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Analysis of Jones-Blair Company paint makers

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Introduction

Jones-Blair Company Strengths - JBC offers a high quality product that is seen by those with knowledge of the industry as the premium product available - JBC has an excellent sales representative staff that is seen as knowledgable, friendly, and trustworthy - although architectural coatings are considered to be a mature market, the long-term growth potential in the industry is 1 to 2% per year - competition in the industry is decreasing, with 40% fewer companies in the industry than in 1975 - Smaller specialty paint and hardware stores/lumberyards have outdistanced mass merchandisers in non metropolitan areas, due to the lack of home-improvement centers and mass merchandisers in less populated areas, as well as the customer relations and service the smaller organizations develop in these areas - professional painters often turn to JBC and similar products because they understand and bank their reputation on the quality of the products they use, and appreciate retailers who give the ...read more.

Middle

the dollar sales made in the industry are by people who generally are purchasing paint solely on price - contractors also generally ignore quality and look for lowest price when purchasing paint Opportunities - JBC could increase advertising by $350,000, with an emphasis on television, to achieve higher awareness among the Dallas-Fort Worth do-it-yourselfer market to at least 30 percent o This would almost double the current marketing budget, which is $360,000 (12 mil * 3%), and probably would not help much; brand awareness is not the only issue for JBC, buyer behavior among DIY painters is an issue as well - JBC could cut prices by 20% to reach a price that is similar to many of its competitors, due to the fact that even the sale price of JBC products is higher than the everyday price of paints at mass merchandisers o This would greatly cut into the contribution margin for JBC, and would probably cost ...read more.

Conclusion

market share in this industry, especially for regional companies trying to compete with national companies - may also bite into JBC's position as the premium paint line - 60% of the architectural coatings market is controlled by 7 large companies o half of all architectural coatings are sold under private, controlled, or store brands, all of which the large competitors sell under - Wal Mart has begun to effectively compete in non-metropolitan areas, meaning that other mass merchandisers could soon follow suit - Competition at the retail level has accelerated in recent years within the DFW area - JBC admits that the mass merchandisers, which control half of the DIY paint market in the DFW area, not only have lower prices, but also have good quality - Despite the growth of dollar sales in the past decade, paint gallonage sales have remained the same for the past 5 years, and JBC is reaching the threshold for its prices ...read more.

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