Jones Blair Company, a leading paint manufacturer in the south-western region of the U.S., wants to venture into the architectural paint coating markets in the region through an integrated and aggressive marketing effort. This is in an attempt to enhance their sales volume in their dominant market, which is in the Dallas-Fort Worth metropolitan areas that spans 11 counties, on top of the fifty non DFW counties in Texas, New Mexico, Louisiana and Oklahoma, in which they market their paint and sundry products.
The costs related to the new marketing venture as well as other proposed strategies, such as increasing the number of sales representatives and reducing the retail price, have posed a challenge to the company (Kerin 172). Upon analysis of the problem, the best alternative that Jones Blair ought to consider is the aggressive marketing efforts in non-DFW areas that they already sell and operate in, as well as subsidizing the prices of their paints in order to compete with the national and mass merchandizing brands. This alternative gains an advantage of all the rest because it is cognizant of Jones Blair’s strengths, which lie in premium paint products for both the homeowner and professional painter. With the entry of competitors in the market they had previously dominated, it is important that Jones Blair’s pricing strategy will place it on a level field with the rest of the players. Competitive prices and increased awareness will help Jones Blair maintain and increase its market share, especially during the approaching painting peak season.
Problem Statement & Statement of Analysis
This case study aims to discover how Jones Blair can competitively price their products to increase consumer awareness in the non-DFW areas while keeping the costs associated with advertising, as well as deal with the decreased profit margins that will result from the price cut.
Jones Blair’s competitors in the architectural coatings market include Sherwin-William, Pratt & Lambert, Benjamin Moore, PPG Industries, the Glidden Unit of Imperial Chemicals, Valspar Corporation and Grow Group. These industries are responsible for 60% of sales in this market segment. Jones Blair has had a fairly good performance in the Southwestern region where they have enjoyed the lion share of the market. However, there have been new entrants in the market who have destabilized Jones Blair’s operations.
Mass merchandisers, such as Sears, Home Mart and Wal-Mart, have also proved to be strong competitors for Jones Blair. In particular, Wal-Mart has been an aggressive and effective competitor in many markets, and the DFW and non-DFW areas are fair game. Studies have shown that consumers mainly frequent wholesale and retail home centers such as Wal-Mart and Home Depot when it comes to purchasing paint and sundry products (Business Case Studies 2). In 1995, about 39% of consumers frequented home centers and mass merchandisers for paint products while only 2% frequented lumberyards and 17% specialty stores.
Consumer trends are also an area of concern for Jones Blair. Consumers always favor the most competitively priced products, especially when it comes to items they do not consume as frequently as paint. As shown in Exhibit 2, customers will only buy paint and related products when the need arises whether they are going to do a home improvement project, or when they have available resources. With such needs at hand, Jones Blair must ensure that the strategy they employ is cognizant of these needs, as well as tailored to suit them as cost efficiently as possible.
Analysis of Alternatives
Price cuts on Jones Blair products will ensure that they attract price-savvy customers as well as increase its market penetration. While it may portend a certain degree of loss in regard to profits, over time, the increased sales will overtake the loss of revenue and ensure a reliable stream of steady income. The competitor prices necessitate this course of action because all other strategies that Jones Blair may employ may fail if the prices of their products do not reflect the current market price.
Marketing through advertisements is important to increase the awareness of Jones Blair’s products in their home markets. The reason why Jones Blair must focus on its markets in DFW and non-DFW markets is its range of products. Their products target homeowners, institutions, small industries and professional painters who require paint products on a small scale. Due to the materials and processes input on their products, their prices cannot allow them to do big residential and industrial jobs for a sustained profit (Brody 3). Thus, they need to establish themselves as the market leaders in their home markets before they can venture out to newer and unfamiliar markets. They can achieve this through the mix of increased marketing by means of advertisements, endorsements and other efforts, as well as cheaper prices.
Other alternatives that are available to Jones Blair include the recruitment of more sales representatives to market their products and brand, as well as clinch new clients for the company. According to the VP of sales, they have only managed to land five new accounts in five years, which may seem satisfactory at first but, with the influx of competition, becomes inadequate. Thus, more sales representatives could mean new potential for business. They are well compensated at 60, 000 dollars per year and have a reputation of friendly and knowledgeable agents of the company. While this is a viable alternative for Jones Blair, it will be a more efficient tool after marketing has been done in the target areas. Once awareness has been created, then can sales representatives be more effective in clinching new business. It would be much harder for them to advertise the company on their own than it would be when advertisements and other marketing efforts have been executed.
They could also keep practicing their current methods. As the VP of finance claim, Jones Blair will continue to be profitable and relevant in the market in case they will control their costs and guard their margins. This will ensure that the contribution margin is maintained and increased. Maintaining status quo will be in line with their policy on recouping non-capital expenditure in one year through increasing their sales volume and minimizing costs.
Jones Blair must ensure that the alternatives they employ as their marketing strategy must be consistent. Smart consistency in marketing will help strengthen Jones Blair’s brand (Brody, 2009). By a smart consistency approach, the company will be able to create and manage the message they wish to send to the consumers.
In regard to Jones Blair, they need to first take stock of their current marketing activities. They have been advertising in the retail shops, in which their products are sold by a cost-sharing forum with the retail shop itself. They have also engaged in newspaper advertisements where they have advertised discounts on their products as seen in Exhibit 5.
Their new marketing drive will target advertisements done through live media, such as television. According to the VP of Advertising, the injection of an additional 350,000 dollars into advertising will help bolster their sales as a result of successful marketing campaigns. The VP estimates that this will help achieve an awareness of about 30% in the do-it-yourself paint market. This is a market that they hope to achieve a larger share of in the long run because of its growing prominence among consumers.
The marketing mix at play here would be that of price and promotion. Instead of doing each activity on its own, the advertising department at Jones Blair should carry them out concurrently. When advertising their products on television, they should also introduce its reduced prices. This will help increase awareness as well as attract the customers. In addition, this will especially resonate with the do-it-yourself consumer segment that they are after.
As mentioned before, smart consistency is a key for Jones Blair to achieve its goal. What the larger companies and mass merchandisers have perfected is the art of being in their consumers’ faces, minds and hearts all the time because of the aggressive marketing campaigns that they employ all through the year picking up fervor as the painting peak season approaches. They spare no expense in their advertising through all the media platforms available to them. While Jones Blair may not have the sheer company size and margins that the national brands enjoy, they can learn from them.
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Advertising should be scheduled in the entire year’s budget of the company, with special emphasis on the peak seasons. They should recruit the best advertising agencies in their market of choice that have an insider’s scoop of the market they wish to dominate. While their experience and operations in the region may give them some latitude over competitors, nothing ought to be left to chance. A serious market survey and analysis must first be instituted then appropriate advertising strategies be employed. For instance, a lot of families watch television during prime time in the evening. Jones Blair should take advantage of this information and ensure that their television ads air during these times. Along with that, they should liaise with the retail shops where they operate to see how best they can leverage their relationship for mutual benefit.
The sales representatives who are already in service to the company should also aid these new marketing ventures that Jones Blair is undertaking. They should revitalize their efforts to ensure that they land new customers and maintain the old accounts. They should also take every opportunity to create awareness of the company’s brand. This will help eliminate the laxity and comfort that the VP of Sales is allured to.