• 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 Analysis

    Vitamin can be added into Justea beverages and Yeo's brand products to come out with new products. One of the products of Yeo's brand which is Laichi can add in real fruit. * 7.1.2 Producing more healthy and nutritious drinks Product lines can be increased by producing more healthy and nutritious drinks.

  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. SWOT and Pestel analysis for Carlton Forum leisure centre

    The sport industry is defined as ' business involved both directly and indirectly in the provision, delivery and service of sport, casual and organised through participation and spectating which contributes to physical and mental health wellbeing' 4.1 internal analyses Internal analysis is an important way of access the business as

  2. The Impact of Migration on the Reduction of Poverty

    (de Walle, 1982). Its movement across the countries are tracked by application of human created geographical boundaries governed by respective countries' and international laws, and the status is normally determined by duration of stays The status can assume innumerous forms.

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

    the customers on their products which will help them in understanding the product exactly and if the customers are out of confusion then they will be able to but the products so that it will give benefits to the sponsored companies [6].

  2. SWOT analysis of Disneyland Paris

    become frustrated and angry as there will be a language barrier they are unable to fix, also they will not be able to navigate themselves around the parks via the maps and sign posts if they are not multilingual. This in turn would give Disney numerous complaints and decreasing their outstanding reputation.

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

    for up to 6 hours, including kitchen porter, prayer room and executive bedroom for Bride and Groom on wedding night. They meet the needs of these customers as they will be mainly Muslims that are attending the wedding so they have a prayer room to recite their prayers that take

  2. Suzlon Wind Power Company Analysis.

    It is the global leader in wind turbine generator research and development. The Technology Organisation is home to applied research, product development and technical support. The full spectrum of expertise is covered, including mechanical design, aerodynamics, material science, electrical design and software development.

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