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Thursday, December 13, 2007

DeWalt -- Customers, innovation and marketing

One of the privileges of 'cracking' the airline pricing/service systems is my ability to use Air Canada's Maple Leaf Lounges for first class travel while purchasing the cheapest no-frills economy tickets. Besides an open (unsupervised) bar, lots of snacks, and comfortable seats with wireless Internet, there is a huge rack of free magazines. So every visit, I grab a stack, stuff them into my travelling case, and head home reading some publications I would never otherwise notice.

So when I started reading Strategy&Business, I thought I might glean a few general business ideas -- only to find the story about DeWalt Power Tools, and their rather successful approach to product innovation.

It turns out this division of Black and Decker, according to Barry Jaruzelski and Kevin Dehoff, have discovered that it really pays to connect and listen to the customers -- in this case, the construction tradespeople who actually use power tools.

The challenge is that professional tool purchasers want equipment that works really well, but are not so concerned about "brand loyalty". They aren't going to switch tools for modest incremental benefits -- in fact, they might be downright angry if slightly better tools are introduced shortly after they purchase something they thought would work for several years.

But, aha, DeWalt listens, say the writer, reporting on Booz Allen Hamilton's annual study of the world's largest corporate R&D spenders. The researchers discovered two primary success factors: "Aligning the innovation model to corporate strategy and listening to customers every step of the way."

Jack Schiech, president of Black & Decker's DeWalt division, has a valuable story to tell about the importance of paying close attention to your customers, the writers noted.

"The best-selling miter saw on the market in the early 1990s cost about $199, and they all had 10-inch blades. Our guys went out and did some research, and found a lot of people building big colonial-style homes with big moldings. The saw blades cut only halfway through those big pieces of truss. So they had to pass a 16-foot piece of molding out the window, flip it around, pass it back in, and make the rest of the cut. We realized that if we moved to a 12-inch blade, which required a completely different, much bigger saw, they could make these cuts in one pass. So we developed and launched the 12-inch miter saw, and charged $399. It became the number one-selling miter saw by huge margin, and remains so to this day."
Now, I realize that readers of this blog are into marketing, more than R&D -- but the point here is that connecting closely to the clients is a vital responsibility of any business which wishes to succeed in the marketplace. This is especially evidenced by DeWalt, which involves and connects the customers in the actual R&D operations, and thus builds a much deeper understanding of what they really want -- and how they think. Clearly, with this information, they are able to sell tools (and receive some great publicity, as well.)

You can read the complete Strategy&Business article here.

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