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Thursday, 12 July 2012

How does Black & Decker uses market segmentation?

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Black & Decker revolutionized the power tool industry and established the modern power tool industry. The firm has long dominated the industry as the world’s leading producer and marketer of power tools and power tool accessories. No other manufacturer is close to matching Black & Decker’s global distribution capabilities in the do-it-yourself market.

Power tool manufacturers compete on such variables as price, quality, product design, product innovation, brand-name reputation, size and strength of retail dealer networks, and after-sale service.

Black & Decker first addressed the needs of customers has smaller, easier-to-use tools. Black & Decker has continuously worked to learn about its customers. At least three distinct markets are identified for the power tool business Do-It-Yourselfers, Serious Do-It-Yourselfers, and professional. The Do-It-Yourselfers category consist of primarily homeowners and hobbyist who wanted solid performing pro-like tools at reasonable prices. Black & Decker has regularly captured about 40% of this 1 billion dollar segment over the years.

Market share for the $.5 billion a year professional tools market has varied from 4.1% to 17.% since 17. These customers rely on their tools for a living and demand the highest level of quality. Black & Decker’s long dominance in the consumer market tinted their image in the professional market. Market research showed that while consumers considered Black & Decker durable tools, trade professionals perceived their tools strictly as consumer do-it-yourselfer tools.

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Many competitors in the industry targeted one market with a specific product line or used a differentiated marketing strategy targeting both products with separate and distinct product lines. Doing so helps strengthen the buyer’s overall identification of the firm with the product category�forming a quicker and more accurate brand image and develop greater brand loyalty.

Black & Decker’s DeWalt line successfully targeted the professional tools customers and provided a distinct product offering for the market.

The Quantum line was developed for more serious do-it-yourselfers who demanded a higher level of quality from their tools, but did not necessarily need the level of performance offered by the professional tools line.

The effort to reach these distinctly different markets involved developing different marketing strategies for each. This requires additional marketing research, forecasting, sales analysis, promotion planning and channel management. Resources must be properly allocated to provide sufficient support for each product line.

Black & Decker had also used geographic segmentation in its marketing strategy. The firm produced products with varying production specification for different countries. This resulted in higher production cost, shirt-runs and a more complex production operation. Under the leadership of Archibald, the production operation was streamlined and product specifications were standardized.



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