Black And Decker
1. FINDINGS Black and Decker\'s DeWalt line has been so successful in the USA
that it is now the standard for both the Professional-Industrial and the

Professional-Tradesman market segments. Nolan Archibald, Chairman, President and

CEO of Black and Decker (B&D) saw the potential in 1994 to increase the
companies market share through worldwide sales of B&D products. While the
company had a definite presence in the European Consumer Power Tools market
segment, it lacked penetration in the Professional Power Tools segment. On the
other hand, in Japan, where there was a huge market for professional power
tools, B&D\'s market penetration was negligible compared to its competitors.

B&D\'s vision for DeWalt is to be the global "Value Power Tool"
provider of choice for every Professional Tradesperson and all worldwide

Industrial markets. Based on the facts, the product managers of the DeWalt line
have developed a global strategy based on the following conclusions: · DeWalt
is a highly successful product in the US market. B&D must leverage its brand
identity and marketing strategies employed in the US and also capitalize on
their established quality and pricing. · B&D must explore the formation of
strategic alliances with local distributors. Multiple and/or hybrid channels
must be used to reach customers quickly and as effectively as possible. ·

Through a global strategy, B&D can appeal to consumer homogeneity by
offering lower product costs while maintaining high product quality. The lower
product costs derived from the economies of scale will maximize customer value
exchange. · B&D must aggressively employ a hybrid push-pull communication
strategy to be successful in the two markets. This will enable B&D to get
the DeWalt name out to more customers in a diverse geography. · While Elu has
performed better than B&D Professional and B&D Proline product lines in
the European market, its lack-luster revenues compel B&D to replace the Elu
product line with the DeWalt line. · There exists cultural differences between
the US market and the European and Japanese markets. While the European market
is similar to that of the US, the Japanese market warrants a thorough study of
local conditions before entering it. The global strategy must consider factors
such as brand loyalty, product recognition, brand image and channel
intermediaries. · A direct presence in Europe and Japan is critical to

B&D\'s success. To effectively penetrate these markets, manufacturing and/or
assembly plants must be established locally. 2. SITUATION ANALYSIS i) US Market

In 1994 the DeWalt product line experienced worldwide sales which exceeded $350
million dollars. B&D\'s market share in the US comprised of 25% of the
professional industry, 40% of the professional tradesman industry, and 50% of
the consumer industry. B&D\'s marketing campaign in the US "Operation

Sudden Impact" was a great success leading to the reduction of Makita\'s
market share in the Professional-Tradesmen segment from over 50% to 30%. ii)

European Market The European market was 35% bigger than the US market. In 1994
the European power tools market was $2.5 billion. Of that $1.5 billion came from
the professional industrial and tradesman market, and $1.0 billion came from the
consumer tools market. The major competitors in the European power tool market
were Bosch, Makita, Hitachi and B&D. Bosch was considered "the standard
of excellence" in the European industry. Both Bosch and B&D held
approximately 30% of the consumer market, while in the professional market Bosch
held 30% and B&D held less than 10%(see Exhibit 1a and 1b for market
shares). In the professional power tools market, B&D offered three product
lines - Elu, B&D Professional and B&D Proline. Elu was a Swiss company
purchased by B&D in the early 1980\'s. Elu enjoyed brand recognition but
failed to reach a broad market. In the professional power tools segment, B&D
employed three distribution channels - specialty, traditional and modern
consumer. Consumer brands represent 70% of B&D\'s European power tool sales.

B&D was viewed as a highly "consumer-segment oriented" company in

Europe, similar to its situation prior to the introduction of the DeWalt line in
the US market. iii) Japanese Market Japan was the second largest in the
professional power tool market worldwide. Unlike the US and European markets,

Japan did not have a consumer power tool market. Two domestic producers -

Hitachi and Makita, dominated the industrial power tool market. They held the
majority of the market share at 40% and 35% respectively. Bosch held 10% of the
market share, and B&D held a slim 2% of the market (see Exhibit 1c).

Introducing the DeWalt product line in Japan poses a bigger challenge for

B&D than US and Europe. The DeWalt product line has never been sold in

Japan, there