Jones Blair Company Case Study

Jones Blair Company Case Study

U.S. paint industry and especially the case of Jones Blair Company under the direction of Alexander Barrett. This industry contains almost 600 paints firms and is divided into three broad segments: architectural coatings, original equipment manufacturing coatings, and special-purpose coatings where each segment serves a specific need. Jones Blair Company produces and markets architectural paint and original equipment manufacturing coatings under the Jones Blair brand name. In addition to manufacturing a full line of architectural paint, the company sells sundries under Jones Blair brand name but not produced by their firm. Jones Blair Company divided the market, which contains more than 1200 outlets, into Dallas-Fort worth (DFW) metropolitan area, contains 600 outlets and non-DFW nonmetropolitan area contains the remaining outlets. The estimated dollar volume of architectural paint and allied products sold in Jones Blair was $80 million; DFW area contains......

Jones-Blair Company, primarily based in the Dallas-Fort Worth (DFW) area, is an established company in the $13 billion US paint industry. A large portion of the maturing paint industry, $10 billion, is established from architectural coatings and the annual growth rate is expected to equal that of general inflation in the coming years. As the growth rate is slowing, the number of paint companies is shrinking at a rate of 2 to 3 percent per year. This decline is due in large part to the slow sales growth, but is also fueled by the necessity for continued expenditures in research & development and recent compliance standards set forth by the EPA. In the coming years, the Jones-Blair Company faces these challenges, as well as those presented by mass merchandisers competing with Jones in current business sectors, as they attempt to exponentially increase company sales growth. In order to reach these business goals at a time when growth is nonexistent, Jones-Blair must take immediate action and increase their sales team and refocus their sales energies.

Mass merchandisers pose a serious threat to the future achieved sales levels of Jones-Blair Company. Of the three primary groups of customers, do it yourself пїЅ paint contractors

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However, as good as this market positioning is, the achieved total grossed sales amounts will not allow them to maintain current levels of research and development and adhere to the growing demands of environmental standards. пїЅ and professional painters, these mass merchandisers have priced their products to capture a higher percentage of the home construction market and the business from paint contractors. So with a contribution margin of 35% the final dollar amount to hit the bottom line would be minimal and not add significant value to the company. The cost of such an addition would be minimal with a base salary of $60,000, plus a 1% commission on sales. With 120 of the companyпїЅs 200 independent retail stores in the non-DFW area, the sales increases will be exponential and allow the company to reach established business goals. However, as the sales reps have focused on current customers over the last five years the sales team has added only five new professional accounts. As well, in the areas outside DFW, 70% of sales are derived from do-it-yourself painters. As well, the company could consider increasing their present sales reps, eight, by an additional representative. At present, 70% of sales within DFW are derived from professional painters. However, the benefit of cutting the prices would not increase company sales to a point where they could maintain current contribution margin numbers. Given that the mass merchandisers are presently not pursuing this market source, the Jones-Blair Company would do well to draw upon their superior salesmen and initiate sales from this resource. Thus resulting only in approximately a 3% increase in customer purchases, from 15% to 18%. A posed increase of approximately 3% in the DFW area would increase the companyпїЅs brand awareness by 5%, from approximately 25% to 30%. The companyпїЅs sales representatives have a superior reputation with their dealers. In such an instance, increases in sales come with increases in variable costs related to the product.

Market Segments

The market segments in which Jones-Blair competes are as follows:

a) Architectural coatings: these include professional buyers and do-it-yourself buyers who mainly use the products for house redecorating, maintenance, and repair.

b) ORM coatings: these buyers are manufacturing firms of durable goods.

Decision Criteria

When buyers are deciding on an architectural