Jones Blair

By: Adam Aldrete, Angela Davis, Jaimee Robinson, Mi Lin

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 1999:

$12 million net sales of Jones Blair architectural paint and allied products

Jones BlairDistribution:

200 independent paint stores, lumberyards, and hardware outlets.

40% of outlets are in DFW areaPromotion:

8 sales representativesSalary: $60,000 1% commission on sales

3% of net sales 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 surrounding areas?

How are they going to accomplish this?

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

Internal Strengths

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

Internal Weaknesses

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

External Opportunities

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

Jones-Blair Market$12 Million Net Sales

Professional DIY

Urban$7,200,000

60%

$5,040,00070%

$2,160,00030%

Rural $4,800,000

40%

$1,440,00030%

$3,360,00070%

$5,040,000

$2,160,000

$1,440,000

$3,360,000

Jones Blair's Market

Urban ProfessionalUrban DIYRural ProfessionalRural DIY

Market ShareProfessional DIY

Urban 35% 6%

Rural 45% 12%

35%

6%45%

12%

Jones Blair Market Share

Urban ProfessionalUrban DIYRural ProfessionalRural DIY

What do you think Jones Blair’s distinctive

competencies are?Hint: There are 2!

Distinctive Competency

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

Create an Ad

Best ad wins a tasty treat

Inspirational Video

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?

VP of Advertising

Direct efforts to Dallas Fort Worth DIY

Increase awareness to 30 %

Advertising Increase of $350,000

Television Coverage in 15 Counties

Pros/Cons

Pros Low added costs

Extra $1 million in BE Break Even: $3,400,000

Increased Awareness Cons

Less Focused 75% of audience is not

buying paint

VP of Operation

Advertising isn’t right Need to be competitive

in DIY 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 dealer 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 Risky Sales reps aren’t that

effective

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 lot of results will come

President Barrett

40% price cut Redirect Advertising

Newspaper & Catalogs Focus on Rural

Pros/Cons

Pros Attractive for contractors More Focused Advertising

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

Recommendation

VP of Sales Extra Sales Associate $60,000 annually Focus on Rural Pro

35%

6%45%

12%

Jones Blair Market Share

Urban ProfessionalUrban DIYRural ProfessionalRural DIY

Why Rural Professional

Distinctive Competency Good Service & High Quality

Good Fit On a 1st name basis with store owners

Control 45% of the marketBest “Bang for the Buck”

Implementation

Hire 1 additional Representative – NOW!Sales Training

Kick their butts into gear Clarify Roles New focus: Rural Professional Painters Increase personal sales by 5% Projected Sales & New Break Even

Recap

Focus on Rural ProfessionalsAdditional Staff57.5% Sales IncreaseAnnual Savings of $969,730

Almost $1million!!! Reinvest Growth?

An Offer You Can’t Refuse!!!

Questions?

Comments? Concerns?