Ivan Lopez

BUS109

Dr. Jerayr Haleblian

TA: Kyle Pham, Row 10

January 27, 2020

The Chain Saw Industry in 1974

Exhibit 1: Chain Saw Industry Strategic Group Map

High Mobility Barrier

Jonsereds
Husqvarna
Pioneer
Partner
Stihl
Homelite*
Target: Casual-Users McCulloch*
Remington*

Prices $
Echo
Skll
Roper Target: Frequent Users
Homelite* (Farmer&Professionals)
McCulloch*
Remington*

Low
Less powerful (2 cubic in.) Combustion engine Powerful (8 cubic in.)
Cubic inch displacement

The strategy’s undertaken by the smaller firms in Exhibit 1 are straightforward. These

firms are targeting either causal users or the more frequent users. By targeting these segments in

the chain saw industry, companies are essentially using a low-cost strategy or a differentiated

product strategy. These firm’s strategy is easily distinguishable, so our time will be mainly

allocated on the three companies with asterisks inside both spectrums; which include Homelite,

McCulloch, and Remington. Although the mobility barrier impedes the ability of firms to move

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from one segment on an industry to another, these company’s variety of product lines and

strategy have allowed them to penetrate both segments. Thirteen of the sixteen product lines

offered by Homelite were made for frequent users. Homelite was able to carve out room in the

low-cost strategy segment by two ways; authorized dealers in hardware stores and J.C. Penny

and through advertising. First time casual customers first choice of searching for a chain saw

would be in one of these two stores because of the convenience of them in this time period. In

addition, J.C. Penny offered credit lines which naturally attracted these casual buyers.

Furthermore, the advertising budget allowed for a massive expenditure in this department. The

total spent from 1969-1973 was $1,025.9 in thousands.

McCulloch Corporation was a pioneer in the U.S. chain saw industry, which naturally

lead the firm to have success in the farmer and professional segments as they were the only

customers targeted. However, with the recent acquisition by Black & Decker, the company

incorporated their strong financial controls, cost-conscious manufacturing orientation, and

product policy into McCulloch’s chain saw strategy. With the help of Boston Consulting Group

identifying the lowering of position in their professional segment, McCulloch introduced lighter,

less expensive chain saws because the casual-user market was expected to grow rapidly by 10%

every year. The approximately 8,000-10,000 established dealers easily allowed for a smooth

transition into this market.

Three out of the twelve products in Remington’s line from Exhibit 4 were in the casual-

user market. They penetrated the low-cost strategy by adopting an electric saw niche. The rise in

electricity lowered cost of saws to less than $50 and were available in low horsepower levels.

This niche allowed Remington to target casual buyers because of the low power requirements

and the construction market because of the flammability of the gasoline chain saw.

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