Marketing and Jones Blair Essay

Submitted By rmumted
Words: 1673
Pages: 7
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MEMORANDUM
From: 199329
To: Steve Clinton
Date: February 5, 2013
Re: Jones Blair Company

Recommendation: Jones Blair Company should seek more accounts in non-Dallas-Fort Worth (DWF) by hiring one additional sales representative.
Problem Statement: Should Jones Blair Company, a manufacturer of architectural paints, expand corporate marketing efforts, mainly in the DWF area, or should it expand into non-DWF areas, which are Oklahoma, New Mexico, Louisiana, and other areas in Texas.

Facts:
U.S. Paint Industry: The U.S. industry is divided into three broad segments: architectural coatings, original equipment manufacturing (OEM) coatings, and special-purpose coatings. Architectural coatings are often called shelf goods and account for 43% or $6.88 billion of total industry dollar sales. OEM coatings are applied to original equipment during manufacturing and are used for durable goods. OEM coating represents 35% or $5.6 billion of total industry dollar sales. Special-purpose coatings are used for special applications or environmental conditions. Special- purpose coatings account for 22% or $3.25 billion of total industry dollar sales.
Architectural Paint Industry: In 2004, the U.S. sales for architectural paint and coating and sundries are estimated to be $12 billion plus. The architectural coatings are considered a mature market because the growth rate is projected to be 1-2% per year. Industry sources estimated that the number of paint companies is currently 600, or about 40% fewer than in 1980. The numbers of paint companies are declining at a rate of 2 or 3% per year. There are three types of distributors in the architectural paint industry, which are mass merchandisers and home improvement centers (50%), hardware store and lumberyards (14%), and specialty paint stores (36%). Also, for architectural painting there are 50% do-it-yourselfers and 25% are professional painters, and the remainder dollar sales result from government, export, and contractor sales.
Competitive Situation: In recent years, competition at the retail level has accelerated. Sherman-Williams, Home Depot, Sears, and Wal-mart have multiple outlets in DFW. Retail selling spaces in paint store, lumberyards, and hardware stores have also increased. Alexander Barret, president of Jones Blair, stated, Our research indicates that 1,000 of these outlets now operate in the 50-county service area, and DFW houses 450 of them.” There is also competition at the manufacturing level. The major change has occurred among paint companies that sell to contractors serving the home construction industry. These companies aggressively price their products to gain a higher percentage of the home construction market. However, these companies have not yet pursued the estimated 400 professional painting firms in DFW and the 200 professional painters outside DFW area.
Market Conditions: The market is segmented into two different groups based on their geographic area. The first group is the DFW, urban, segment. In this segment it was estimated that do-it-yourselfers accounted for 70% of non-contractor-related volume, and 30% accounted for the professionals. The second group is the non-DFW, rural, segment. In this segment it was estimated that do-it-yourselfers- accounted for 90% of non-contractor-related volume and 10% accounted for the professionals. The do-it-yourselfers value price, convenience, and quality when they are shopping for paint. The professionals value quality, convenience, and knowledge. In 2004, Jones Blair Company’s architectural paint and allied products sales volume was $12,000,000 with a profit of $1,140,000. The company’s dollar sales had increased at an average annual rate of 4% per year. The company distributes its products through 200 independent paint stores, lumberyards, and hardware outlets. In the 11-county DFW area, 40% of Jones Blair’s outlets are located. The remaining outlets are in the other 39 counties in the area. Jones Blair sales are
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