Black & Decker Corporation Case

Black & Decker Corporation is an organization located in Towson, Maryland. They blueprint and trade in power tools and accessories, hardware and home improvement products, and technology based fastening systems (Wikipedia, 2011). For a long time, B&D brands magnetize great strength from the consumers and the Professional Industrial segments while its Professional-Tradesmen segment has been sour.

In this case, Black & Decker Corporation (B&D) is facing a major challenge in the power tools market. The industry is segmented into three categories; Consumer, Professional-Industrial, and Professional-Tradesmen, and while B&D holds the biggest market share in the Consumer segment, they are trailing far behind in the Professional-Tradesmen segment, with a meager 9% market share and its revenue about $35MM. Though this is a growing market segment, B&D is barely making any profits from it, and a new strategy is needed if they are to be competitive and gain market share.

Market research revealed that Black & Decker had excellent market awareness; almost 98% of consumers were familiar with the brand. In the Consumer segment, B&D held almost 50% of the market, and in the Professional-Industrial segment, B&D was perceived to have "high quality, differentiated products, and excellent service". In contrast, consumers in the Professional-Tradesmen segment perceived B&D tools to be of inferior quality compared to their competitors, even though field tests proved B&D tools are of comparable quality and durability. This discrepancy suggests that Black & Decker is facing a brand image/perception problem, rather than a quality/service problem. It is very interesting to see such a wide difference in the acceptance of the B&D product. Here are the reasons I believe explain the difference in share:

Perception of Quality - Makita and Milwauke have positioned themselves as a premium product in the profession power tool segment. B&D, as a result of its market leadership with 50% market share in consumer market segment, is considered a inferior brand to Makita and Milwauke as tradesman believe that the brand is more geared towards amateur than professional. The consumer and professional market segment are differentiated by skillset of the users of the tool - consumer segment is considered an amature segment requiring low performance tools whereas professional segment requires highest performance tools.

Pricing: A lower price is generally associated with the lower quality in consumer's mind. By pricing its product 5-10% lower, BD is sending a signal to the market that we are not the leaders in the market when it comes to quality. This message is rather not an issue with IS buyes given their sophistication and their know how of the product. It is clear that all the tests established that B&D has one of the hightest quality. BD scored both made it to the