The Black & Decker Corporation
Household Products Group: Brand Transition
Submitted By:
CABAYACRUZ, Jamie Bernadette C. CARPITANOS, Joyce Sophia R.
TAN, Krystal Joy D. TAN, Neil Matthew L. ZOZOBRADO, Bethle May M.
Submitted to: Mr. Francis Arroyo
Date:
The Black & Decker Corporation Household Products Group: Brand Transition Problem Statement
How can the Black & Decker brand name be conveyed in the most effective and efficient way to the GE small-appliance line while choosing the right kind of communications program that would facilitate the transfer?
Objective
The objective for theBlack & Decker Corporation is to strengthen the structure of the company, their product innovation line, communications, promotional programs and advertising for it to be prepared for future endeavors regarding their brand transition with the GE small-appliance line.
Brief Description of the Case
Black and Decker Corp. (B&D) acquired the Housewares Division of General Electric Co. (GE), combining the GE small-appliance product line with its own household product line. The Black and Decker Corporation, as the leading worldwide manufacturer of professional and consumer hand-held power tools, produced over 100 products in 21 factories around the world. Theywere confronting two problems in the business in the late 1970s. First, they had lower growth rate for the power tool market worldwide together with increasing foreign competition. Second, their management realized that the American housewares market presented a significant opportunity. In 1979, Black & Decker Corp. produced a new kind of product, which is the Dustbuster. It is a rechargeable hand-held vacuum cleaner. Women mostly purchased this type of product and it was ranged at 60%. It was a success and that prompted to launch their two new rechargeable product which are the Spotliter, a rechargeable flashlight, and Scrub Brusher, a rechargeable cordless scrubber. These three products have helped them in achieving a big amount of revenue. As the year goes by, their sales increased 30% annually between 1983 and 1985.
Their products were able to address the needs of consumers, especially in families. Their products were also able to help households because of its quality, user-friendliness, and effectiveness.
On the other hand, GE Housewares Divisions is Black &Decker’s largest competitor in the U.S. electric housewares or small-appliance market. Housewares Divisions sold almost 150 models of products in 14 categories covering food preparation, ovening, garment care, personal care, and home security. GA’s success resulted from continuing attention to product innovation, which is mainly the reason they were ranked first or second in market share.
These two big companies culminated in an agreement Black &Decker would acquire the GE Housewares Division and signed a three-year note. Black &Decker acquired seven plants in several countries – the United States, Mexico, Brazil, and Singapore. They also had five distribution centers, sixteen service centers, and sales and management team.
Black & Deckerregarding their product line and pricing, they participated in five more broad housewares categories after acquiring the GE division. The housewares market was mature and split. The growth depended on the rate of household formation and new product development. Each year, one-tenth of all small appliances were replaced and the timing of the replacement could be accelerated if they are able to convince the consumers to acquire their high-priced, higher-margin models of a particular appliance.
Some Black &Decker executives focused on the price premium of Black &Decker in some specific categories. They advocated o decrease their prices on some models or 1985. The percentage margin became higher of premium models such as the Spacemaker products. Nonetheless, despite Black &Decker’s share leadership position, competitive brands around the globe did not depend on B&D’s in setting their and this fact is agreed by all.
B&D’s price premium in the food preparation category was largely due to the premium-priced Spacemaker line of under-the-cabinet kitchen appliances.
Spacemakerline expanded their production by including a toaster oven, drop coffee maker, mixer, and electric knife. They were able to convince one customers or purchasers who were first timers. More important, current owners who were persuaded and convinced traded up with their products. GE’s regular or standard countertop version of the Spacemaker appliances lost share as GE’s competitors slashed or cut prices to maintain their sales volumes in countertop models. However, Spacemaker models were expected to gain sales in the five product categories in which they have competed and contested.
Sunbeam, Proctor-Silex, Hamilton Beach and Norelco were B&D’s competitors. These competitors don’t offer the same broad line but all of them are competing with B&D’s each product category. B&D have to compete with specialist competitors in each product line. B&D’s competitors saw that there is problem in term of strongest brand name in the houseware market and there is an opportunity for them to increase their market share. With these, some prices of existing models were reduced, price increase was not that often, promotional and merchandising allowances escalated. Manufacturers decided to introduce new products and decided to enter new product categories. Just like in the case of Norelco and West bend, it was said that they would launch a new line of irons. For the Sunbeam company it was announced that they’ve allocated a huge amount for national advertising, cooperative advertising and sales promotion. They also introduced two new aggressively and heavily advertised products which was introduced at premium price level. With the competitors that B&D’s considers, they also had to content with imitators of some of their products. Believing that the newly acquired product lines would divert B&D’s management and attention. B&D’s imitators doubled their effort to capture the market.
B&D’s was traditionally strong in hardware stores. In 1984, B&D accounts carried, on average, 30 B&D stockkeeping units (SKUs).Housewares and hardware buyers at B&D’s major accounts determined twice a year which models they would specify as “basics”. The selected models were carried in distribution for the next six months. There were some models that were not specified as basics that might be occasionally stocked but depends to temporary offers.
Areas of Consideration Strengths
Black & Decker has a strong distribution since then.
The company has a broad product range and retailer network.
The Black & Decker offered one of the broadest lines of any manufacturer competing in 17 products groups.
Black & Decker’s models were priced competitively within each price or feature segment but overall Black & Decker’s share tended to be stronger in the medium and upper rather than the lower prices ranges.
Weaknesses
Black and Decker is very vulnerable with their products because they make products that can easily be serviced.
The company’s products are generally priced lower.
Black and Decker’s products are easily found.
The company’s products are usually found with their competitors. They do not innovate and try to make their products more enticing.
Opportunities
The Black & Decker Corporation is the largest competitor in U.S Household market.
Further penetration of the housewares market could generate substantial sales and profits for the company.
Black & Decker is traditionally strong in hardware stores with regards to notably catalogue showrooms and mass merchandisers.
In the effort to uphold technological innovation and increase competitive environment, the electronics industries have a chance to explore E-Learning for their new employees.
Threats
Significant impediment to growth was Black & Decker’s limited access to housewares buyers in the major retail chains.
Consumers considered Black & Decker as suitable manufacturer of these products but were largely unaware that Black & Decker already made them.
Black and Decker have four principal competitors in the households segment namely Sunbeam, Proctor-Silex, Hamilton Beach, and Norelco.
The price premium in certain categories left the Black & Decker company vulnerable to lower-priced competition.
ACA 1: Name change across the entire product line
First alternative for the Black and Decker Company is to change the name across the entire product line as soon as possible to demonstrate. Communication program should also be facilitated, push & pull programs and media exposure should be considered.
Economical: This would cause the company to have huge expenses given the fact that they will have to immediately find a way to change its name or do the brand transition as soon as possible. Reopening a brand name immediately without having to take few considerations can cause drastic and unbearable outcomes.
Political: This does not violate any law otherwise stated by a given state or foreign country.
Psychological: This would be a bold move for the entire company and the people involved may have to undergo series of meeting or conferences for them to be fully aware of the risks that they will have to encounter. They should also be mindful of the pros and cons that they are about to come along upon the brand transition.
Social: For the community, people will have the tendency to be confused or puzzled with the immediate brand transition. Maybe they would have doubts in the products being produced from now on by the Black and Decker if they will not be properly informed by the transition that will happen.
This alternative suggests that Black and Decker should delay first the name transfer until the end of the three-year period. With these alternative, push & pull programs and media exposure should be implemented.
Economical: As we all know, brand transition would really be costly in the part of the Black and Decker Company. But given this alternative since they will be delaying, the company could prepare the necessary finances in order for them not to incur more losses in the whole run of the brand transition.
Political: This does not violate any law otherwise stated by a given state or foreign country.
Psychological: For the persons involved this would have a positive effect on them because they will be given sufficient time in order for them to brainstorm their ideas regarding the brand transition.
Social: This would have a positive effect in the community since they will be fully aware of the brand transition. Advertisements and promotions will be posted for them to be able to identify the Black and Decker Company products.
ACA 3: Gradual Transition
All the items in one or two product categories would be introduced under the name of Black and Decker name in successive six months periods.With these alternative, push & pull program and media exposure is also recommended.
Economical: This will be costly for the company since they will be dividing their finances into two: First six months and the second and last six months of brand transition. They would have to consider advertising and promoting their products
two times and their finances should also double to be able to compensate this alternative.
Political: This does not violate any law otherwise stated by a given state or foreign country.
Psychological: This will be a heavy task for the persons involved since they would have to consider two different brand transitions. They would have to plan out everything so they will have a smooth flow. But with great determination and teamwork coming from the employees of the company, this alternative can be pulled-off.
Social: Although this would be of good advantage for the buyers of the Black and Decker, this can also create confusion. Considering the fact that they have two brand transitions to do. The consumers should be fully aware of this so confusion will come in the picture.
ACA 4: Name change first on premium quality items
The name change on the first premium quality items in several product categories should be implemented to be followed later by the remaining lower-priced items in each product line.Push & pull program and media exposure should be considered as communication program in this alternative.
Economical: This will be costly for the company since they will be dividing their finances into two: First is for the premium products and the second and the last one will be on the low-priced ones. Meaning, they would have to do two brand transitions for this alternative. They would have to consider advertising and promoting their products two times and their finances should also double to be able to compensate this alternative.
Political: This does not violate any law otherwise stated by a given state or foreign country.
Psychological: This will be a heavy task for the persons involved since they would have to consider two different brand transitions. They would have to plan out everything so they will have a smooth flow. But with great determination and teamwork coming from the employees of the company, this alternative can be pulled-off.
Social: Although this would be of good advantage for the buyers of the Black and Decker, this can also create confusion. Considering the fact that they have two brand transitions to do. The consumers should be fully aware of this so confusion will come in the picture.
ACA5: Transition schedule should be linked to new product development
Transition schedule should be linked to new product development program. This program would implement name change in a product category only after the product line and packaging had been redesigned and/or when Black and Decker could offer a new product with enhanced features.Push & pull program and media exposure would facilitate the transfer.
Economical: This will be costly for the Black and Decker Company since they would have to innovate their products. With this, they have to devise new platforms and plans for the new products that would come along the brand transition. This will have a huge hold on the finances of the company since they would not only have the brand transition itself but also the opening of their new innovation of products.
Political: This does not violate any law otherwise stated by a given state or foreign country.
Psychological: This will be stressful on the part of the persons involved since they will not be only thinking on how to do the brand transition but also on how to create new innovations for the products to be presented to the public in line with the brand transitioning.
Social: This will have a positive effect on the community since new products under the Black and Decker Company will be presented. They will have a new outlook with the products given by the company because they are not coming from the acquisition of the previous companies.
Recommendation
The researchers of this study recommend to use the 2nd alternative
presented above. The push and pull marketing is a strategy in attracting the customers to your offered products and services. There are differences in the push marketing and pull marketing. Push marketing involves activities that take your products or services directly to the customers. This refers to many traditional mass marketing approaches. It also involves advertising and direct mailing to your customers. In push marketing, the emphasis in on you, mass advertising is implemented, it is spread demographically, and it is a point-in-time blast. Meanwhile, pull marketing has the same objectives with push marketing, but there are also differences. Accordingly, one of the objectives of pull marketing is attracting interest in products and services that leads to sales. Its goal is to use less time, fewer dollars or expenses, but should be resulting with greater impact. It aims to get your customers to seek out your products and services through an active and exploratory process. Basically, its goal is to influence and attract. Why is pulling power the most recommended by the researchers? Potential customers are difficult to reach, highly skeptical and you need to earn their trust. It focuses on how customer research and buy versus selling to them. The emphasis of pulling power or pull marketing is on them, the customers, and the entire market. This uses 1 to 1 targeting. Also, this gives importance to the continuous and
growing relationships to the customers. The company needs to build the trust to their customers, and they need to make sure that the customers will make the right decision in buying their products for them not to get the feeling of regret, and waste of money.
Action Plan
Activity/Plan ImplementingScheme MonitoringScheme ResponsiblePerson(s) TargetDate Budget/Resources Needed Change the name across the entire product line as soon as possible to demonstrate by
using the push & pull programs and media exposure kind of communication program. By conducting a meeting to discuss about
the push and pull programs and media exposure of the Black & Decker since it
will solely stand alone
after and brainstorm with all the persons responsible to make this activity/plan possible. -Legal requirement s needed -Signed Contracts -Kenneth Homa, B&D’s vice president of marketing -External Consultants - Executives of B&D corporation -Management Team of Housewares Division of General Electric Co. (GE) Within two weeksif possible for their brand name to be conveyed in the most effective and efficient way to the GE small-appliance line. This would be costlysince they will have to immediately find a way to do the brand transition as soon as possible taking few considerations
that would not cause drastic and unbearable
Activity/Plan ImplementingScheme MonitoringScheme ResponsiblePerson(s) TargetDate Budget/Resources Needed The Black &
Decker should delay the brand
transition until the end of the
three-year period by using
the push & pull programs and media exposure kind of communication programs. By trying to communicate with the people involved in making this alternative possible. -Signed Contract -Legal requirement s needed -Kenneth Homa, B&D’s vice president of marketing - Executives of B&D corporation - External Consultants -Management Team of Housewares Division of General Electric Co. (GE) Within one weekif possible for their brand name to be conveyed in the most effective and efficient way to the GE small-appliance line. This would really be costly almost millionsbut given this alternative since they will be delaying, the company could prepare the necessary finances in order for them
not to incur more losses in the whole run of
the brand transition.
Activity/Plan ImplementingScheme MonitoringScheme ResponsiblePerson(s) TargetDate Budget/Resources Needed Introduce to the
market all the items in one or two product categories under the name of Black and Decker in six successive months through push &
pull program and media exposure kind of communication By conducting a meeting with the persons involved to plan out everything so they will have a smooth flow. - Budget -Plan on how to introduce to the market all the items in one or two product categories -Legal requirement s -Signed contracts -Packaging and graphics team -Kenneth Homa, B&D’s vice president of marketing -Financial Department -Executives of B&D corporation - Research and Development department 2 weeks in planning everything and allot another week in analyzing how to influence people watching the ad. When advertising a product in television the cost depends on how long will the commercial be but 30 seconds
will be enough for B&D to advertise their product that will
cost around $200 to $1,500
if in local television station.
Activity/Plan ImplementingScheme MonitoringScheme ResponsiblePerson(s) Target Date Budget/Resources Needed Implement the brand transitioning on the premium quality items first to be followed by the remaining lower-priced items in each product line. By making some radical changes to whatever is needed to adjust for this
brand transition to happen and schedule a meeting for planning. -Legal requirement s -Plan on how to do this brand transition -Packaging and graphics - Senior Management Team -Financial Department -Kenneth Homa, B&D’s vice president of marketing - Executives of B&D corporation - External Consultants -Management Team of Housewares Division of General Electric Co. (GE) 1 month to implement this brand transitioning including the schedule meeting for ts operation to run smoothly since they have to place the customer benefit front and center at all times. There is no exact or accurate figures of the budget but this will be costly for the company since they will be
doing two brand transitions for this alternative. They would have
to consider advertising and promoting their products two times and this would result to another cash outflow. Activity/Plan Implementin g Scheme Monitoring Scheme Person(s)
Responsible Target Date
Budget/Resourc es Needed
Create a new product development program that is linked to the transition schedule through the push & pull program and media exposure kind of communication that would facilitate the transfer. By inventing new platforms and
plans for the new products that would come along the brand transition through scheduling of meetings with the persons responsible. -copy of the plan that they came up with during the meeting -new product development program -Financial Department -Kenneth Homa, B&D’s vice president of marketing - Executives of B&D corporation - External Consultants -Management Team of Housewares Division of General Electric Co. (GE) 2-3 weeks so they can make some changes already. This will be costly since they
would not only have the brand transition itself
but also the opening of their
new innovation of products.
Conclusion
In conclusion with the given discussion of the researchers’ recommendations, this alternative would extremely be an effective way of helping
the current situation of the company involved in this case. It may be costly, but if the strategies will be done efficiently and effectively, then surely, it will really make a great change in the company. -Inbound and outbound tactics must be aligned and coordinated. Lastly, the key is to earn to trust of the customers. To be able to achieve that, Black& Decker must add value in a clear, relevant, and helpful manner.
