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Snap-On Tools Destroys its Business Model
By
Jim Muehlhausen
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.
Snap-On Tools Destroys its Business Model