Case Analysis

On
Black & Decker Corp : Household Products Group, Brand Transition

Under the Guidance of

Prof. Sanket Vatavwala

in partial fulfilment of requirement for the award of the degree of

Master of Business Administration

INDIAN INSTITUTE OF MANAGEMENT, AMRITSAR

SUBMITTED BY
Group 5
MBA/07/009 AMAN SHAH
MBA/07/029 MAYURESH SONI
MBA/07/113 VAISHAK MANDAKATHINGAL SALENBABU
MBA/07/134 GUNJANPREET KAUR
MBA/07/174 TAYADE ASHUTOSH SANJEEV
MBA/07/212 MANIK MITTAL

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 Introduction

1. Black & Decker 3 Innovative houseware products till 1984

 Dustbuster
 Spotliter
 Scrub Brusher
2. B & D acquires GE Housewares Division to gain access to house ware
buyers & resolve to develop a product line up that gave them an access to
wide spectrum of houseware products.
3. B & D could use GE name for 3 years following the acquisition.
4. Competitors soon gamed themselves up with aggressive marketing budget &
new product line ups.
Problem Statement

 Effective way for a brand transition

 IMC for this transition

Suggestions made by different group of executives

1. The name change should be done throughout the product lines as early as
possible to demonstrate B&D’s commitment to the trade
2. Delay the name transfer to the max limit possible as they are sceptical
about the pulling power of B&D brand
3. Gradual transition to be done starting from 1 or 2 product categories at an
interval of six months
4. First change the names of premium priced products followed by the other
product categories
5. Transition should be linked to new product development i.e., when the
B&D team comes up with some improvements or upgrades in product or
packaging
Evaluation of these choices
1. Gradual Change
Advantages Disadvantages
 It makes consumer easier to shift  GE brand loyalty &
reduces psychological barrier of change. consumer association
 It helps in better understanding of with GE continues.
market
 It makes it easy for dealers
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2. Transition of premium products first.
Advantages
 B&D brand equity can be
leveraged easily
 Premium can be charged from
customers
Disadvantages
 Loss of revenue could happen
due to failed transition.
 Possibility of consumer
disconnect with association with
price.

3. Transition linked with new product development

 B&D should first offer new items for various categories before putting
their name on a similar product category that was previously associated
with the GE Brand.
 This will enable a smoother transition by aligning the B&D Brand with
the innovation image of the GE Brand.
 Develop a fresh brand for being innovative, similar to GE Perhaps
possibly superior to GE

SWOT ANALYSIS

Strength:
• In 17 product groups, Black &
Decker has one of the widest product
portfolios of any manufacturer.
• Each pricing or feature segment for
the cars had prices that were
competitive.
• Widespread dissemination
• wide selection of products and store
network.
Weakness:
• Black and Decker's goods are
widely accessible.
• The company's goods are typically
available from rivals. They don't
innovate or work to improve the
allure of their items.
• create products that are simple to
maintain
• the company's products are often
less expensive.

Opportunities:
• the biggest rival in the American
household market.
• Black & Decker has a long history
of dominance in hardware stores,
particularly mass merchandisers and
catalogue showrooms.
Threats:
• Black & Decker's restricted access
to buyers of home goods in the main
retail chains was a significant barrier
to growth.
• Customers thought Black & Decker
was an appropriate manufacturer of

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 these

Issues in industry and innovation

Competition: 

 Consumer behaviour is mostly changing in the housewares sector, which

includes food preparation, beverage makers such as coffee makers, ovens,
garment care, and personal care. Increasing foreground competition has
caused the slowdown of the power tool brand growth.
 The houseware industry is mature, and sales and revenue primarily
depend on the number of homes and product innovation growth.
 Numerous competitors deal in all product categories, such as coffee
makers, ovens, garment care, and personal care. Still, there is fierce
competition from businesses specializing in just one area, such as coffee
makers, ovens, garment care, or personal care. Present your product
concept to the client.

Consumer behaviour:

 The houseware industry is a mature market, and sales and revenue

primarily depend on the growth in the number of households and product
innovation.
 The category is something where once the customer buys the product,
they are not willing to buy another or replace the current product very
soon.
 Price is more important to consumers than brand or feature preference.

Distribution:

 This category uses up a lot of shelf space in retail stores since the items
are bulky and big, and the margins for retailers aren't very impressive.
 The majority of sales for this category occur during promotional offers or
clearance sales, further reducing the margins for retailers which further
enhance the challenge of availability of products to the consumers

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Innovation Challenges:

 Generally, the decision to buy or not to purchase the product is based on

the price rather than the brand awareness or product features, or the extra
benefits the customer is getting by using that particular product from that
specific brand which imposes a big challenge of innovation.
 High friction from customers to try new innovative products like
dishwasher drawers, which are innovative products because they have
been doing the same work manually for so long and are willing to do it in
the future also, so the sales were only limited to essential, small products
like coffee machines, blender, iron, etc.

Recommendations:
 After evaluating the options available to us, we recommend B&D to
go ahead with the third option. There will be two sides viz. Customer
side and the Dealers side. Let’s first consider the customer side. A
gradual transition will allow the consumers ample amount of time to
adopt to the transitional phase and change their consuming patterns
accordingly. Due to a small incremental transition, it will be easier to
gauge the overall market response as to how the people are reacting to
the change. If the reaction is adverse, we can always fall back and
relaunch the entire segment with new brand else we can continue with
the current predicament and introduce our product offerings gradually.
 Similarly, from the dealer’s side advantage associated with the gradual
transition is that the dealers will be more willing to partner the change.
If we suddenly make the changes, we might face some sceptical from
the dealers side.
 The only downfall to the strategy might be regarding the people who
associate with GE and its innovative product may continue despite our
continuous efforts, but with gradual integration people will learn to
adopt to the changes.
Industry Analysis:

The market for household goods had reached its maturity and was highly
competitive. The rate of new household formation and the rate of new product
development were the primary factors that determined the growth of the

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industry. Each year, approximately one tenth of all the small appliances that
were being used were replaced. If manufacturers can convince consumers to
trade up to more highly featured, higher priced, and higher margin models of a
particular appliance, then the timing of replacement purchases could be
accelerated. This would increase the profit margins for the manufacturers.
The total value of the homewares market was estimated to be $1,395.73 billion
in 2020, and it is anticipated that it will reach $2,028.68 billion by 2028,
registering a CAGR of 5.20% from 2021 to 2028.
The term "homewares" refers to a variety of goods that can be easily moved or
replaced, such as a bed, sofa, air conditioner, refrigerator, and microwave oven,
in addition to other products that are used for home decoration. Home goods
include things like furniture and home appliances, as well as things like
kitchenware, lighting systems, and other bathroom accessories. The dynamic
shifts in lifestyle, as well as the tremendous rise in the number of women in the
workforce, have contributed to an increase in the average income of households
and an improvement in the quality of life. These characteristics are having a
significant impact on the expansion of the homewares market. Because the
husband and wife both have careers that keep them busy, the family has less
time to devote to completing household responsibilities and to taking care of
themselves. As a result, more and more people are investing in high-tech and
innovative home appliances to improve their quality of life at home. The United
Nations reports that a significant proportion of the earth's landmass is presently
undergoing the process of urbanisation. At the present time, urban areas are
home to approximately 54.8% of the world's population. The rise in
urbanisation has caused an increase in the demand for residential homes and
apartments, which is expected to result in an increase in the number of
households. This, in turn, creates a massive demand for a variety of homewares
products, such as home appliances, furniture, lighting, soft furnishing, and home
decoration products.
The spread of the COVID-19 pandemic has had a detrimental impact on the
expansion of the homewares market. The disruption in the distribution channel,
which has also had a negative impact on the activities of exporting and
importing goods, has led to a significant drop in sales of household goods. In
addition, the pandemic has had the greatest effect on the manufacturing
activities, which has had a negative impact on the expansion of the homewares
market.

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According to the analysis of the market for homewares, the market can be
broken down into three different segments: region, distribution channel, and
type. The market can be broken down into numerous sub-sectors, such as home
decoration, furniture, kitchenware, home appliances, soft furnishings, lighting,
bathroom accessories, and others, based on the products that are sold on it. It is
segmented into Homewares stores, franchised stores, Department stores, Online
Stores, and Specialty Stores according to the distribution channel. North
America, which includes the United States of America, Canada, and Mexico;
Europe, which includes Germany, France, the United Kingdom, Italy, Spain,
Russia, and the rest of Europe; Asia-Pacific, which includes China, Japan, India,
Australia, South Korea, and the rest of Asia-Pacific; and Latin America, the
Caribbean, and Central America, which includes LAMEA (Latin America, The
Middle East and Africa)

On the basis of type, the home appliance segment held the largest share of the
homewares market in 2020, and it is anticipated that it will maintain its share
throughout the forecast period for the homewares market. The anticipated
expansion of the market is primarily attributable to the rising demand for
increasingly high-tech and sophisticated versions of a variety of household
appliances, including air conditioners, refrigerators, washing machines,
dishwashers, and microwave ovens. It is anticipated that factors such as rising

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global temperatures and humidity levels, as well as a growing acceptance of air
conditioners as a utility product rather than a luxury product, will all contribute
to the expansion of the home appliances market. It is anticipated that the
increasing technological advancements in air conditioners, such as the
availability with inverter and air purification technologies, will positively
influence the sales of the air conditioners, which, in turn, contributes to the
growth of the market through the home appliances segment.

Industry in India:

By the year 2025, it is anticipated that India will move up the ranks to become
the fifth largest consumer market in the world. In contrast to the average
increase of 5% seen across the globe, consumer spending in this country is
currently expanding at a rate of 12% on an annual basis. Because of the rise in
their incomes and the movement of these households into the affluent and elite
segments, more than 100 million Indian households from the middle class will
exhibit a high growth in their consumption pattern.
In recent years, the retail sector in India has developed into one of the most
dynamic and fast-moving in the world. By the year 2020, it is anticipated that
India's retail market will have grown by 60 percent to reach a total of 1.1 trillion
US dollars. This growth will be driven by the continuous entry of several new
players across a variety of product categories and retail formats. The growth
rate of organised retail in India has been hovering around 25% annually. Its
current market share in the entirety of the Indian retail sector is greater than 7%.
With an annual growth rate of between 25 and 30 percent, the houseware
subcategory of the Indian domestic retail market is one that is expanding.
Houseware has always been a significant product category in the market,
regardless of whether one is living in a traditional, transitional, or contemporary
society anywhere in the world. There has been a significant shift in the buyer or
consumer base for houseware products in India, and it is no longer just women.
This change has taken place.
The production of cookware, tableware, kitchenware, kitchen tools, storage,
kitchen appliances, cleaning and general houseware, and other products in India
is still very limited, and as a result, the market is also fed through imports.
There are hundreds of importers and distributors in India, all of whom either
bring goods into the country and sell them under their own brands or act as
agents for foreign manufacturers and retailers.

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Houseware retailers, department store home stores, department stores, online
retailers, corporate gift buyers, and institutional buyers were among the serious
trade visitors who attended the newly introduced Hall 5 at HGH India 2016, the
largest annual trade show for the Home Décor, Gifts, and Houseware industry.
The organisers' spokesperson said, in reference to the inclusion of a specialised
Houseware section at this year's trade show, "We are delighted with the positive
response we receive each year from the visitors, which motivates us to provide
the best possible visitor experience with innovative solutions. This year, we are
pleased to announce the addition of a Houseware section." We have decided to
have a dedicated hall for the houseware & gifts sector in order to cater to the
changing and increasing needs of the retailers, brands, manufacturers, and
importers as well as to look at the growing demand of the houseware segment in
the Indian market. This will help trade and institutional buyers understand the
innovative range of products in a more focused manner, while also saving them
time. In addition, the hall will help cater to the growing demand of the
houseware segment in the Indian market. We are overjoyed to see the positive
response from the general public.

References:
 https://www.alliedmarketresearch.com/homewares-market-A10640
 https://www.hghindia.com/eng/houseware/
 https://www.euromonitor.com/homewares-in-india/report
 https://growthmarketreports.com/report/houseware-market-global-
industry-analysis#:~:text=Report%20Description,forecast%20period%2C
%202022%20%E2%80%93%202030.