Joseph-Scotti-Module1-Task1

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.

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).

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).

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)

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). AmazonSupply 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
AmazonSupply in the short term as Grainger generates about 75% of its revenue from the large
customer segment, whereas AmazonSupply is likely focusing on smaller businesses and startup firms.
However, with a nearly 100% larger item catalog at 2.2 million items in 2014, AmazonSupply 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 AmazonSupply 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
Joseph-Scotti-Module1-Task1

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.

670 words.

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-client-
grainger
5. http://reliabilityweb.com/articles/entry/recent_impacts_of_e-
procurement_on_the_mro_industry_maintenance_repair
6. http://www.fool.com/investing/general/2014/06/11/can-this-leading-industrial-distributor-
stop-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
Joseph-Scotti-Module1-Task2

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).

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).

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.

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).

SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis:

 Strengths: Power tool industry leader, best distribution partner in Grainger and other top MROs,
premium price but reliable tools.
 Weaknesses: Outsourced tool production to Asia risks damaging brand similar to the decline of
Craftsman tools.
 Opportunities: Marketing directly to customers who can influence purchasing decision within
their organization.
 Threats: Upstart tool distributors such as Northern Tool and Harbor Freight have large and fast-
growing retail distribution points for their low-cost, house brand tools with lifetime warranties.

Bosch and Bosch Power Tool brand image overlap assumptions – I assumed 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.

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.

712 words.

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/_266b25cdfc5104ff46a9b96780bedbb4_About-the-
client_Robert-Bosch-Tool-Corporation-Snapshot.pdf?Expires=1473811200&Signature=e9-
ZbY35JID6C0i6SsAcGJb9da960y2KGCVgJQYQk6dDQkIJHYUcluNmvuy1P8vzLts6BPsZsrCHthNwuB
FDHw-
zckWrRfMTPOkMCT0ENMfRA9JZM3U1me8nfK4Aglvhn5GJoZMiv1419ln24xbgAZEM3ao~02vCygj
yB~O9cT8_&Key-Pair-Id=APKAJLTNE6QMUY6HBC5A
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