1.

The risks of choosing De Walt as the Brand for B&D’s battle in the professional tradesmen segment are related to customer perceptions and competitor activity.

On the customer side, B&D cannot predict how the customers will react in Industrial and consumer home use segments. In the Industrial segment the risk is smaller due to knowledgeable professional buyers making the product choice. But for the “do it yourself” –man, current B&D offering in Tradesmen segment means choosing a product that a professional might use. With this reference gone, the perceived value for the home user could be reduced. Thus an increased market share in tradesmen segment could hurt profits in the lower segment. The extent of this is unknown and effects on revenue are difficult to forecast.

Secondly, though the brand recognition and the positive perception of De Walt brand exists, there is no certainty of the time needed to gain true market acceptance. The broadening of De Walt product offering into power tools in this segment could in the early stages lead customers to choose a competitor product instead. Whether the expectation can be delivered in a reasonable time is an unknown factor.

The strategy does not address the issue of strong competitor position in certain distributor channels. For instance the Membership clubs and Two-Step channels is dominated by Makita and the position could be defended by the competitor. On other competitor related risks, one could mention pricing power of Makita and Milwaukee. The premium is there currently and could be reduced to make the competitor products more attractive. In general the competitor reactions are a risk factor that B&D is powerless to influence.

Pricing for De Walt must be right from the start to mitigate possibility of wrong customer perception from the launch. Additionally B&D should consider, whether to limit the