Essay About Trade Sales And Background Of Paint Industry

Jones Blair
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BACKGROUND OF PAINT INDUSTRY
The paint market can be divided in :
– TRADE SALES : product sold to households, contractors and professional painter;
– INDUSTRIALS SALES : product for original application by manufacturers.
TRADE SALES :
1. 1984 : $ 5.1 billion
2. 1986 : $ 5.8 billion
AVARAGE ANNUAL GROWTH reduced during 1980s:
1. usage of new material;
2. more durable products;
3. better paint quality;
4. “war” cost/price;
5. increasing cost of raw materials;
6. increasing competition.
COMPOSITION OF TRADE SALES :
1. 45%: households;
2. 35%: contractors and professional painters;
3. 20%: others.
BACKGRAOUND OF JBC
– Privately held corporation involved in trade paint sales;
– Sales volume= $ 4.67 million
– The four largest paint producers accounted for about 30% of the total U.S. market.
– About 50% of trade paint sales were private brands.
SALES VOLUME distributed evenly between DFW and rural accounts
– $4.67 million/2=$2.335 million:
RURL AREAS accounts for 60% of sales volume :
70%: households;
30%:professional painters.
URBAN AREAS accounts for 40 % of sales volume:
30% : households;
70%: professional painters.
SALES DISTRIBUTION IN JBC:
Urban areas:
50% of $4.67 million = $ 2.335 million
households:
30% of $ 2.335 million = $ 700.500
professional painters:
70% of Ј 2.335 million = $ 1.634.500
Rural areas:
50% of $4.67 million = $ 2.335 million
households:
70% of $ 2.335 million = $ 1.634.500
professional painters :
30% of $ 2.335 million = $ 700.500
SALES DISTRIBUTION IN PAINT MKT:
Urban areas :
60% of 55 million = $ 33 million
households:
70% of $ 33 million = $ 23.1
professional painters:
30% of $ 33 million = $ 9.9
Rural areas :
40% of $ 55 million = $ 22 million
households:
90% of $ 22 million = $ 19.8
professional painters:
10% of $ 22 million = $ 2.2
RISKS:
-Price war;
-No brand awareness.
Estimated dollar volume of paint on JB s service area = $ 55 million JB S MARKET
SHARE = $ 4.67 million / $ 55 million = 8.49%
PROPOSAL OF MARKET SEGMENTATION
* Segmentation based on 2 factors:
o Type of customers;
o Geographical areas.
* 4 segments:
o urban households vs. rural households
o urban professional painters vs. rural professional painters vs. rural
professional painters
* Competitive positioning:
o Urban areas:
$ 2.335 million / $33 million = 7.07%
household:
$700.500 million / $ 23.1 million = 3.03%
professional painters:
$ 1.634.500 million / $ 9.9 million = 16.51 %
o Rural areas:
$ 2.335 million / $ 22 million = 10.61%
household:
$ 1.634.500 million / $19.8 million = 8.25 %
professional painters:
$ 700.500 million / $ 2.2 million = 31.84%
HOUSEHOLDS CHARACTERISTIC:
1. price