jhon's blair

Jones.BlairIndustrial Coatings

Presented to : Mr. Abu Daud KhanStrategic Marketing (MKT 732)

ID-13274003 Presented by : Md Shamsul Alam Masud

U.S. Paint IndustrySegment Architectural Coatings Original Equipment

Manufacturing CoatingsSpecial-Purpose

Coatings% of total industry

dollar sales

43% 35% 22%

Architectural Coatings General purpose paints and varnishes used on residential and

commercial structures OEM Coatings

Used for durable goods such as automobiles, appliances, and industrial machinery

Special-Purpose Coatings Used for special applications such as bridges, marine

applications, and highway and traffic markings

Three Segments of Industry:

Jones Blair• Headquarters: Dallas, Texas• Service Area:

1. Texas, Oklahoma, New Mexico, and Louisiana.

2. Dallas-Fort worth (DFW) area

• Competition:– 600 paint companies in the

US• 1997: Total sales $ 80million– $12 million net sales of Jones

Blair architectural paint and allied products

Jones Blair• Distribution:– 200 independent paint stores, lumberyards, and

hardware outlets.– 40% of outlets are in DFW area

Promotion: 8 sales representatives Salary:$480,000annually

1% commission on sales 3% of net sales spend

for advertising & sales promotion efforts

What do you think Jones Blair’s problem is?

Problem

Where and how does Jones-Blair Company deploy corporate marketing efforts among the various architectural paint coatings markets in

their service area

• Should they target: Professionals or Do-it-yourselfers?

• Where should they target: Dallas Fort Worth or Non DFW?

• How are they going to accomplish this?

Internal Strengths

• Experience – Founded in 1928• Strong relationships between sales

representatives and retail stores• High quality• Sell to both professionals and DIYers• Cooperative advertising with retailers• Motivated, determined and passionate• A lot of research available• Low Break Even - Excel

Only 3% of net sales goes to advertising Ads only reach and influence 25% of target CGS is 60% of net sales Only 8 sales representatives Narrow market penetration in DFW area. No exclusive rights with retailers Highest price in market

Internal Weaknesses

External Opportunities• Market Growth: 1-2% per year • Distributed to 200 of the 1,000 retail outlets in the area• 40% of these retailers are in rural areas • DIY painters first choose a retail outlet for paint and sundries

then choose a paint brand.• Pro-painters are frequent buyers and look for paint that is

high quality, durable and easy to clean up• The average dollar paint purchase per purchase occasion:

$74.00. Average of $12.00 on sundryMarket Growth

2000 2001 2002 2003$80,000,000 $80,800,000 $81,608,000 $82,424,080

600 different competitors Competition is spending more on advertising Competition is less expensive Major in-house retailers have little knowledge DIYers purchase paint once every four years and get what’s

convenient and inexpensive Contractors want paint for the lowest price. Demand effected by substitutes, long lasting products and

VOC regulations

External Threats

Total Market$80 Million Net Sales

Professional DIY

Urban$48,000,000

60%

$14,400,00030%

$33,600,00070%

Rural $32,000,000

40%

$3,200,00010%

$28,800,00090%

$14,400,

000

$33,600,

000

$3,200,0

00

$28,800,

000

Total Market

Urban ProfessionalUrban DIYRural ProfessionalRural DIY

Market ShareProfessional DIY

Urban 18% 42%

Rural 4% 36%

Jones Blair Market Share

What do you think Jones Blair’s distinctive

competencies are?Hint: There are 2!

Core Competencies

• Quality– Best on the Market

• 1 Coat Coverage• Mildew & Stain Resistant• Pleasant Fragrance• 1000’s of Colors

– Good fit with professional painters

• Service– Sales Representatives

• Well Liked• Helpful• Professional• Knowledgeable• 1st name basis with

customers• Discuss both Business &

Family• Run the Store

– Good fit with rural area

Alternatives

1. Increase advertising dollars by $350,000 and use it for TV ads

2. Have an overall 20% price cut3. Add one more sales representative4. Continue to guard margins and control costs5. President Barrett’s suggestions

1. Ad dollars used for print media instead of TV2. 40% price cut to attract contractors

Which Alternative Do you think is the best for Jones Blair ?

VP of Advertising

• Direct efforts to Dallas Fort Worth-DIYers

• Increase awareness to 30 %

• Advertising Increase of $350,000

• Television Coverage in 15 Counties

Pros/Cons• Pros

– Low added costs compare to competitors

– Extra $350,000• Break Even: $3,400,000

– Increased Awareness• Cons

– Almost doubling the advertising cost.

– 75% of audience is not buying paint

VP of Operation

• Advertising isn’t right way.

• Need to be competitive in DIYers

• Consumers are Price Sensitive

• Cut Price by 20%

Pros/Cons

• Pros– Competitive Price– Gain Market Share

• In DIY Sectors

• Cons– Break Even: $4,480,000

• Huge break even– Lowers perception of

quality

Vice President of Sales• Target: Non-DFW areas

– Where ½ of the sales and most dealers exist right now

• Solution: Add another sales rep– There are already 8– This rep would develop new

retail account leads and call on professional painters to solicit their business through our dealers

– Cost to add another sales rep is $60,000

Pros/Cons

• Pros– Motivated to inspire team– Potential for success

– Large Market– Break Even: $2,571,429

• Not affected too much

• Cons– Overlooked the DFW area– Sales reps aren’t that

effective for immediate breakthrough.

Vice President of Finance

• Keep everything the same– Continue to guard

margins and control costs

Pros/Cons

• Pros– Not Risky– Keep doing what

company does best• Cons– Doesn’t solve the

problem– Not a result oriented

approach.

President Barrett

• 40% price cut to attract contractors

• Redirect Advertising print media instead TV– Newspaper & Catalogs.– Focus to Rural

Pros/Cons

• Pros– Attractive for contractors– More Focused Advertising

can cover widespread.• Cons– Increase cost for

competitive bidding– Constant Loss– Break Even: -$14,280,000

1

-15000000

-10000000

-5000000

0

5000000

Normal

Vp of Sales

Vp of Advertising

Vp of Operations

President & CEO

2400000

2571428.57142857

3400000

4480000

-14280000

Break Even Analysis

NormalVp of SalesVp of AdvertisingVp of OperationsPresident & CEOAxis Title

Why Rural Professional

• Competitive Advantage:– Good Service & High Quality

• Good Fit:– On a 1st name basis with store owners

• Control 45% of the market by professionals painter.

• Best “Bang for the Buck”

Recommendation

• Actively pursue non-DFW Household and Professional markets.

• Hire one additional Representative – NOW! who is incharge of new account development.

• Seek more retail accounts in non-DFW markets.• Sales Training– Kick their butts into gear– Clarify Roles– New focus: Rural Professional Painters– Increase personal sales by 5%

Recommendation

• Maintain prices, reduction in the price may be boomerang effect.

• Engage in cooperative advertising with current advertising budget.

Questions?

Comments? Concerns?