CASE ANALYSIS

MARKETING MANAGMENT

Group I
Mahesh Katta 1011250
Rahul Ranjit 1011271
Sameer Thombare 1011276
Shivaprasad Raja 1011285
Sourav 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

SWOT
OpportunitiesAnalysis
Threat
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

Price
Profitability
Improvement
Cost

Decision Point
Sub brand
B&D DeWalt
Share New Brand
Improvement New name
Repositioning B&D
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 3.5 4.81
Income

• 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
THANK YOU