element of the business marketing strategy. To begin with, price of a product determines its demand in the market. Moreover, it enhances the competitiveness of the business. B&D needed to set the prices of its products at a level that consumers could afford them.
Furthermore, organizational product ought to be of high standards and to satisfy the needs of the consumers. Therefore, B&D required focusing on customers needs and ensuring that its products meet those needs. Place is a crucial element of marketing strategy.
The company ought to have identified a location where customers could acquire its products without struggle. Finally, promotion is crucial in increasing the market share. Therefore, B&D could have used it to increase the market share of its products.
Alternative Solutions
The most visible alternative solution to B&D’s problem was change of the management strategies. The existing strategies seemed to pose resistance to the effectiveness of the marketing department.
This posed a risk of business continuing losing the market share of its products under the watch of the stakeholders. Implementation of Galli’s ideas needed a transformation in the management structure. The existing management was a stabling block to the success of the company’s brand name.
The marketing department of B&D has no powers. Therefore, marketers fear opposition from other departments whenever they propose novel marketing strategies. It would be prudent to give it powers over other departments to ensure its effectiveness. In addition, the company ought to hire marketing experts that would contribute to the establishment of novel management strategies aimed at rescuing the company.
Recommendation
Black &Decker had various solutions to choose from in an effort to increase its market share. The company could drop its brand name to reduce the risk of further loss in the market share.
On the other hand, it could educate its consumers on how to make good use of its products to avoid the risk of customers using the tools in the wrong jobs out of ignorance. Therefore, the company ought to have put the interests of its consumers before others to retain a considerable market share.
In addition, the company’s management ought to focus on business’ interests and not the brand names. B&D was at risk of losing market share while the management focused on the brand name.
It is prudent for the management to consider changing the brand name whenever the business is at a risk that demands its removal. Brand name is a key factor in product promotion in the market. Hence, removal of a flawed brand name is good for the benefit of the company in regaining the market share.