Janmar Coatings Case Essay
I - Janmar Coatings Case Essay introduction. Central Problem: Fundamentally, Janmar Coatings, Inc. faces two concurrent issues that pose threats to their current and future sales. The main issues that must be addressed by Janmar Coatings are how to maintain and/or increase sales in an estimated maturing market while also facing a highly saturated market of competition. Furthermore, Janmar Coatings products are being sold to respectively, two differentiated customer bases with different buying behaviors [“do it yourselfers” and professional painters].
II. Issues: Specifically, Janmar Coatings must address several issues that attribute to the central problem.
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a. First, the market condition. Industry sources have estimated the overall market for Architectural Coatings to have matured and have projected long-term growth not to exceed 2 percent per year. These figures are relevant because Janmar Coatings can not target high growth in what appears to be a stagnate market. b. Second, the saturation of the market. While figures essentially indicate a decline in competition by actually companies in the market [2% decrease in number of companies], this is due to larger firms acquiring smaller firms. These acquisitions provide regional boosts for these firms in specific regions and geographic presence. Furthermore, competition at the retail level and shelf space has likewise accelerated in recent years. Another figure worth relevance to Janmar Coatings sales is the increase of competition at the paint manufacturing level as well. c. Third, the price sensitivity of do-it-yourselfer. Proximately 50 percent of the architectural coatings sales are accounted by do-it-yourselfers. Figures show that this market segment is growing. Critically though, these consumers are extremely price sensitive and Janmar Coatings products are priced in the premium category segment. This poses a serious issue towards growth within this segment when Janmar Coatings are the highest-priced paint in this segment. d. Finally, the effectiveness of their current sales representatives. While Janmar Coatings data indicts that their sales representatives are well liked, knowledgeable, and professional, they pose a serious threat to growth opportunities. Janmar Coatings sales representatives have essentially only retained their current accounts without expanding the cliental [five new clients in 5 years]. This is relevant because Janmar could potentially see this segment as a growth opportunity.
III. Recommendations: Based on the following issues and data provided within the case, the following would be the ideal recommendations as solutions to the central problem. a. An increase in advertising budget within the Dallas-Fort-Worth region (DFW) would potentially increase sales based on the market conditions. As noted, do-it-yourself painters account for a significant majority of the architectural coatings market at 50%. Yet as stated above, this target market also happens to be the most price sensitive and Janmar Coatings products are the highest priced within this category. Furthermore, retail outlets indict that 70% of sales within the DFW region are attributed to professional painters. Thus, an increase in local advertising towards do-it-yourselfers could potentially build more awareness within the consumers mind in the local market about Janmar. Brand recognition is critical when Janmar products are fighting cheaper brands on store shelves. Advertising locally is the soundest investment because it focuses on a growing target market [do-it-yourselfers] in an untapped market for Janmar. Likewise, investing locally will be cheaper in cost of goods sold relative to investments in our regions. This increase in advertising could also be implemented alongside with promotions to further entice local do-it-yourselfers about the brand. b. Another solution for addressing growth would be an additional sales representative. Retail outlet surveys indict that 70% of the non-DFW sales went to do-it-yourselfers. This is relevant because professional painters have their reputation at stake and prefer a higher quality product like Janmar Coatings when buying a product. This target market of professional painters outside the DFW region remains untapped. An additional sales representative would aid the current force in bring in to new cliental, which is must need in a stagnate market. The market conditions outside DFW region are ideal because price sensitive
do-it-yourselfers are already purchasing Janmar but professional painters aren’t. Additional sales representatives would address this issue by bring more clients to their current base from strategically untapped outside DFW regions.