Jones●Blair Company markets its paint and sundry items in over 50 counties in southwestern United States from its plant and headquarters in Dallas, Texas.

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The Academy of Economic Studies - Bucharest

Faculty of Economic Studies in Foreign Languages

Jones • Blair Company

Case study

Coordinator Prof. Carmen Balan Students

Mitovski Andrea

Nemoianu Estera Laura

Popa Camelia

Group 135, series B

Bucharest, 2005

.Situation Analysis

?. Internal environment

Company is a privately held corporation that produces and markets architectural paint under the Jones?Blair brand name. In addition to producing a full line of architectural coatings, the company sells paint sundries (brushes, rollers, thinners, etc) under the Jones?Blair name, even though these items are not manufactured by the company. The company also operates a very large OEM coatings division, which sells its products throughout the U.S. and worldwide. Therefore, the target markets of this paint manufacturing company are: Architectural Paint Coatings & Sundries, a $80 million dollars market excluding contractor sales; and OEM Coatings.

Jones?Blair Company markets its paint and sundry items in over 50 counties in southwestern United States from its plant and headquarters in Dallas, Texas. The eleven county Dallas-Fort Worth (DFW) metropolitan area is the major business and financial center in the company's service area.

The first target market - to which we refer in this case study, the Architectural Coatings - is mature and with average annual growth 1-2%. It can be divided by area as DFW & Non-DFW, where DFW has 60% of overall sales. The market segments to which the company addresses are: the do-it-yourselfers (DIY), the professional painters, and the contractors.

DIY household buyers were believed to account for 70% of non-contractor-related volume in DFW and 90% of non-contractor related volume in other areas. Mass merchandisers control 50% of DIY market.

A company survey of retail outlets indicated that 70% of sales through their dealers in Dallas-Fort Worth area went to the professional painter, while 70% of the sales through their non-DFW outlets went to the do-it-youselfers. Moreover, the Jones?Blair Company contractor sales in the metropolitan area and in other areas are minimal.

Jones?Blair has 15% market share in these areas, excluding contractor sales (in 1997, the company architectural paint and sundries sales volume was $12 million,out of the total $80 million sales volume for the 50-county service area), and a 4% dollar sales annual growth rate.

Its products are the highest-priced in the service area, the 1997 figures showing that paint cost-of-goods sold, including freight expenses, was 60% of net sales. The products are also seen as of a high quality.

Those products are distributed in 200 independent paint stores, where 80 of them located in DFW (40% of the outlets are located in the 11-county DFW area, while the remaining outlets are situated in the other 39 counties in the service area).

In terms of promotion, the 8 sales representatives of the company are well known for providing good services and professional suggestions. Furthermore, 3% of the company budget (net sales) is spent on advertising and sales promotion efforts. 55% of these are allocated to cooperative advertising programs with retail accounts. The cooperative program, whereby Jones?Blair pays a portion of an account's media costs based on the dollar amount paint purchased from Jones?Blair , applies to newspaper advertising and seasonal cataloues distributed in a retailer's immediate trade area. The remainder of 45% of the advertising and sales promotion budget is spent on in-store displays, corporate brand advertising, outdoor signs, regional magazines, premiums, and advertising production cost, and Web site ( www.jones-blair.com).

?. External environment

In order to maintain or gain a good position on the market, a business unit has to monitor key macroenvironment forces (demographic-economic, technological, political-legal, and social-cultural) and significant microeconomic actors (customers, competitors, distributors, suppliers) that affect its ability to earn profits.

In particular, for Jones?Blair Company, the situation analysis of the external environment is presented below.

. Analysing the Macroenvironment

* Economic factors: the companies seeking growth and a higher sales base to support increasing costs are making mergers and acquisitions; the architectural coatings segment faces competition from alternative materials (aluminium and vinyl sidings, interior wall coverings, wood panelling); there is fierce competition among paint manufacturers and distributors, while most customers tend to be very price sensitive.

* Technological factors: paint companies developed higher-quality products that reduced the amount of paint necessary per application and the frequency of repainting.

* Regulatory factors: U.S. paint manufacturers are under growing pressure to reduce emissions of volatile organic compounds (VOCs) from paints and to limit consumption of solvents.

* Social-cultural factors: there is an increasing level of house redecorating, maintenance, and repair, as well as sales of existing homes, and to a lesser extent new home, commercial, and industrial construction. There is also a trend toward DIY painting by household consumers.

2. Analysing the Microenvironment

* Customers: the target customers of Jones?Blair are the do-it-yourselfers, the professional painters, and the contractors. DIY purchasers usually view paint as paint, a covering, and try to get the best price, but there are is a significant number of people who desire service as well in the form of information about application, color matching, surface preparation, and durability. As recent Home Improvement Research Institute surveys show, DIY painters first choose a retail outlet for paint and paint sundries, then choose a paint brand. Moreover, when deciding on the store, do-it-yourselfers choose different stores 46% of the time, look for the best price 22% of the time, and only 27% remain faithful to one store, while the remainder of 8% choose a store close to their home. Home centers and mass merchandisers represent the two most frequently patronized categories of retailers shopped by DIY for paint and paint sundries. Professional painters, on the other hand, seek quality products, since their reputation is at stake. They want paint that is durable, washable, and that will cover in a single coat. They deal with stores that can mix large quantities of custom colors and expect to work with knowledgeable store employees. Specialty paint stores and lumberyards are the most patronized retail stores by professional painters for paint products and sundry items. Most contractors simply want a coating and strive for the lowest price.
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* Suppliers: We refer to the manufacturers of paint sundries (brushes, rollers, thinners, etc), as Jones?Blair also sells paint sundries under Jones?Blair name, even though these are not manufactured by the company.

* Competitors: Competition is fierce both at the retail level, and at the paint manufacturing level. At the retail level, 50% of architectural coatins are sold under private, controlled, or store brands. Sears, Kmart, Sherwin-Williams, and Home Depot have multiple outlets in DFW. Competition for retail selling space in paint stores, lumberyards, and hardware stores has also increased. At the paint manufacturing level, 7 major ...

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