Jones Blair is a regional paint manufacturer that has to compete in a mature market (sales growth are expected to be the general rate of inflation) and also very concentrated, since the seven major producers account for upwards of 60 percent of sales.
Therefore, in this market context, Jones Blair will need to increase its sales in volume, but keep its profit margin. The strategies to be considered in this case can be based on: consumer segmentation, targeting and managing marketing mix.
Key Issues
Recent research indicated that do-it-yourself painters do not care much about the brand and, consequently, about the quality of the paint (brand reputation was the 4th key criteria mentioned by the buyers to choose a covering) and it has become a commodity for this kind of consumers.
Also, the company has been facing strong environmental pressure due to new regulations about the emissions of volatile organic compounds (VOCs).
It is necessary for the company to invest in R&D and it is also likely that the company will not see its costs of production decrease due to the activities of R&D.
Alternative Courses of Action
The market for do-it-yourself consumers is forecasted to reach US$ 5.74 billion by the year 2003 (see appendix 2) and it seems to be the best segment for Jones Blair to focus its resources on, since it represents 90 percent of non-contractor-related volume outside DFW area and 70 percent in DFW.
The company’s most important market is Dallas-Fort Worth, which reaches 60-67 percent of total sales in USD within the years 1992-1996 (Appendix 1).
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Nevertheless, this percentage has been declining throughout the years, on a decreasing average basis of 1.43 percent per year (Appendix 1).
The market in DFW is getting more competitive and in Jones Blair’s outlets there has been a decline in gallonage volume. Nevertheless, non-DFW outlets historically have grown in gallonage volume sales, which means that consumers in DFW area seem to be more price sensitive than outside this area.
Recommendations
Jones Blair will need to play up strength on distribution. This also means that they could expand their business into other areas. It is likely to be more profitable and successful to the company to sell to consumers located outside DFW area in this case. As the Vice President of Sales figured, it will cost $60,000 per year plus commission to the additional sales representative.
The company will also need to segment their market and focus more on its most important segment of do-it-yourself consumers and work or its premium positioning through promotion efforts regarding Jones Blair’s best cost-benefit for paints.
