Black & Decker- New Sub Brand is Category NOT Company

8/12/2019 Black & Decker- New Sub Brand is Category NOT Company

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Black & Decker (A)

Kevin Williams


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B&D Summary

Jan 1991 - #1 producer

$5B Revenue ~ 10% overall profitability

Strong brand identity

High quality products


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B & D Issue

Segment Size B&D Competition

Consumer $530M 45% No threat

Pro-Industrial $550M 20% Milwaukee=20%

Pro-Tradesman $420M 9% Makita = 50%(80% in C/L drills)

Why?


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B&D Analysis

Is it core product quality?

No, see Figure E

Lab and field tests show superior quality

Is it pricing?

No, B&D is 5% to 10% under others


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B&D Analysis

Is it distribution?

B&D has channels covered

Same amount of shelf space

Makitas reputation is ??

Is it promotion/branding?

Brand recognition is strong

Image with tradesmen is horrible


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B&D Brand Image

Great in consumer and industrial

Negative in tradesman due to: Strength in consumer segment

Strength in household products

Competitors are specialty brands Color/Low price low quality

Unstated needs: image/status/style


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B&D Alternatives for Action

Harvest from Tradesman segment

Build share: Sub-brand strategy (B&D Piranha)

New brand strategy (DeWalt)

Really new brand strategy (e.g. Lexus)


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B&D Harvest Strategy

Why? 9% share in segment, $0 profits, little risk

Dominant competitor (8:1)

Unrealistic goals: 2X share in 3 years andincrease Op Inc to 12%

Why not?

Big market and marketing mix is right Competitive openings

Withdrawal may hurt Industrial segment


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Sidebar: Brand vs. sub-brand

When is a new brand appropriate?

What about family/sub-brand?

Examples:Acura, Lexus

P&G, Tide, Lays, Sun Chips

Coca-Cola Why can Nike or GE serve pros and

amateurs with the same brand?


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B&D Piranha Strategy

Why?

Continue to leverage B&D brand equity

Alonzo Decker

Has worked with other products

Why not?

Customers may read right through it

Cost


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B&DDeWalt Strategy

Why?

No consumer connotation

Good awareness to build from

Can reposition (re-price) entire line

Why not?

Brand previously de-emphasized

Alonzo Decker

Cost


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B&DCompetitive Response

Makita:

Weak on service

Channel is negative

High price

Milwaukee:

Smaller company

Small marketing budget


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B&DOverriding Issues

Cost/benefit? Huge risk.

Goals: 2X market share in 3 years

0% profitability to 12% for entire SBU!

Dominant competitor


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B&DYour decision?

And implementation plan?


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Brand Management


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Brand = Category Company

Find an open category

Give the idea a simple name: energybar, sports drink, PCs sold direct

Create a powerful brand image:PowerBar, Red Bull, Starbucks

Intense PR at launch

Heavy advertising after brand isestablished


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1 Brand for 1 Idea

H&R Block for tax prep

Dell for direct PCs

Polaroid for instant photographyKodak for color film

B&D for consumer

DeWALT for professional


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Brand Extension

Extension may = dilution.

What is the brand promise?

New idea (promise) = new brand.

Companies can be repositioned. Brandscannot.


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Ingredient Branding

Does the customer care?

Can we make him care?

How much of the value do we provide?


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B&DTheir decision

DeWALT!

Success!

40% share in 1994

Makitas share

dropped to < 30%

Sales of $350M


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B&DWhy did it work?

Did the researchunderstood theproblem from a customer standpoint.

Integrated marketing approach:

Product + warranty + service

Focused MarComm campaign

Sales/distribution (75 dedicated reps)

Price

Weak competitive response

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Black & Decker- New Sub Brand is Category NOT Company