Jones Bliar

SUMMARY

1) How might the architectural paint industry be characterized? 2

a) The US paint industry 2

b) Architectural paint industry 2

2) How might the JB market area be characterized? 2

3) How can this market be segmented? 2

4) Which market to pursue? 2

a) Non-DFW Household, a high potential for growth 2

b) Urban professional, wants high quality paints 2

c) Non-DFW Professional, already dominant 2

d) Urban Household, very price- sensitive 2

5) What competitive position does Jones Blair have in its market? 2

6) What strategy should JB adopt to reach the segment sought? 2

a) Spend additional $350,000 on corporate advertising 2

Pros 2

Cons 2

b) Cut price by 20% 2

Pros 2

Cons 2

c) Hire one additional sales representative 2

Pros 2

Cons 2

d) Do Nothing (Status Quo) 2

Pros 2

Cons 2

7) Recommendations 2

SLIDES 2

1) How might the architectural paint industry be characterized?

a) The US paint industry

The US paint industry is considered to be a maturing industry. Industry sales in 1995 were estimated to be slightly over $13 billion.

The US paint market is divided into three segments: architectural coatings (43%), original equipment manufacturing (OEM) coatings (35%)and special purpose coatings (22%).

The architectural coatings are general purpose paints, varnishes, and lacquers used on residential, commercial, and institutional structures. They are sold through wholesalers and retailers.

OEM coatings are formulated to industrial buyer specifications and they are used for durable goods such as automobiles, transportation equipment, building products industrial machinery and equipment etc.

Special purpose coatings are formulated for special applications or environmental conditions (extreme temperatures, exposure to chemicals). They are used for automotive and machinery refinishing, industrial construction such as factories, railroads, utilities, bridges marine application, highway and traffic machines and roof paints.

b) Architectural paint industry

In 1995, the U.S. sales for architectural paint coating accounts for about $5.5 billion (without sundries). The architectural coatings are mature market. A slow growth rate is the main characteristic of a mature market.

The sluggish growth rate measured in dollars can be traced back to a slowing growth rate in volume. This is because of a growing of materials that don’t require paint or require little paint such as plastic and aluminum. These are substitute products that can increase consumers’ sensibility to changes in price.

This is also because of the increasing quality of paints. Less paint is needed for each application and the time between applications is longer. Lastly, industrial clients have developed more efficient and effective ways of applying paint. Again, less paint is needed and the time between applications can be extended.

The demand for painting accessories such as brushes and rollers is predicted to increase. The sales of sundries account for about $4.5 billion, which is significant. This is due to the popularity of do-it-yourself projects.

In addition, the trend is towards fewer companies sharing the market. This is the result of companies closing down and smaller companies being taken over. Many small companies, however, have been able to survive because technology is readily available and because of the necessity to adapt paints mixtures to different regional climates.

Major producers of paint for the architectural coatings segment include Sherwin-Williams, Benjamin Moore, PPG Industries etc. These producers account for upwards of 60% of sales in the architectural coatings segment. Sherwin-Williams is the largest