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