I. Situation Analysis
• Divided into three segments
o Architectural Coatings-general purpose paints, varnishes, and lacquers.
• Can be purchased from wholesalers, retail shops, and paint shops
• Account for 43% of total industry sales
o Original equipment manufacturing
• Intended for industrial buyers, to be used during manufacturing
• Account for 35% of total industry sales
o Special-purpose coatings
• Used for special environmental conditions (high heat, chemical exposure, etc.)
• Account for 22% of total industry dollar sales
• Paint industry is approaching maturity, 2004 sales totaled just over $16 billion.
o In the Jones-Blair’s 50-county service area, ...view middle of the document...
o Large producers in the paint industry account for 60% of sales in architectural coatings by:
• Marketing their own brand names
• Marketing under private, controlled, and store brand names
• 50% of architectural coatings are sold under one of these three types.
• Sears, Lowe’s, Wal-Mart, and Hope Depot are large players in marketing for these products.
• Home centers & wholesalers are among the most visited types of retailers by the do-it-yourself segment of buyers.
o Specialty paint stores, lumberyards and independent hardware stores that sell architectural paint & paint sundries have continued to be competitors in this market, despite mass merchandisers & large home centers.
• Sources from the paint industry suggest that specialty paint stores account for around 36% of the paint & sundry sales.
• Lumberyards and Hardware stores represent about 14% of sales.
• Privately held corporation, headquarter is in Dallas, Texas. Alexander Barrett is president.
• Market and produce architectural paint & paint sundries.
o Market products in more than 50 counties in Texas, New Mexico, Oklahoma, and Louisiana.
• Operate OEM coatings division, with a worldwide market
• Sales in 2004 for Jones-Blair was $12 million, with a net profit before taxes totaling $1, 140, 000.
• Sales increased at an average rate of 4% annually over the last 10 decades.
• Increased research and development and labor costs did not affect their margins.
• Distributes through 200 independent paint stores, lumberyards, and hardware outlets.
• In an 11 counties around the Dallas-Fort Worth (DFW) area, 40% of the outlets are situated.
• The remaining 39 counties in the company’s 50 county market hold the other outlets.
• Sales are distributed evenly between DFW outlets and non- DFW outlets
• Non-DFW outlets with sales in paint & sundry products that exceed $50,000 exclusively carry Jones-Blair products.
• The majority of DFW outlets carry 2-3 brands in their stores and price Jones-Blair at a premium.
o A small number of DFW outlets that have purchases greater than $50,000 annually carry the Jones-Blair brand exclusively.
• The company employs 8 sales representatives, responsible for keeping track of inventories of their product line in each retail outlet. Also responsible for receiving orders, setting up in store displays, and helping coordinate cooperative advertising.
o Sales representatives have positive reviews from Jones-Blair paint dealers and outlets.
o Sales reps are paid a 1% commission and a base salary.
• Approximately 3% of net sales is spent on advertising and sales promotions.
o 55% of the above stated 3% are assigned to cooperative advertising programs with their retail customers.
o This cooperative program...