• 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

    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

  2. Unit 9: Marketing Strategy

    The only foreseeable way for Fabulous Frostings to grow would be to diversify into providing other products to attract new target markets. Nevertheless, I do not see such strong diversification in the near future for Fabulous Frostings and would therefore remain to place under the category of low market growth.

  1. Marketing plan for Trung Nguyen coffee company.

    General purpose 20 feet containers are used. o Motivating the channel Trung Nguyen will introduce its products at 20% off the wholesale price during the first month to promote supermarkets and stores to buy the product. 3.2.4 Promotion Trung Nguyen gets closer to its customers by the means of sponsoring, sampling events, and print advertising.

  2. SWOT Analysis

    F&N Company is very successful in the soft drinks industry. According to the Global Market Information Database (2006), F&N Coca-Cola Sdn Bhd has the highest company shares of the soft drinks sold, while Yeo Hiap Seng (M) Bhd is located on the third place (Global Market Information Database 2006).

  1. SWOT analysis of Disneyland Paris

    Fast passes are another strength Disneyland offers to its customers, although customers would have to pay an extra amount they receive the benefit of not having to wait in long queues for the rides, which could frustrate the more impatient customers.

  2. SWOT and Pestel analysis for Carlton Forum leisure centre

    Especially with leisure centres such as Carlton forum who operate on a bases that the community comes first. Improvements in employee rights e.g. Maternity rights. +3 +3 +9 This ensures that each and every employee has equal and positive right and the ever changing improvements means that it makes for a better work place.

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

    Maintaining safety in a Zoo is very important. When a customer enters the Zoo they should feel safe and secure. There are signs throughout the zoo such not feeding animals through the cages, Zookeepers; Zookeepers are the people who do the day to day work of feeding and cleaning the animals.

  2. Suzlon Wind Power Company Analysis.

    The company continues to expand its technological capability since technology is central to wind market leadership. The focus is on overall life cycle costs and customers? return on investment. In other words the company focuses on continued improvements in reliability, product, operation and maintenance cost and energy cost reductions.

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