Jones Blair should pursue the non-DFW rural segment. This segment has experienced rapid growth, Jones Blair has strong existing channels, and consumers are less price sensitive. Within this segment, adding a sales representative to target professionals could gain new accounts and increase sales without requiring a large investment. Doing nothing risks losing competitive advantages and potential for long-term growth.

1. Jones Blair Case Discussion
1. Which segment(s) should Jones Blair pursue? Why?
- Size of each segment
Total market size: 80MM (p5)
Urban size: 60% (p5)
Household size: DFW 70%, non-DFW 90% (p5)
DIY Professional
Urban
(DFW)
80MM * 60% * 70% =
33.6MM
80MM * 60% * 30% =
14.4MM
Rural
(non-DFW)
80MM * 40% * 90% =
28.8MM
80MM * 40% * 10% =
3.2MM
- Competition: Intense competition in DFW area. Mass merchandisers control 50% of
DIY's market in DFW area with their own private brands.
- Future growth: DFW area showed little growth. Non-DFW area grew rapidly
- Accessibility: Mass merchandisers have control in DFW, Jones Blair holding on to their
channels in Non-DFW
- Consumer needs:
• DFW/DIY: Price sensitive due to heave low price emphasis by mass
merchandisers. Large number of paint outlets and multiple brands allows for
opportunity for comparative shopping.
• Non-DFW/DIY: Fewer opportunities for comparative shopping. No mass
merchandisers. Less price-sensitive.
• Professional in both DFW and non-DFW: Care about quality and service,
less concerned about price.
- Jones Blair’s current market share in each segment
Total sales volume: 12MM (p6)
Urban size: 50% (p6 Exhibit 4)
Household size: DFW 30%, non-DFW 70% (p10)

2. Household Professional
Urban
(DFW)
12MM * 50% * 30% = 1.8MM
1.8MM / 33.6MM = 5.4%
12MM * 50% * 70% = 4.2MM
4.2MM / 14.4MM = 29.2%
Rural
(non-DFW)
12MM * 50% * 70% = 4.2MM
4.2MM / 28.8MM = 14.6%
12MM * 50% * 30% = 1.8MM
1.8MM / 3.2MM = 56.3%
- Jones Blair's capabilities/weakness
JB offers good service: Maintain close relationships with clients. Helpful professional, and
knowledgeable sales representatives
JB is a premium-priced paint. It loses competition in urban outlets that carry multiple brands
2. Among the four different plans proposed, what strategy should Jones Blair adopt?
Contribution Margin = Unit Contribution/Price (conceptually it's the percentage of contribution for
a certain amount of sales)
Jones Blair's contribution margin: 35% (p.9)
BE Sales = BE Volume * Price = Fixed Cost/Unit Contribution * Price
= Fixed Cost / (Price* Contribution Margin)* Price = Fixed Cost / Contribution Margin
• Increase advertising budget to DIY by $350,000 (VP of Advertising)
BE Sales = $350,000 / 0.35 = $1MM,
BE market share: $1MM / $6MM = 16.7% (or $1/$1.8=55.6% in DIY-DFW)
• Cut price by 20% (VP of Operations)
Current Price Reduction
Sales $100 $80
VC $65 $65
Contribution $35 $15
Contri. Margin35% $15/$80 = 18.75% (which means need to almost double the sales)
BE sales here means the sales needed to achieve the same profit:
Jones Blair's current profit: 12MM x 0.35 = 4,200,000
BESales = 4,200,000 / .1875 = 22,400,000

3. • Add a sales rep to target professionals in Non-DFW area (VP of Sales)
BE Sales = Cost of One Rep/Contribution Margin = $60,000/.35 = $171,428
Total number of accounts in Non-DFW area: 200 total x 60% = 120 accounts
One account sales in Rural area (for household & professional) = $6MM /120accounts =
$50,000/account
BE accounts = $171,428 / $50,000 = 4 new accounts
• Do nothing (VP of Finance)
- Profitability is more illusionary than real. Dollars growth due to price increase. Paint gallonage
remained stable. No real growth. (p6. 2nd
para)
- Failure to act in the short-term might have LONG-TERM negative results
- May lose any potential competitive advantage