Jones Blair and Co Marketing Plann
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BACKGROUND AND PROBLEM DEFINITION
The case deals with Jones Blair and Co. a privately held paint manufacturing corporation based out of Dallas Texas. The firm markets its paints and sundry items in over 50 countries in Texas. Forty percent of its outlets are located in the 11 country DFW area whereas the remaining 60% are situated in the other 39 countries in the service area.
The President of the company is looking for a solution regarding where and how to deploy corporate marketing efforts among the various architectural paint coatings in the South Western United States. It is the main market of operations for the Architectural paint coatings (APC). APC is the most crucial product in the companys portfolio.
MARKET AND INDUSTRY ANALYSIS
Paint industry is $16 Bn. It has three broad variants namely: Architectural Paint coatings, OEM paints and Special paints. The focus of study is APCs which form 43% of the industry ($4.45 Bn) and is a total $12 Bn market with sundries. There are 3 different types of buyers in the industry :Do-it-yourself (70% of DFW and 90 % of Non DFW), contractors and professionals. The products are available in : Specialty paint stores, lumberyards, Independent hardware, Mass Merchandising and Home improvement. The focus of the company is on either DFW counties and Non DFW counties (total sales $80 mn). The gallons of paint is not expected to rise and the industry has reached a maturity phase. The companies are closing down and a lot of companies are getting acquired .The US paint manufactures are under growth pressure to reduce emissions of volatile organic compounds (VOCs) and this has further eroded the already historically low profit margins of the industry players.
EVALUATION OF ALTERNATIVE COURSES OF ACTION:
The four alternatives available to Mr. Alex are:
1. Expend additional $350000 on advertising(mainly TV)
The company will have to earn an extra sales of $ 1 million to breakeven for the additional cost incurred.
Advertising makes easy inroads into the consumers but has its limitations too as its impact cannot be directly measured and has to be in line with the consumer buying behavior.
2.Reduce the cost of the paint by 20%.
By doing this companys contribution margin will reduce to 15% from 35% and so to breakeven the firm will have to make an additional sales of 33% over and above the current sales of $12m. This will help the firm to keep the same overall gross margin.
Price reduction is the need of the hour as the firms products are already reaching the threshold of the price. The pricing is also associated with the consumers image of the brand and so is a sensitive area to work on.
3.Hiring an additional sales person for