Jones Blair Case Analysis Essay
- I. Factual Summary: How might one characterize the paint coating industry? How might one segment the Jones Blair market area? Which segments represent opportunities for Jones Blair? What is Jones Blair’s competitive position in its market area?
- II. Case Problems/Opportunities:
- III. Alternatives:4 Increase corporate brand advertising by $350,0004 Reduce price by 20%5 Add one additional sales representative Control Costs
- IV. Selected Solution:6 Which segment should Jones Blair pursue? What strategy should Jones Blair adopt to reach the segment identified?
- V. Conclusion:
I. Factual Summary:
The executives at Jones Blair find themselves at an impasse. The company is trying to decide how to best deploy marketing efforts with valid solutions presented by each executive. The status of the industry was examined in detail in the case and a number of challenges were revealed. The U. S. paint industry, an industry that has been estimated to have $16 billion in sales in 2004, is a mature, slow growing market, many different factors impact demand and also EPA regulations are eating away at profit margins.
How might one characterize the paint coating industry? The U. S. paint industry is considered a mature, slow growing market with many factors affecting demand. Industry sales in 2004 were approximately $16 billion. How might one segment the Jones Blair market area? The U. S. paint industry is segmented into Architectural coating, Original Equipment Manufacturing and Special purpose coating. For this analysis, the focus will be on Architectural coating. Also, Jones Blair’s market can be divided into two geographic areas, Dallas-Fort Worth (also the company’s headquarters) and non-Dallas-Fort Worth.
Both of these segments can be broken down again into two consumer segments of do-it-yourselfers and professional painters. In 2004, Jones Blair’s total sales for the architectural paint coatings were $12 million which is split evenly throughout the company’s distribution area. 70% percent or $4. 2 million of the company’s sales in the DFW counties were accounted for by professional painters while the other 30 percent or $1. 8 million was sold to do-it-yourselfers. In the non-DFW areas it was the exact opposite. 70 percent or $4. million of these $6 million in sales were to do-it-yourselfers while the remainder was accounted for by the professional painters in the area. Which segments represent opportunities for Jones Blair? The most opportunity for Jones Blair exists in the Architectural Coating segment. Jones Blair also can focus on the do-it-yourselfers in the DFW area and professional painters in the non-DFW areas. What is Jones Blair’s competitive position in its market area? Jones Blair niche is the do-it-yourselfer and wanting high quality paint and customer service.
These consumers want a knowledgeable sales representative that can assist with not only selecting the paint, but also how to prepare the wall and apply the paint properly. Jones Blair is also desirable to the professional painter that wants high quality paint (requiring only one coat, washable, long life) to enhance the painter’s reputation.
II. Case Problems/Opportunities:
The problem Jones Blair executives have is how and where to deploy corporate marketing efforts. The company has a small distribution area and with the increase of large stores, the company must find a way to increase profit and market share.
Jones Blair has an opportunity to use the status of high quality, customer service name the company has created for themselves to solve this problem. The executives only need to decide on which strategy will fit the company best.
Increase corporate brand advertising by $350,000 On the positive side, by increasing advertising, consumers will be more aware of Jones Blair’s products. Since most consumers choose a retail outlet, then a brand name of paint, this could help drive consumers to seek out retailers of Jones Blair’s paint.
Also, if consumers are aware of the company’s brand, in retailers that have many brands, the consumer will choose Jones Blair. A potential problem with this strategy is with a large, non targeted marketing push, 75% of audience the company would be targeting is not purchasing paint. Based on the company’s standard of recovering the costs within a year, if the company doubles its advertising costs, sales should show a significant increase and there is no guarantee of this. Reduce price by 20% By reducing the price, Jones Blair will be more competitive with other brands.
Right now, Jones Blair is prices significantly higher than all other brands and when a consumer sees the brands side by side at a store, they may not realize the higher quality of Jones Blair paint, just the higher price and immediately select against. A major issue is since reducing the price 20% reduces the profit margin to 15%, to maintain the same profit while reducing the price, the sales must be $28 million for this year. This is an increase of 233% in one year to justify reducing the price this much. This is a highly unlikely target.
Another potential problem is Jones Blair could lose the consumer’s perception of the company being high quality, high customer focused. Jones Blair has continually put focus on being the leader in quality and customer satisfaction and if the company’s prices are the same as all the other brands, what makes Jones Blair stand out? Add one additional sales representative Adding an additional sales representative has the potential for growth if they are in the right territory and have the ability to sign new accounts.
To justify hiring this sales representative to focus on the non-DFW area at $60,000 per year, the employee would have to bring multiple accounts in one year (based off average dollar purchase per year of current retail accounts) when the current sales force has only managed to bring in 5 in the past 5 years. Also with this point, the VP of Sales admitted that the sales force has bandwidth to bring on more accounts. Investigation needs to be done on why the sales force is struggling to acquire new accounts.
Issues could be the sales force does not have proper stretch goals to push for more accounts, the commission is not high enough to motivate the sales force to find new accounts, the market is saturated and finding new accounts is extremely difficult or Jones Blair’s current sales representatives just cannot get the job done. Control Costs This suggestion requires no action. The company should continue with the current strategy and focus on controlling costs and increasing profit margins.
IV. Selected Solution:
Which segment should Jones Blair pursue? Jones Blair should pursue more accounts in the non-DFW market. At the present time, Jones Blair sells mostly to do-it-yourselfers in the non DFW market. There is availability in the areas not serviced by the big box retailers. Jones Blair will be able to make a name for themselves as the high quality, easily accessible provider for paint. The company should focus on professional painters. What is this market missing that Jones Blair could provide? What strategy should Jones Blair adopt to reach the segment identified? The company should increase advertising in local magazines and newspapers and hire one additional sales representative specifically for this market.
The company needs to have a presence in more retail outlets and therefore, should expand distribution to the more rural non-DFW areas that big box competitors do not have locations. Jones Blair should also hire one additional sales representative specifically for this area. Having a sales representative specifically for this market, the company can continue the focus of customer oriented and high quality by creating relationships with new accounts as they have successfully done in the past. Jones Blair should also investigate why the current sales force has been unsuccessful at acquiring new accounts.
To implement the strategy, Jones Blair will hire one additional sales representative, preferably that already is located and familiar with target area and has worked in the paint industry. To locate and onboard a new employee can be time consuming so the company should begin immediately. While the company is searching for the new sales representative, the marketing department should research and create new advertisements for local newspapers and magazines in the non-DFW rural area the sales representative will be targeting.
If Jones Blair finds the perfect sales representative, one who is already familiar with the area and has a paint background, onboarding should take no more than a month. With this timeline, if this strategy was implemented today, the new advertisements should be rolled out in no later than 2 months. Also, Jones Bair should put pressure on the VP of Sales to solve the problem of the current sales force not acquiring new accounts. What is the underlying issue and how can it be resolved? Starting immediately, this issue should have research completed and data supporting the findings in no later than 3 months.