• 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. Pro's and Con's of Documents

    A good advertisement will, include: a meaningful job title, a salary or salary range and details of where the job will be based. It is helpful to include a brief paragraph outlining the main responsibilities of the role and the skills and experience required.

  2. Marketing plan for Trung Nguyen coffee company.

    A free- with purchase premium like a branded set of coffee cups or branded coffee should be offered to the consumers. As well in- and- on-pack premiums are mediums to affect the customer behavior to buy Trung Nguyen's coffee. > Trung Nguyen will not use any price- offs promotion because

  1. Virgin Atlantic PESTLE analysis.

    Competition is thought to improve efficiency in the business and be good for customers, but if there is too much competition then the company will not be making a profit. Like all airlines Virgin Atlantic must observe all rules and regulations of the FFA (federal aviation authority)

  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. Unit 9: Marketing Strategy

    I would assume that the 20% of people buying from a local bakery would live in Alford and Mablethorpe as these towns have local bakery owned by Gray and Goodliffe, my main competitor. I was pleased to see the result that nobody answered that they never buy bread or cakes

  2. The Impact of Migration on the Reduction of Poverty

    It would be premature to speculate on the long-term impact of such decreases on the poverty levels. 1.6. Data Analysis: The research method being qualitative in nature, the method of analysis is manual which is accepted as a correct form for the integration of the research analysis.

  1. PEST is a planning tool which is used by a business to evaluate and ...

    Cornish pasties as they are seen as not healthy due to how many calories they provide this means that people will buy a product which provides less calorie consumption so that they do not go over the guide. Ginsters could overcome this by creating a healthier type of pastry to contain the contents of their Original Cornish pasties.

  2. Suzlon Wind Power Company Analysis.

    The progressive policy & regulatory framework prevailing in the country has been encouraging the growth of the wind power sector and driving investment at a fast pace. 1. Ministry of New and Renewable Energy (MNRE), in its ?Strategic Plan for the New & Renewable Energy Sector for the period

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