2. U.S. Paint Industry
Segment Architectural
Coatings
Original Equipment
Manufacturing Coatings
Special-Purpose
Coatings
% of total
industry
dollar
sales
43% 35% 22%
Architectural Coatings
General purpose paints and varnishes used on residential
and commercial structures
OEM Coatings
Used for durable goods such as automobiles, appliances,
and industrial machinery
Special-Purpose Coatings
Used for special applications such as bridges, marine
applications, and highway and traffic markings
Three Segments of Industry:
3. Jones Blair
• Headquarters: Dallas, Texas
• Service Area:
1. Texas, Oklahoma, New
Mexico, and Louisiana.
2. Dallas-Fort worth (DFW)
area
• Competition:
– 600 paint companies in
the US
• 1997: Total sales $ 80million
– $12 million net sales of
Jones Blair architectural
paint and allied products
4. Jones Blair
• Distribution:
– 200 independent paint stores, lumberyards, and
hardware outlets.
– 40% of outlets are in DFW area
Promotion:
8 sales representatives
Salary:$480,000annually
1% commission on
sales
3% of net sales spend
for advertising & sales
promotion efforts
6. Problem
Where and how does Jones-Blair Company
deploy corporate marketing efforts among the
various architectural paint coatings markets in
their service area
• Should they target: Professionals or Do-it-
yourselfers?
• Where should they target: Dallas Fort Worth or
Non DFW?
• How are they going to accomplish this?
7. Internal Strengths
• Experience – Founded in 1928
• Strong relationships between sales
representatives and retail stores
• High quality
• Sell to both professionals and DIYers
• Cooperative advertising with retailers
• Motivated, determined and passionate
• A lot of research available
• Low Break Even - Excel
8. Only 3% of net sales goes to advertising
Ads only reach and influence 25% of target
CGS is 60% of net sales
Only 8 sales representatives
Narrow market penetration in DFW area.
No exclusive rights with retailers
Highest price in market
Internal Weaknesses
9. External Opportunities
• Market Growth: 1-2% per year
• Distributed to 200 of the 1,000 retail outlets in the area
• 40% of these retailers are in rural areas
• DIY painters first choose a retail outlet for paint and sundries
then choose a paint brand.
• Pro-painters are frequent buyers and look for paint that is
high quality, durable and easy to clean up
• The average dollar paint purchase per purchase occasion:
$74.00. Average of $12.00 on sundry
Market Growth
2000 2001 2002 2003
$80,000,000 $80,800,000 $81,608,000 $82,424,080
10. 600 different competitors
Competition is spending more on advertising
Competition is less expensive
Major in-house retailers have little knowledge
DIYers purchase paint once every four years and get what’s
convenient and inexpensive
Contractors want paint for the lowest price.
Demand effected by substitutes, long lasting products and
VOC regulations
External Threats
11. Total Market
$80 Million
Net Sales
Professional DIY
Urban
$48,000,000
60%
$14,400,000
30%
$33,600,000
70%
Rural
$32,000,000
40%
$3,200,000
10%
$28,800,000
90%
$14,400,000
$33,600,000
$3,200,000
$28,800,00
0
Total Market
Urban Professional
Urban DIY
Rural Professional
Rural DIY
13. What do you think Jones
Blair’s distinctive
competencies are?
Hint: There are 2!
14. Core Competencies
• Quality
– Best on the Market
• 1 Coat Coverage
• Mildew & Stain Resistant
• Pleasant Fragrance
• 1000’s of Colors
– Good fit with
professional painters
• Service
– Sales Representatives
• Well Liked
• Helpful
• Professional
• Knowledgeable
• 1st name basis with
customers
• Discuss both Business &
Family
• Run the Store
– Good fit with rural area
15. Alternatives
1. Increase advertising dollars by $350,000 and
use it for TV ads
2. Have an overall 20% price cut
3. Add one more sales representative
4. Continue to guard margins and control costs
5. President Barrett’s suggestions
1. Ad dollars used for print media instead of TV
2. 40% price cut to attract contractors
17. VP of Advertising
• Direct efforts to Dallas
Fort Worth-DIYers
• Increase awareness to
30 %
• Advertising Increase of
$350,000
• Television Coverage in
15 Counties
18. Pros/Cons
• Pros
– Low added costs
compare to competitors
– Extra $350,000
• Break Even: $3,400,000
– Increased Awareness
• Cons
– Almost doubling the
advertising cost.
– 75% of audience is not
buying paint
19. VP of Operation
• Advertising isn’t right
way.
• Need to be competitive
in DIYers
• Consumers are Price
Sensitive
• Cut Price by 20%
20. Pros/Cons
• Pros
– Competitive Price
– Gain Market Share
• In DIY Sectors
• Cons
– Break Even: $4,480,000
• Huge break even
– Lowers perception of
quality
21. Vice President of Sales
• Target: Non-DFW areas
– Where ½ of the sales and most
dealers exist right now
• Solution: Add another sales
rep
– There are already 8
– This rep would develop new
retail account leads and call on
professional painters to solicit
their business through our
dealers
– Cost to add another sales rep is
$60,000
22. Pros/Cons
• Pros
– Motivated to inspire team
– Potential for success
– Large Market
– Break Even: $2,571,429
• Not affected too much
• Cons
– Overlooked the DFW area
– Sales reps aren’t that
effective for immediate
breakthrough.
23. Vice President of Finance
• Keep everything the
same
– Continue to guard
margins and control
costs
24. Pros/Cons
• Pros
– Not Risky
– Keep doing what
company does best
• Cons
– Doesn’t solve the
problem
– Not a result oriented
approach.
25. President Barrett
• 40% price cut to attract
contractors
• Redirect Advertising
print media instead TV
– Newspaper & Catalogs.
– Focus to Rural
26. Pros/Cons
• Pros
– Attractive for contractors
– More Focused Advertising
can cover widespread.
• Cons
– Increase cost for
competitive bidding
– Constant Loss
– Break Even: -$14,280,000
27. Normal
Vp of Sales
Vp of Advertising
Vp of Operations
President & CEO
-16000000
-14000000
-12000000
-10000000
-8000000
-6000000
-4000000
-2000000
0
2000000
4000000
6000000
1
2400000
2571428.571
3400000
4480000
-14280000
AxisTitle
Break Even Analysis
Normal
Vp of Sales
Vp of Advertising
Vp of Operations
President & CEO
28. Why Rural Professional
• Competitive Advantage:
– Good Service & High Quality
• Good Fit:
– On a 1st name basis with store owners
• Control 45% of the market by professionals
painter.
• Best “Bang for the Buck”
29. Recommendation
• Actively pursue non-DFW Household and
Professional markets.
• Hire one additional Representative – NOW! who
is incharge of new account development.
• Seek more retail accounts in non-DFW markets.
• Sales Training
– Kick their butts into gear
– Clarify Roles
– New focus: Rural Professional Painters
– Increase personal sales by 5%
30. Recommendation
• Maintain prices, reduction in the price may be
boomerang effect.
• Engage in cooperative advertising with
current advertising budget.
Jones Blair is a privately held corporation that produces and markets architectural paint and sundries
Service area:
Over 50 counties in Texas, Oklahoma, New Mexico, and Louisiana.
The 11 county Dallas-Fort worth (DFW) area
1999:
$80 million of architectural paint and allied products sold in Jones-Blair’s 50-county service area
JONES-BLAIR Service Centers
2728 Empire CentralDallas, TX 75235(214) 353-1681 Phone(800) 325-6321 FaxCustomer Service
5201 SpruceBellaire, TX 77401(713) 661-9865 Phone(713) 667-9143 FaxEddie Gamez, Store Managerbellaire@jones-blair.com
801 Riverfront Pkwy.Chattanooga, TN 37402(423) 634-7734 Phone(423) 267-9713 FaxSteve Goodwin, Store Managerchattstore@jones-blair.com
9289 E. Park Ave.Houma, LA 70360(985) 580-0020 Phone(985) 580-0038 FaxBrad Price, Store Managerhoumasc@jones-blair.com
4419 97thEdmonton, Alberta T6E 6W6(780) 430-7665 Phone(780) 430-7853 FaxDavid Melara, Store Manageredmontonsc@jones-blair.com
There is $50,000 paint and sundry purchases in both DFW area and Non-DFW area annually.