Many professional mechanics view Snap-On Tools as the best tools money can buy. A Snap-On wrench or screwdriver can cost five times more than a similar Craftsman model, but professionals swear the extra cost is worth it. According to their website, since 1920, Snap-On’s business model has been:
The tools we sell are the Gold Standard for professionals and recognized as a badge of excellence. They are the résumé for any professional technician.
After 90 years of outstanding brand-building, Snap-On has decided to sell cheap Chinese wares. If you have visited your local Costco, you will find a $19 Snap-On flashlight and multi-wrench tool set. The set looks to be an excellent value with 3 pieces for only $19 retail. In addition, the set bears the Snap-On name. You can also find low-end Snap-On battery chargers, multi-tools, work lights, and knives.
In my mind, the greatest marketing book ever written is The 22 Immutable Laws of Marketing by Al Ries and Jack Trout. Ries and Trout make things perfectly clear: A brand means one thing and one thing only to a consumer. In effect, a brand owns words in your mind. Tide makes a great detergent, not a great foot powder. For many, Tide owns the word detergent. Cadillac makes luxury cars, not $10 skateboards. For many, Cadillac owns the phrase luxury automobile. Snap-On owns the phrase best tools or high quality tools in the minds of professional technicians. By introducing a brand that does not fit the customer’s image of the brand, Snap-On is committing brand and business model suicide.
It is difficult to understand why Snap-On would spend 90 years building one of the top brands in the industry and then self-sabotage its own brand. As the Chinese are looking for ways to exit the low-margin cheap goods market and move upstream to a Snap-On style business model, Snap-On abandons the very position which others envy. A premium set of 14 Snap-On wrenches cost $677.30 vs. a similar set at Sears for $69.99. For most fixer-uppers, the Sears wrenches are more than adequate. However, ask your mechanic if the Sears wrenches will suffice. Look in the shop at his or her toolbox and you will most likely see the Snap-On badge of honor. Professional technicians have had a strong brand loyalty towards Snap-On.
It will be interesting to see if the “we make the best and most expensive tools but also have this cheap stuff” business model will have an adverse affect on the Snap-On business model. The grass always seems greener on the side of customer segments not sold. However, history is full of examples of ill-thought line extensions and brand changes.
Boston Chicken
Boston Chicken was once focused on rotisserie chicken, but then they wanted to expand, so they added turkey, meatloaf and ham to the menu. Then to explain the expanded menu to consumers, they changed the name of their restaurants to Boston Market. Within a couple years, the firm went bankrupt.
New Coke
Old Coke was the top brand but Pepsi still had a large share of the market. In addition, Pepsi seemed to win all the blind taste tests. Coca-Cola decided to chase the Pepsi drinkers by changing formulation to a Pepsi-style taste. Drinkers gave Coca-Cola the message loud and clear, “If we want something that tastes like Pepsi, we will buy Pepsi.”
Digital Equipment
In the 1980, Digital Equipment’s business model was to provide corporations with a line of computers one level below an IBM mainframe. These mini-computers turned DEC into the second-largest computer company, behind only IBM. However, as PC’s gained popularity in the mid-1980s, DEC decided to enter this fast-growing market as well.
Chasing a second market segment may have lead to DEC’s demise as the company was effectively dismantled in 1998. The bulk of the pieces were sold to Compaq for a fraction of their former value.
Miller Lite
In 1973, Miller Beer was the #2 brand in the US. That same year, Miller Brewing Company introduced Miller Lite. Through a series of successful commercials featuring retired sports stars, Miller Lite grew to the #2 brand. However, during that same period, Miller High Life fell off the sales map (not even in the top 20 brands). The Champaign of beers has made a return of sorts. Currently, High Life is the #10 brand in the US. However, Miller has repositioned the brand as a cheaper “Popular” beer vs. its old “Premium” category and price.
Is it me, or does it seem that Miller simply spend tons of money to substitute Lite for High Life as the #2 brand?
So what’s the lesson for your brand and your business model? Massive amounts of time, energy, and money are spent to create a brand promise to your customer. Don’t change that promise simply because the grass looks greener. In this world of excessive competition, less is more. The stronger your focus on your primary branding promise, the more successful your business model.
{ 18 comments… read them below or add one }
I couldn't help but notice that the picture looks like a Chinese knockoff. The prestigous Snap-On company spells it's name Snap-On with a capital "O" in "On" while the picture you supplied is for a brand called Snap-on. This looks like a fake. I doubt it is the product of the Snap-On company you refer to!
Tom, great observation. Chinese knock-offs are a big problem for powerful brands. However, this is simply a case of grabbing a picture from Google. I saw the $20 toolset with my own eyes at Costco. It’s official; Snap-On has chosen to volitionally enter the piranha tank.
I truly enjoyed this article and have shared it on several social networking sites.
Perhaps I've missed something, but where's the problem in pursuing an entirely new market segment via a new route to market. The professional user will continue to buy from the tool guy with the van - in the UK that's how it works, anyway - while the amateur will buy from Costco etc. If the quality of the pro tools fell to that of those sold to the amateur things might be different. But Snap On won't let that happen, will they?
John:
That depends on whether you believe a brand can be two things to two people? Let's flip this around. Hyundai is coming out with an $80,000 luxury car. Would you purchase one instead of a BMW or Mercedes? My guess is no. This is because Hyundai is an inexpensive car in your mind. It can't be a luxury car once it is an inexpensive car. It may not be fair, but marketing is more about psychology than logic.
Jim
Of course it's a risk. But what if the two people you refer to are in highly differentiated groups? Are buyers of Mercedes cars deterred by the number of Mercedes trucks and vans they see on the road in the UK? Not in the least. Sales of both are booming. In each case the brand satisfies the needs of its specific target group, even though those needs are very different. What you don't see, of course, is a Mercedes dealership retailing cars and trucks on the same site, or indeed within quite a radius. The route to market is the means of delineating one group of buyers from another.
Another perfect example is Jacuzzi - once considered the premium whirlpool bathtub, they started selling their branded component parts to many of their competitors back in the early '80s, who could then claim that their products were also "Jacuzzis", thereby removing a key competitive advantage. Kohler has dominated the market ever since.
Now, this is a coincidence! I found this article as I was googling Snap-On because I wanted to tell them what a piece of crap they are selling! about six months ago, Costco was selling a nice metal box containing an excellent main multitool, along with a smaller version, a box-cutter type knife (very good), a keychain knife (good), and a flashlight & batteries. All for about thirty bucks -- and that's Canadian! I was so impressed with the set that I picked up a slimmed down version on last week's Costco vist. This time, it was for $20. IT IS A PIECE OF JUNK! The red Snap-On color isn't even correct. If they can't even get the color right, what does that tell you about the product in the box? And by the way...Excellent article!
These tools are made by a company overseas named Alltrade Tools, who purchased the license to use the Snap-On name. Most of these tools are sold at Cosco. Any warrantee issues has to be handle directly through Alltrade or Cosco.
It still seems like a horrible brand-ruining idea?
Another thing that snap on has done that leaves me scratching my head is that they've removed all markings that would let you know that their ratchets are made in the USA. I've read that they still are made in the USA, but why take the marking off that says so?
Snap-on isn't just distributing these cheap consumer wares through Costco; you can now find them at Sears.com, Amazon, and a number of other places. My favorite model to ridicule is the "cordless work light" that requires you to use a separate extension cord to power it.
I completely agree with Jim - as Snap-on's low-quality tools and accessories attract more attention, people's opinions will change. What if this part of their business succeeds? Will Snap-on slap their name onto consumer-grade wrenches? Screwdrivers? Other hand tools?
Somewhat related, Snap-on recently adjusted the way some of their child brands are marketed. Now, instead of seeing Bahco and Williams tools, you will see "Bahco by Snap-on" or "Snap-on Williams" tools. Some distributors have even gone to describe such products simply as "Snap-on."
They're muddying the waters for the sake of short-term profit. Maybe they can pull this off without suffering ill effects, but that does not seem likely.
Think about it this way: the professional mechanic will only get his tools from the snap on dealer in the back of his truck. he wont go to costco to get the tools. the do it at home type guy will get his snap on tools from costco because he doesnt have access to the truck. the quality of the tool is proportional to the quality of the tool and where it was bought and the cost of that tool.
Wow, when will Americans stop being greedy punks. I don't care if we can still buy the good tools at trucks, the thing is, some big wig decided he wanted a couple extra hundred thousand or maybe even millions so he copped out and gave a middle finger to the rest of the guys runnin the show before him. And now that economically strong, overly militarized, technologically more advanced country across the sea has a little more money to put together their super force. The only reason America will fail and be destroyed is because of greedy Americans. Sorry Jefferson, it was all for nothing, excuse me while I learn Chinese and try to start the revolution over from scratch.
As a Canadian I too am totally disgusted by the blind and foolhardy way that our North American business folks are giving our jobs away to China. I tried to find a new circular saw in our stores that was NOT made in Asia and even the great names such as Milwaukee were all made in China. Stupid people, who do they think will buy their imported crap when there are no real jobs left in North America??
Have you talked to Snap On, Jim? Wouldn't the first step be to check with the company before everyone makes their best guess? You feel this packaged product is sanctioned by Snap On simply because you saw it in person at Costco? I don't see how that verifies that this product is Snap On made or sanctioned. As was pointed out by Thomas Bryant, the logo is incorrect. It seems to me that the foundation of this story is flawed until someone checks out the premise.
Fair point, but can't we say the same for Costco not putting their company/brand at risk by purchasing an unauthorized knockoff? It may not be a correct assumption, but it's a reasonable one, right?
I agree completely with Ryan & Joe B. I have been to China. The people there are very nice, but still very poor. Their government, on the other hand, is growing increasingly rich. We in Canada & the U.S. are are helping them to achieve this by purchasing their goods (which Walmart sells by the shipload). We are not helping the Chinese people, as they continue to work very hard for next to nothing.
If we carry this one step further & allow the Chinese government to invest in businesses in our countries, Ryan's comment about learning Chinese will not be a joke. Buying cheap goods now, has already resulted in lost jobs, & will ultimately result in foreign control in our countries.
The Chinese government does NOT hold the same philosophical values as the governments in Western Europe, Australia, & North America do, & when their ownership becomes significant enough, they will be making the rules. Sweat shops will not be just a picture in our minds of something happening in a faraway land. They will become a reality right here. "Health, wealth, & the pursuit of happiness" will become the picture in our minds, of something we once had, along with religious freedom. You can't get something for nothing. Support the philosophies that first made our countries & individuals prosperous, & buy goods made at home!