• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Situational Analysis of Jones Blair Paint Company.

Extracts from this document...

Introduction

´╗┐Tatyana Utkina Dr. Barksdale MK 4900 September 11, 2012 Jones Blair Case Situational Analysis 1. Industry 1. The US paint industry is divided into 3 broad segments: 1. Architectural coatings 2. Original equipment manufacturing (OEM) coatings 3. Special-purpose coatings 1. Architectural coatings account for 43% of total industry dollar sales 2. OEM coatings represent 35 % of total industry dollar sales 3. Special-purpose coatings account for 22% of total industry dollar sales 4. US paint industry is a maturing industry 5. Industry sales in 2004 were estimated to be slightly over $16 billion. 6. No new competitors are entering the market, competition decreased by 40% from 1980 to 2004 7. The number of paint companies is declining at 2-3% per year 8. Estimated US sales of architectural paint coverings and sundries are $ 12 billion in 2004 9. The 7 biggest companies (Sherwin-Williams, Benjamin Moore, the Glidden unit of Imperial Chemicals, PPG Industries, Valspar Corporation, Grow Group, and Pratt & Lambert) account for 60 % of sales 10. Architectural coatings are a mature market with long term sales growth projected in the range of 1 -2% per year 11. Demand depends on: 1. House redecorating, maintenance, and repair as well as sales of existing homes and home, commercial, and industrial construction 2. ...read more.

Middle

Awareness increase of 30% among DIY 1. Cons: 1. Less focused 2. What will advertising do Jones Blair, given that about 75% of the audience is not buying paint 3. Increase advertising budget to $710 K (Appendix 2) 4. Must generate $1 mil in additional sales just to break even and cover cost of the new advertising (Appendix 3) 1. 20% price cut on all paint products to achieve parity with national paint brands 1. Pros: 1. Completive price 2. Possible market share gain 3. When price decreases by 20%, the sales go up 33% (Appendix 4) 1. Cons: 1. Jones Blair may not be able to sell enough volume to cover COGS. 2. Jones Blair does not look like premium paint in the eyes of consumers. Perception of lower quality. 1. Add one additional sales rep whose sole responsibility is to develop new retail account leads and presentations and cal professional painters to solicit their business through Jones Blair?s dealers 1. Pros: 1. Cover more bases by doing more contracts with retailers or professional painters 1. Cons: 1. Do sales reps focus on retail accounts or professional painter recruitment? 2. Contractor Sales in DFW are minimal/ No use for another sales rep 3. Sales reps are not aggressive and not very affective 4. Additional sales needed to hire a new rep is $171,428 (Appendix 5) ...read more.

Conclusion

Current advertising expenditures = Net sales * Advertising budget of 3% of net sales Current advertising expenditures = $12 mil * 03 = $360 K New advertising expenditures = $350 K + $360 K = $710 K 3. Additional advertising / Contribution = Additional break-even volume $350,000 / .35 = $1 mil in additional sales 4. Current contribution = 35% Price reduction = 20% Reduction in contribution margin = 35% - 20% = 15% Gross margin = Current Sales * Current contribution Gross margin = $12mil * 0.35= $4.2 mil To maintain the current gross margin, we need: ($12 mil+ x) *.15 = $4.2 mil x = $16 mil $16 mil - $12 mil = $4 mil $4 mil / $12 mil = .33 If Jones Blair drops the price by 20% the sales will increase 33%. 5. The required additional sales to recover cost of sales rep = Annual wages / Contribution $ 60,000 / 0.35 = $ 171,429 $ generated by each store to remain profitable = $ amount needed to stay profitable / retailers located outside of DFW $4.2 mil / 120 = $35 K # of accounts to break-even = The required additional sales to recover cost of a sales representative / $ generated by each store to remain profitable $171,429 / $35 K = 5 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. SWOT and Pestel analysis for Carlton Forum leisure centre

    (Peng. 2008) Resources. Intangible. Strength weakness capabilities membership Has great quality of service with a decent price Staff skills Ability to provide customers with the best service. Frontline staff. Face of the business thus having the power to positively represent the business. Customer service Ability of providing customers with the best quality service.

  2. Pro's and Con's of Documents

    for us to narrow down the number of applicants * It also shortens the number of potential interviews * We might of lost exceptional applicants due to not judging them right from their application form * Time consuming for us * This procedure was not a fair way of judging

  1. Marketing plan for Trung Nguyen coffee company.

    > Sampling events at Trung Nguyen's coffee shop owned or franchise by Trung Nguyen's coffee. This kind of sampling should be used to show the distinct relative advantages of the fresh coffee of Trung Nguyen coffee. In addition, premium should be offered in some period when introducing a new coffee product.

  2. SWOT Analysis

    The purpose is to form the basis of future health programs to promote a healthier Malaysia (Pang, 2006). YHS Company should take this opportunity to promote its brand to the consumers. * 4.3.2 Competition YHS Company focuses on producing healthy drinks whereas its competitor F&N Company focuses on producing unhealthy drinks such as coca-cola and Sarsi.

  1. Business plan. The business that I am going to produce is a personalised logo ...

    As of this there are also disadvantages of starting a partnership- The profit must be shared equally among the partners, you do not have as much control over a business all partners will want to have a say in all important decisions, There can be disagreements between the partners.

  2. The main purpose of this research is to know and analyze whether the Olympic ...

    The detailed analysis on the problems is been taken into consideration and the research process related to the human behavior is been totally specified within this research method and this particular qualitative research method is been utilized in many fields such as the academic discipline, the social studies as well

  1. Customer Service Analysis Between MacDonald Hotel and Chester Zoo.

    or for advice they should be able to answer them straightaway the staff at Chester Zoo were very knowledgeable because every employee has to go through a vigorous training program which also includes knowing things about animal welfare. Maintaining safety in a Zoo is very important.

  2. Suzlon Wind Power Company Analysis.

    across wind farm project areas in India productivity of over 1,00,000 heads of livestock. Global Footprint Geographical Presence of the Suzlon is in 33 countries spread across 6 continents. The Key Markets where the company has installed its presence are as follows, Asia Pacific - India, China, Australia, Japan, Sri

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work