Business Case 180 degrees: Jones Blair
Kenneth De Smet
1. Which are the main characteristics of the U.S. painting products market
The U.S. painting products market is a maturing industry with industry sales in 1996 slightly over 13 billion dollars. With average annual dollar sales growth forecasted to approximate the general rate of inflation through 2000.
Further more it is divided into three broad segments:
- Architectural coatings: this consists out of general-purpose paints. It holds 43 percent of the total industry dollar sales.
- Original equipment manufacturing coatings: industrial buyer specifications are applied to original equipment during manufacturing (think ...view middle of the document...
service of expertise. 70% do-it-yourself. Decreasing sales from 1992 to 1996 yet bigger than non-DFW and relatively small declines.
increasing sales from 1992 to 1996. Exist 90% do-it-yourself.. Yet in absolute terms $16 million dollars smaller than DFW.
4. Which is the competitive position held by Jones Blair in its market?
A regional paint manufacturer mainly in the DFW-area. Holds 60% share in DFW-area in 1996. So it is marketleader in the DFW-area. Their consumers are mainly do-it-yourself househould buyers. Estimated dollar volume of architectural paint and allied products sold in Jones Blair’s 50-county service area in 1996 was $80 million. Do-it-yourself household buyers were believed to account for 70 percent of non-contractor-related volume in DFW and 90 percent in other areas.
Sales is distributed evenly between DFW and non-DFW accounts while 40% of the stores are situated in DFW.
They are the highes-priced paint in the area. Competition of mass producers is rising.
5. Which targeting strategy do you recommend for Jones Blair
I recommend they focus on the do-it-yourselfer in the DFW-area. Professional painters are more price-sensitive which makes competition with mass producers as a regional paint manufacturer very hard as your scale is significantly smaller. In other words a low price is not a viable strategy in an industry with high fixed costs (such as R&D). Further more it seems that most revenu comes from the do-it-yourselfers. Regarding the area it seems that altough there are more retail stores outside the DFW-area the percentage of sales is equal to the sales of the DFW-area.
6. Which strategy ( ‘Planning Meeting’, p.8) should be adopted by the company? Give the economic and financial implications of each strategy. You can also make your own recommendations.
I think the company should adopt the strategy as explained by the Vice President of Advertising. An increase of $350,000 in corporate brand advertising beyond what they are now spending to achieve a higher awareness level.
Economic implications: better brand awareness should lead to more sales. This strategy targets foremost the do-it-yourselvers which hold the biggest market share. (70% in DFW and 90% in non-DFW). Also the television coverage will also reach non-DFW do-it-yourselvers. As the two different area’s (DFW and non DFW) both hold significant shares, 60% DFW and 40% non-DFW, in sales a strategy focused on one geographic area seems unsatisfying. Furthermore consumer research stipulates that 48% of the consumeres visit different stores before buying. And only Twenty-two percent looks for the best prices. As such brand differentation might drive sales.
Financial implications: An extra cost of $350.000 dollar must be made.
* View of Vice President of Operations:
I agree that the focus must be must be on the do-it-yourselfer paint...