Jones Blair Case Analysis Essay
STRENGTHS 1. According to me the biggest strength for Jones Blair is their high quality of products, as they have been in the industry for a very long time and have invested a decent amount into research and development work. This coupled with knowledgeable and experienced sales representatives who are helpful and well liked by the customer’s adds to be their strength. They also sell their products to both Professional painters and DIY markets. WEAKNESS One of the biggest weaknesses for Jones Blair in the market is that they are not competitively priced in comparison to their competitors.
Jones Blair is in fact the highest prized paints in the market. This could be a big disadvantage to the company as the DIY market in the in DFW area holds the most major market and accounts to about 70% of sales comprises of DIY painters who according to a survey focus mainly on cost, and paint is just a commodity for them. They choose the store first and decide the brand which makes it obvious that they tend to focus on getting whatever is cheap instead of looking out for quality of paint. In addition to that they have only 8 sales representatives and spend about 8% of net sales on advertising. OPPURTUNITY
The paint Industry is a maturing industry where Professional painters look for high quality paints whereas Do it yourself painters focus mostly on cheaply available products. THREATS Because of the growing pressure by the Environmental Protection Agency(EPA) to reduce volatile organic compounds(VOC),the profit margins have declined considerably, besides facing a strong competition by substitute products such as aluminum and Vinyl siding. Also there is a very huge completion from mass merchandisers and big paint companies especially in the DFW,Do it Yourself segment which holds the major industry share.
I think that strengths, weakness, opportunities and Threats do not necessarily outweigh each other every time in every service area, but it is also a possibility sometimes. For instance, one of the biggest strength for Jones Blair is their high quality in products, and the amount of research and development work they have put into their products because of which their products are charged more premium which works against them in the DFW consumer markets because people in those markets are only interested in purchasing cheap products and don’t care much about the quality.
Although their weakness outweighs the strength in the DFW consumer section in some areas like professional DFW segment their quality is their biggest asset as professional painters look for high quality paints with durability, and hence Jones Blair has a large market share in that area. So ideally the company should focus on those segments where they can play at their strengths, and have plenty of external opportunities to do so. 2. Which of the four segments above do you think is the worst and best fit for Jones Blair? Why?
Of the four segments the Worst Fit for Jones Blair would be Urban(DFW) consumer market because their share is only 5. 4% (1. 8m) of the total market share, although this is the service area that occupies 70%(33. 6 m) of the market share in DFW segment. This could be due to the large presence of mass merchandisers in consumer DFW segment and the fact that household consumers do not really care about the quality of paint and only view it as a commodity and try to go for the cheapest available brand. Jones Blair dominates the rural professional market as with a 56. % share in that market. This could be due to the fact that professional painters look for good quality products with more durability and are ready to pay a little higher price for that as well.
Good Quality paints is the forte of Jones Blair, and in addition to that mass merchandise brands have yet not entered the professional paints market, which works in the company’s favor. Although Non DFW professional market is the best fit for Jones blair,unfortunately it has limited growth potential because its total market share is only $3. M,which is about 4% of the industry paint share out of which Jones Blair already occupies more than 55% of current market share. So it has a very limited opportunity to grow in that segment. 3. Suggestion 1. To spend a 300,000 TV brand image advertising campaign split between DFW and non DFW areas. Current Contribution Margin: 35% or 0. 35 The amount of extra sales that would be required to cover this cost of 300,000 would be $300,000/0. 35=$8571428. 57 Jones Blair will have to increase its market share significantly to compensate for this additional cost.
Suggestion 2 20% price cut Contribution Margin: 35% 20% price cut will reduce the contribution margin to 15% or 0. 35 Calculation Currently Gross margin is 12m*0. 35=4. 2m In order to maintain this Gross margin, (12m+x)*0. 15=4. 2m X=16 Therefore required sales is $28 million. Suggestion 3: To invest $300,000 in in store advertising, merchandising and sales support. Calculation: Current Contribution Margin: 35% or 0. 35 The amount of extra sales that would be required to cover this cost of 300,000 would be $300,000/0. 35=$8571428. 57
I would suggest the third option to increase their in store advertising ,merchandising and sales support because a 20% price cut would require an additional sales on 28 million to maintain the $4. 2 million. This strategy would be rather difficult for the company as they spend a lot of money on research and fine quality of products. Using this strategy would mean throwing away the premium brand name that Jones Blair has maintained over the past many years, and it might confuse the customers too and might make the customers question their quality and they may end up losing their brand ecognition. If the company spends money on brand advertising it might help them create awareness about their brand but may not be useful in the long term, because mass merchandise customers first choose a store and then the brand placing less importance on the brand and giving more importance to cost of the product, so even if customers were aware of Jones Blair products they may choose to not buy because of their high prices.
The third option is most feasible because spending extra amount of money on sales support would ensure that profession painters who are the main customers of Jones Blair will remain happy. Also in store advertising and merchandising will ensure their increase in sales to corporations which at the moment might be their best bet as they need to increase contracts with large companies to boost their sales.