Janmar Coatings, Inc.

MBA 8650-003

3 February 2018

Case Summary One - Janmar Coatings, Inc.

a. Statement of the Problem – Janmar Coatings, Inc. is positioned in a maturing market with low margins and projected sales growth, so the company needs to focus its marketing and sales efforts on the market segment where they remain competitive.

b. Situation Assessment:

i. Identification of Market

        - The paint coatings market we are focusing on consists of 1,000 outlets who sell Janmar’s offerings in over 50 counties in Texas, Oklahoma, New Mexico, and Louisiana. We will mainly be focusing on the Architectural coatings market which comprises 43 percent of the total industry dollar sales. Architectural coatings and sundries have estimated sales of $12 billion-plus in 2004, but it is a maturing market with long term sales growth projected at 1-2% each year which essentially keeps up with inflation. Mergers and acquisitions in the US paint industry have been fueled due to this slow growth along with needed R&D costs and costs associated with government regulations. The number of paint companies is estimated to be around 600 which is 40 percent less than in 1980, and this number decreases by approximately 2-3 percent each year. Major brands account for up to 60% of sales in the architectural market.

ii. Segmentation of Market

            - The main outlets for paint sales are through mass merchandisers, home improvement centers, specialty paint stores, lumberyards, and independent hardware stores. Specialty paint stores are estimated to account for about 36 percent of paint and sundry sales, and Hardware stores and lumberyards account for about 14 percent with the rest of the sales coming from architectural coatings that are sold under private, controlled, or store brand names that are sold by mass merchandisers and home improvement stores. Do-it-yourself painters account for approximately 50 percent of architectural coatings dollar sales, and the two outlets most frequently patronized by this market are mass merchandisers and home improvement centers. Do-it-yourself painters are typically very price sensitive and have shown to first choose a retail outlet for paint and sundries, then choose a paint brand. Professional painters are the next market and account for 25 percent of architectural coatings dollar sales. Professional painters frequently patronize specialty paint stores and lumberyards where quality is important to them along with the level of service these outlets provide. The service area that Janmar Coatings markets to can be broken down between the Dallas-Fort Worth (DFW) surrounding area and everywhere else Janmar markets since DFW contains 450 of the 1,000 outlets.

iii. Selection of Target Market(s)

           - Since Janmar Coatings’ offerings are the highest priced paint in the service area, the company’s target markets are specialty paint stores and lumberyards outside of the DFW area. This is because professional painters, who are not price sensitive, frequently choose these locations to make their purchases. Sales are also increasing in the non-DFW areas where specialty/hardware stores outdistance mass merchandisers in these non-metropolitan areas.

iv. Marketing Mix: