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MGTA02H3 (143)


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Management (MGT)
Tarun Dewan

Introduction and Problem Definition The worlds largest producer BlackDecker of power tools power tool accessories electric lawn tools and residential security hardware started facing competition in the professional tradesmen segment of its industry Although BD was a market leader in the consumer and ProfessionalIndustrial segment with a 50 and 20 market share respectively the company only holds 9 of the ProfessionalTradesmen segment The issue throughout the case is that Joe Galli VP MarketingSales wants to increase BDs market share in the Tradesman segment The problem that the company is facing with aiming expansion in that segment is Branding professional audience perceive BD as a home use brand as it resembles the colour scheme used for consumer segmented products The perception problem exists since Tradesman segment looksat BD as a Consumer Brand with low quality and ruggedness This perception is further encouraged by its low priceThese issues need to be resolved in consideration with some of the critical issues that Joe Galli has discussed in the case this can happen by demarcating the consumertradesman segments and positioning BD as a high qualityrugged brand in the tradesman segment Alternatives 1 Harvest ProfessionalTradesmen ChannelsFocus on profitability rather than market share in the ProfessionalTradesmen segment This alternative will lead to a similar market share in the segment assuming the price elasticity of demand is extremely low Through this approach BD would be able to increase its price by 5 increasing sales from 35M to 3675M further increasing operating profits by 13M Although this idea might help in order to improve the companys image of being a cheap and low quality brand in the
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