Gregory Hynes Case

Gregory Hynes

10/14/14

Janmar Coatings, Inc. Case Brief

A. Problem identification and justification:

The problem that Janmars current overall strategy faces is, based on recent trends, they are currently targeting the wrong market where is less growth potential. The recent trend in the paint industry has been a growing number of consumers becoming do-it-yourselfers expecially in the non-DFW areas where it is believed to account for 90% of non-contractor paint volume sales. The number of do-it-yourselfers in the DFW area is also significant with around 70% of paint volume sales believed to come from this market. Janmars current product strategy is geared more towards the professional paint market due to their premium product as well as their distribution strategy of selling through paint stores, hardware stores, and lumberyards, which would be more frequently visited by the professional painters. Janmars current market share reflects their strategy with a 29.2% share in the professional market in DFW area and a 56.3% share in the non-DFW professional market. In the DIY-er market they hold a 10.6% share in the non-mass merchandiser market in the DFW area and a 14.6% share in the non-DFW market. This is problematic because the non-DFW area is growing at 6.4% average annual dollar sales increase while the DFW area is falling 1.4% per year. With 90% of non-DFW area sales being DIY-ers Janmar must shift their focuses towards this market if they are to continue to see growth from year to year

B. Alternative identification.

a. Strategic alternatives

i. Increased focus on the non-DFW DIY market

ii. Expanding their product placement by getting it onto the shelves of mass merchandisers as well as the paint stores, hardware stores, and lumberyards

iii. Lower their price of paint

iv. Focus their advertising on the non-DFW market

b. Tactical alternatives

i. Introduce new paint line geared towards the DIY market

C. Evaluative criteria.

a. Profitability- net profit before taxes in 2004 was $1.14 million. Any alternative must exceed this number

b. Contribution margin- lowering the price of their paint would effect the contribution margin of 40% Janmar is currently operating at

c. Market share- how would the alternative impact their share of the different markets. How much would a shift to focus on the non-DFW area impact the DFW area sales

d. Cannibalization- how would