Jones Blair
Essay title: Jones Blair
Problem Statement
Jones-Blair is a regional paint manufacturer that focuses on high quality paint in the Dallas-Fort Worth area and the surrounding 50 counties. Jones-Blair competes in a mature market, where sales have steadily increased at the rate of inflation. Jones-Blair has seen continuous growth in sales dollars due to increasing prices, of which are the highest in the market. Jones-Blair faces a major dilemma in that they must maintain their growth and profit margins, but in order to do so, they must increase their overall sales in a very mature market that is facing increased competition from commodity priced brand name paints that significantly undercut Jones-Blair prices throughout the region. The Jones-Blair management staff is determined to find the proper solution through the proper sales strategy and marketing mix within the architectural paint market.
Situation Assessment
The market which Jones-Blair competes is sub-divided into two distinct markets. The DFW area has seen steady declining sales while in the non-DFW area, sales have steadily increased (Exhibit 1). The market for do-it-yourself consumers is forecasting growth and it seems to be the best segment for Jones-Blair to focus its efforts since it represents 90 percent of non-contractor related volume outside the DFW area and 70 percent in DFW (Exhibit 1). Additionally, competition is growing in the DFW area and provides a significant threat to Jones-Blair’s emphasis on quality, thus higher prices. Research suggests that do-it yourself painters view paint as a commodity, thus are not as focused on quality and are not as willing to pay higher prices. In order to increase sales, the company must focus on increased advertising and sales support. At the same time, the company also faces external threats due to strong environmental pressure to increase regulation on the emissions of volatile organic compounds (VOCs). The company is required to spend R&D in this area therefore its cost of production will not be able to decrease in the next several years. In order to maintain or increase profit margins, the only alternative for Jones-Blair is to increase the overall sales volume.
Analysis of Sales Strategy
The company currently views DFW as its most important market and they focus the majority of their sales efforts in this region, however, the trend has shown a steady decline in sales. The non-DFW market is promising, however it increases the COGS (Exhibit 2) due to extra freight/distribution. Additionally, Jones-Blair has only penetrated the non-DFW area by a mere 16%, leaving a potential of 84% of the market available for new sales. The non-DFW area has very limited competition (Walmart) leaving opportunity for new business to the specialty paint stores, hardware stores, and lumber yards. This is beneficial since these types of stores have outdistanced mass merchandisers and home improvement centers in the past.
Jones-Blair currently distributes to 200 paint stores, lumberyards and hardware outlets. Their current sales force of 8 manages these accounts. A simple Pareto distribution shows the company only maintains a small number of accounts in the high-dollar range, however, they represent the majority of sales (Exhibit 3). The sales representatives are considered “well-liked, helpful, professional and knowledgeable,” however they only gained 5 new accounts in the previous 5 years. Since the current sales force represents an average of 25 accounts a piece, refocusing their efforts toward some of the higher dollar accounts, especially in the non-DFW area where the specialty stores only carry one line of paint, only a few new accounts should generate a significant growth in sales. Another consideration would be to increase the overall sales force, however the concern raised by management is the increase in cost may not create a greater sales volume. Analysis shows that for a new sales representative at a base salary of $60,000 and a 1% sales commission, roughly 4 new accounts would need to be captured in order to cover the increased costs (Exhibit 4). With 8 reps currently generating $12 million in sales, one additional rep focused in the non-DFW region (which is only 16% penetrated) with an emphasis on the larger accounts and the do-it-yourself