Janmar Coatings Inc
IntroductionMr. Ronald Burns, President of Janmar Coatings, Inc., must make a decision regarding the allocation of corporate marketing efforts among the architectural paint coatings markets served in the southwest United States for year 2005. The issue they are faced with is how to determine the most effective marketing strategy to implement and where it should be implemented to reach the most target customers in the most receptive target market. Â The executive group still has not reached a decision after several unsuccessful meetings, and Mr. Burns is eager to find an answer that will grow the market share for Janmar Coatings, Inc. His top executives have each provided him with a solution that we have carefully evaluated for him to consider. The architectural coatings industry is a competitive and mature market with an estimated revenue of $12 billion dollars. The long term projected sales growth is 1-2% a year. 50% of architectural coating sales dollars are from Do-It-Yourself (DIY) painters. Professional painters account for 25% of the remaining dollar sales with the final 25% coming from government, export and contractor sales. Janmar Coatings, Inc is a privately held corporation headquartered in Dallas, Texas that produces and markets original equipment manufacturing (OEM) coatings, architectural coatings as well as paint sundries. They market to over 50 counties in Texas, Oklahoma, New Mexico, and Louisiana. Dallas Fort Worth (DFW) and the 11 county DFW metropolitan area is their major business service center. There are 1,000 retail outlets that operate in the in the 50 country service area and DFW houses 450 of them. Additionally, Janmar is currently present in 200 independent paint stores, lumberyards and hardware outlets. 80 of these stores are located in DFW area including 66 which carry 2-3 competing brands. The other 120 stores are located outside of the DFW area.
In 2004, Janmar had $12 million in sales and $1,140,000 in net profit. They have experienced an impressive average 4% dollar sales increase annually for the past decade. However, in 2004, 60% of their net sales were cost of goods sold and freight expenses. Currently, they are the highest price point for paint in their service area. Janmar’s major competition in the architectural coating segment for DFW outlets include: Sears, Kmart, Sherwin-Williams, and Home Depot. Competition has also increased for retail selling space in paint stores. Janmar’s current position in the marketplace is summarized in the SWOT Analysis table below: StrengthsSolid distribution network 4% dollar increase in sales per year for last decade8 knowledgeable sales representativesHigh quality productWeaknessesLow margins on productsPoor brand recognition and Low brand awareness High price point Opportunities Increasing demand from DIY-ersCapitalize on good customer relationships and increased presence in retailers Growing number of people looking for high quality productsThreatsGovernment Regulations Environmental Regulations Availability of alternative materialsTechnological formula advancesLarger companies acquiring them Need for ongoing R&D The following is a summary of the main problem as well as the four alternatives, which will be addresses in our analysis and considered in our final recommendation. Our goal is to make a recommended the best course of action for Janmar Coatings, which is outlined below:Problem StatementAs stated above, Mr. Burns is searching for an answer to the issue of where and how to best deploy corporate marketing efforts among the various architectural paint coating markets served by the company in the southwestern United States. He was presented with four options from his top executives. They are as followed: