Black and Decker Case Analysis

Issue Statement

The key issue of the case is Black & Decker’s performance in the Professional-Tradesmen customer segment. These are customers who work as freelance carpenters and purchase their own equipment. In this segment, Black & Decker performs poorly in terms of sales, brand perception, and market share. Consumers in this segment tend to view Black & Decker as being of poor quality, despite the products performing well in quality tests. Black & Decker is being heavily outperformed by competitors—mainly Makita who holds 50% of market share in this segment. This is a particularly pernicious issue because the Professional-Tradesmen customer segment is currently the fastest growing segment, meaning that Black & Decker could miss out on huge profits if it does not capitalize on this growth.

Situation Analysis

Company

Black & Decker was created in 1910 by Duncan Black and Alonzo Decker and in 1917 received the patent for the world’s first portable power drill with a pistol grip and trigger switch. It eventually became the world’s largest producer of power tools, power tool accessories, residential security hardware, and electric lawn and garden tools. In 1979, it eventually shifted to creating household products as well, with the creation of the successful “Dustbuster” handheld vacuum. The company’s revenues have steadily increased but so have its long-term debts, which represent 84% of total capital. The five largest product groups are power tools and accessories (29%), household products (15%), information systems and services (11%), outdoor products (9%), and security hardware (9%). The company’s main strengths are its high quality products and high brand awareness. Black & Decker’s brand strength ranks #7 in the U.S. and #19 in Europe. Several Black & Decker household products hold over 50% market share. It also holds the #1 position in the consumer power tools segment. The main weaknesses are the lack of market share and negative brand image with professional tradesmen customer segment.

Customer

Black & Decker has five main product groups, however this case analysis will focus on the customers within the power tools segment. The power tools market in the United States is a $1.5 billion market. In this product group, there are three main customer segments – household consumers, professional-tradesmen, and professional-industrial.

Household Consumers

Household consumers, making up $530 million of the market, shop at stores like Wal-Mart, Kmart, and other hardware stores for products to use at home. These customers tend to buy generic tools for occasional use around the house. This is the only customer segment focused on individual use, while the other two are focused on professional