Market & Industry Analysis
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Background and problem definition:
As the market of Architectural coating segment of US paint industry has matured and where large players are acquiring small regional players to increase sales base to offset increasing cost, Jones Blair company- a regional player which has till date competed successfully against big national players has to think of different strategy as to how it can increase sales as paint season is approaching in short run and how to remain competitive in the paint industry.
Market & Industry Analysis:
The architectural coating segment consists of 43% of US paint industry with long term growth projected to be 1-2%. The rate of decline of companies in AC segment has been declining at the rate of 2-3% annually because of consolidation. The customer for this AC segment consists of Do it yourself and professional painters. Jones Blair is a premium priced player in this segment mostly covering 50 county of DFW (11) & non DFW (39) areas having major focus on do it yourself painters constituting 50% of AC segment (though they are very price sensitive but still Jones Blair catering this segment because of no entry of national players which are price competitive, in DFW market) because of value proposition in terms of serving the regional needs of the region. Blair Jones caters to almost 15% of the total market in ($80 million 50 counties) but with the rising competition in DFW area the gallonage sales has gone down in contrast to non DFW areas. The company sales volume in $ from both DFW & non DFW areas are same but retail accounts in DFW area is less than Non DFW area signifying more potential of growth in non DFW area. The major players in the market are mainly private brands catering to 50% of the demand. The demand can be further categorised as Do it yourself (50%), professional Painters (25%) and rest others. Jones Blair mainly concentrates on Do it yourself customers but a vast opportunity in terms of serving professional painters are still untapped as they are quality conscious and more service oriented.
Alternative Courses of Action
Increasing advertising spend- On one hand increasing ad budget by $350000 (which has to be recovered through increase in sales) will help in brand recall of customers and based on buying behaviour of customers can increase sales (though only assumption based on Exhibit 3) but the medium of the TV will reach 75% of those viewers who doesnt buy Paints (need for rethink on the medium of communication). The sale has to increase by $1000000 to reach breakeven which cant be said with surety.
Adding Sales force-
If one sale person is added then the minimum sales required to justify this measure will be to increase the sales by minimum $171428. As the president of sales has accepted that the