Jones-Blair Case Report

Jones-Blair Case Report

Problem

The Jones Blair Company is a small paint (coatings) producer in the southwestern United States. The company plant and headquarters are located in Dallas, Texas. It does most of its business within this 11 county Dallas-Fort-Worth (DFW) region, along with 39 other counties in Oklahoma, New Mexico and Louisiana. Currently the company sells top quality architectural paint and accessories to various markets. The company also sells OEM materials to domestic and international customers. One of their main goals is to produce top quality coatings by continually researching and developing new solutions. In doing so, Jones Blair is one of the most expensive paints on the shelves. Jones Blair sells to mostly private, controlled store brands such as: Sear’s, Lowes, Home Depot, and Wal-Mart. This makes up 50% of sales, and specialty stores make up 36% of sales.

The Jones Blair Company has increased sales on an annual basis, but the sales volume has stayed the same. The main reason for this is research and development costs. The company is being challenged by a competitive industry. The company should determine where and how the company will market its architectural products in the southern US. Only 3% of net sales go to advertising, which is about 360,000. The ads only reach and influence about 25% of the target market. The Company distributes to about 200 of the 1,000 retail outlets. Currently, Jones-Blair’s sales are evenly distributed throughout the DFW and non-DFW regions. However, only 40% of the company’s retail accounts are located in the DFW area. This area also has more competition with all stores carrying multiple paint brands, all priced lower than Jones-Blair paint. DWF sales have dropped an average of $72,500 per year over the last 4 years, while Jones-Blair struggles to maintain competitive market share in this area.

Analysis

Jones Blair’s employees have developed alternatives to get rid of the company’s problem. The first of these alternatives is spending additional $350,000 in corporate brand advertising beyond what they are now spending in order to reach more of the do-it-yourself painter market in the DFW region. This proposition is based on a recent study that found brand awareness is directly related to purchase decisions. It is also probable that increasing the amount of spending could potentially reach non-DFW consumers as well. The second alternative is to cut prices by 20% on all paint products to achieve parity. This alternative is easy to justify because compared to the market, the price of Jones Blair products are extremely high. Choosing to cut the price should give Jones Blair a competitive advantage over their competitors, but will have to result in increased sales volume in order to offset costs that are unlikely to drop. The