Task 1

Business Model
W.W. Grainger (Grainger) is the largest supplier in the Maintenance, Repair, and Operations
(MRO) segment. Their business model is business to business (B2B) but with a unique focus on
marketing directly to the consumer (B2C). The reason for this is that in the MRO sector, the
customer is usually not the purchaser of supplies. The contractor, customer, or service person
generally gives specified products required for purchase to the business’ procurement
department for purchase.

Strategy for Growth

Their strategy for growth is a multi-year expansion of local branches to increase market
presence in the United States. This includes larger branches and additional sales personnel to
increase the availability of products and service to customers in 25 major metropolitan
markets. They expect this will increase sales and contribute to their long-term goal of 7-10
percent growth (1).

Online Presence
Grainger has an online presence on the most popular social networks: Facebook, Twitter,
LinkedIn, YouTube, Instagram, and Google+. Their Global Rank on Alexa.com is in the top 5,000
sites worldwide, and almost breaking the top 1,000 in the United States (1,176 as of September
10th, 2016). The vast majority of their visitors come from the United States at 82%, followed by
China at only 2%. 21% of their visits come directly from search engines (2).

Customers
Grainger’s customers are 85% based in the United States. Their three top audience interests are
the Industrial Goods and Services, Construction and Maintenance, and Home Improvement
customer demographics. Grainger.com receives approximately 5 million total visits per month,
with each visitor spending about 4 minutes on the site, and an average of almost 5 pages per
visitor (3).
Grainger’s main customers are B2B - Their customer’s purchasing patterns trends are:
1. Customer is target of advertising and marketing (B2C)
2. Customer recommends products for purchase to firm’s procurement/provisioning
department
3. Business purchases directly from Grainger.com or over the phone (B2B) (4)
Maintenance, Repair, and Operation (MRO) industry
The Maintenance, Repair, and Operation (MRO) industry in North America has been increasing
focus on funneling customers through e-procurement platforms over traditional sales methods
(in-person, over the phone, local retail sales). Large distributors, such as Grainger, bring in as
much as $2 billion annually through e-procurement platforms alone. Paperless communication
is also a relatively new trend to the industry, saving 50-70% of time through the ordering
process (5). Amazon Supply is a new competitor in the MRO space, offering industrial
distribution on the B2B level. Grainger is a leader in the space with 6% market share, estimated
at $145 billion. Grainger may not have to worry about competition from Amazon Supply in the
short term as Grainger generates about 75% of its revenue from the large customer segment,
whereas Amazon Supply is likely focusing on smaller businesses and startup firms. However,
with a nearly 100% larger item catalog at 2.2 million items in 2014, Amazon Supply is positioned
to offer more value in terms of choice to Grainger’s customers (6).

With over 40 competitors in the industrial distributor / MRO space, Grainger was ranked 2nd by
MDM.com in 2015 in terms of revenue. HD Supply (Home Depot) and Amazon Supply are up-
and coming competitors (7). Only Wolseley Industrial Group outranks Grainger, with $11.9
billion in annual revenue. Both these top two firms are similar in terms of employee size, but
Wolseley has the edge on locations in the United States at 1,377 to Grainger’s 377 (8). This does
come with the added burden of overhead expenditures. Both businesses stand to hold their
positions in the coming years, however HD Supply at rank #3 is close behind with $8.9 billion in
revenue and around half the employees of Grainger and Wolseley, and half the locations of
Wolseley. With HD Supply’s lower overhead costs in payroll and commercial space / distribution
points, HD Supply appears to be on an upward path to overtaking Grainger. This is why Grainger
must realize the value of the digital marketing channels and importance of accurate, impactful
targeting. With a sound digital marketing strategy, Grainger can acquire new customers from
the competition as well as retain existing clients at a relatively low cost thanks to targeting and
retargeting.

Sources:
1. http://invest.grainger.com/phoenix.zhtml?c=76754&p=irol-newsArticle&ID=544519
2. http://www.alexa.com/siteinfo/grainger.com
3. https://www.similarweb.com/website/grainger.com
4. https://www.coursera.org/learn/digital-marketing-capstone/lecture/FYkhG/know-the-
clientgrainger
5.
http://reliabilityweb.com/articles/entry/recent_impacts_of_eprocurement_on_the_mro_indus
try_maintenance_repair
6. http://www.fool.com/investing/general/2014/06/11/can-this-leading-industrial-
distributorstop-the-b.aspx
7. http://www.mdm.com/2015-top-industrial-distributors
8. http://www.mdm.com/directories/2466-2015-top-40-industrial-distributors/listing/718

Word Count: 690

 Task 2

1. Bosch's brand with specific focus on the power tools category

Bosch Tools is a supplier of power tools to Grainger. Bosch sells products via Grainger and
other MROs/partners in their distribution network. Grainger is one of their main partners for
B2B sales. Bosch is one of the world’s leading providers for power tools, accessories, and
measuring tools with over $5 billion in sales in 2015. Bosch also owns the Skil and Dremel line
of products for the smaller contractor industry and the individual consumer at the retail level,
however Bosch’s name brand is built for and marketed to MRO industry professionals who
demand industry-leading performance and reliability (1).

2. Primary/Secondary customers
Bosch’s primary audience is the MRO professional industry, while their secondary audience is
the maintenance/service worker and contractors. This secondary audience is marketed to
directly as they are the ones who are using the tools, and they exert influence in the primary
audience (procurement departments or anyone else who does the actual purchasing). Their
customers are from the key professional trades of General Contractors, Carpenters, Concrete
and Masonry, Facilities Maintenance, Electricians, Plumbers, HVAC, Remodelers,
Woodworkers, Framers, and Landscapers. Bosch’s key product categories for these customers
are Rotary Hammers, Demolition Hammers, Grinders, Woodworking, and Cordless Tools (2).

3. Trends among primary/secondary customers

Trends I noticed among the secondary customers are that mostly all of the skilled trade
workers who use Bosch tools would be purchasing their own products, however the larger the
corporation they work for, the more likely they are to request purchase from a procurement
department (primary customer) on their behalf, ultimately always making the purchasing
decision regardless of if they are the primary or secondary customer. Because of this unique
arrangement, it is wise of Grainger to direct their digital marketing efforts directly to the
consumer rather than the business, as the skilled workers are the ones researching the tools
that best suit their needs.

4. Existing perceptions of the Bosch power tools

Existing perceptions of Bosch power tools is that they were once of high quality made in
Germany, Switzerland, or the United States and worth a premium cost, however in recent
years production has been outsourced to cheaper Asian plants and quality has slipped slightly,
but they are still industry leaders for small to large professionals alike (3).

5. SWOT Analysis
Strengths
- Innovative capabilities
- Pace of innovation is faster than
competitors
- High quality products
- Diversified portfolio
Weaknesses
- Slow response to market demand
- Huge debt
- Extensive process oriented
- Employee productivity
 Opportunities Threats
- Increased demand for quality - High competition – new competitors
products - Low sales due to high pricing
- New technologies
- Renewable energy sector

6. Assumptions regarding overlaps between Bosch and Bosch Power Tools brand image
Both brands were synonymous with each other, only to find that Bosch as the parent company
has an umbrella of retail tool brands such as Skil, Skilsaw, Dremel, RotoZip and of course the
professional line bearing the proud name, Bosch Power Tools; all of which many people have
heard of through retail home improvement retailers. I was also surprised to find the Bosch
parent company also owns and produces the lesser known brands such as Vermont American,
Hawera, Sia, Freud, Avanti, CST/berger, and Rolatape; which are likely niche products for very
specific industry use (2). Coming away from this research project, I am now aware of the
hierarchy of quality in these various brands, and the industries they are marketed towards.
The overall goal of the capstone project to recommend a digital marketing strategy for
Grainger to target the customer directly and increase Bosch Power Tools sales by 10% is much
clearer to me now as the MRO businesses and firms most likely to pay the premium for these
top of the line tools are using procurement departments, so the customer becomes an active
influencer in their organization’s purchasing decisions.

7. Bosch's Power Tools online presence

Bosch’s power tools online presence includes the top social media platforms of LinkedIn,
Facebook, Twitter, YouTube, and Instagram; similar to the online social media presence of
Grainger (4). Bosch has active customer service engagement on these platforms, as well as
instructional videos on YouTube; the second largest search engine behind Google. This is a
valuable channel as customers are actively searching for video reviews and demonstration
content related to the tools they need to purchase

Sources:
1.
http://www.bosch.us/en/us/our_company_1/business_sectors_and_divisions_1/power_tools
_1 /power-tools.html
2. https://d18ky98rnyall9.cloudfront.net
3. http://www.answers.com/Q/Where_are_bosch_power_tools_made
4. https://www.google.com/search?q=bosch+power+tools&ie=utf-8&oe=utf-8#q=bosch

Word Count: 734