Jones Blair Case Study
Problem Statement: Where and how should Jones Blair Company engages its corporate marketing efforts among the various architectural paint coatings market? Situation Analysis Jones Blair Company, JBC, currently faces a unique challenge in which the upper level management must act in order to maintain its profitability. Jones Blair current market position is in the process of being eroded due to the mass merchandising efforts of companies like Kmart and Sears. In developing their strategy forward, Jones must address two key issues to address the problem statement.
First, Jones Blair must determine which marketing medium they will use to access their potential customers. Secondly, they must determine the geographic locations in which they will concentrate their efforts. Jones Blair’s current core competency is in the architectural paint industry. This sector has seen a consistent annual growth between 1% and 2% remaining equal to the rate of inflation. This market consists of $80 million annually in net revenue of which Jones Blair commands 15%.
Jones Blair has established a name based on the core values of product quality and the service they provide. Founded in 1928, Jones Blair has become the standard in quality and has earned the reputation of being a fair dealer resulting in long standing relationships with distributors of their products. However, this has created a concern due to the need for high quality products; they have the inability to be flexible with pricing. National retailers due to the mass quantities that they sell have gained an advantage due to this inelasticity of pricing.
This is especially visible in the long-lasting and durable market. They are concerned with the ability to continue to market to the professional buyers. Although Jones Blair’s strong ties and outstanding relationships have provided them protection over the years they must address the issues of pricing and market share rapidly. Jones Blair has collaborated with the retailers in marketing initiatives and partnerships to lower advertising costs and still gain exposure to their targeted groups.
In the current market, Jones Blair sells in 200 local retain stores out of a possible 1000. A target of opportunity is to increase this number, especially in areas that contain high quality painting opportunities in which the professionals are purchasing. Jones Blair has a targeted markets geared towards do-it-yourselfers, professionals that is split in to two major regions within the Dallas Fort Worth area. These areas do not consist of specific locations, but can be better broken in to rural and urban.
Upon analysis of the targeted market and the locations the following ratios represent Jones Blair’s market share in each segment: Urban/Professionals 35%, Urban/Do-it-yourself 6%, Rural/Professional 45% and the Rural/Do-it-yourself 12%. As the core competency of providing high quality paint the target for Jones Blair is geared towards the professionals who have a stake in the quality of their work. Do-it-yourselfers are much more price sensitive and also do not purchase the products on a consistent basis.
Another key factor for the do-it-yourselfers is they often choose the retailer first, usually a mass retailer, as opposed to a professional who is focused on products that will establish long term customer relationships. Mass retail locations sell large quantity mid quality items such as Valspar, Glidden and Behr paints. Jones Blair Company has called together its senior management executives to provide insights into the marketability of its products. Each individual has focused on how and what they believe to answer the problem that Jones Blair is facing. . The VP of Advertising Alex, believes that a direct infusion of $350,000 into advertising efforts will increase awareness by 30% in the do-it-yourselfers market. He also would like to reach 15 of the surrounding counties with television commercials. 2. The VP of Operations has suggested a 20% price reduction on all paint products to achieve parity with national brands. 3. The VP of Sales has suggested foregoing the DFW market and adding a sales representative for $60,000 dollars to focus on increasing retail accounts and professional customers. 4.
The VP of Finance is very hesitant to any drastic strategy change. He would like to see specific goals tied to results. Jones Blair has the responsibility to analyze these options to evaluate the effect on the overall business operations within the firm. The VP of Advertising’s suggestion of $350k increase in to the marketing budget would create an increase in $1 million dollars to recoup the cost of this venture. His philosophy of accessing the do-it-yourselfers would not bring these individuals away from their primary focus which is retail location.
The do-it-yourselfers are going to continue to visit Home Depot and other mass marketing stores despite advertising efforts. The cost benefit analysis would not be beneficial to Jones Blair. The VP of Operations has suggested a 20% decrease in price to better compete with the mass merchants who are gaining a foothold on the paint industry. This however is a significant change from the overall culture and strategy of the company. The core competency of great quality and outstanding service will be placed in jeopardy.
Cost cutting measures will have to be put into place and often this will come from the customer relations sector. The perception amongst professionals is that they produce a high quality product in which they can trust and guarantee the consumer superior quality. Finally, the reduction of the contribution margin would not be justified by a subsequent increase in volume further cementing the fact that this option does not answer the problem. The VP of Sales’ proposal of the addition of another sales individual whose focus is outside of the Dallas Fort Worth area has the most traction.
His focus will be to solicit new retail accounts and gain more professional users in the rural areas. The $60,000 dollars that the company will create sales volume and increase the potential revenues, and this strategy will cost the company $171,500 dollars in overall sales. At a minimum more exposure to the professionals will continue to build upon the company’s core competencies and allow for growth. Finally, the VP of Finance has chosen stay the path philosophy. This is both potentially hazardous because there are not issues being addressed with the approach.
The ability to stay relevant with the increased pressure from the mass merchants, Jones Blair must continue to develop its customer relationships as well as increase its visibility to the professionals. A status quo situation does not address the potential loss of the target market. Recommendation: After the breakeven analysis and reviewing the problem statement, the VP of Sales strategy of hiring a new sales associate is the recommendation. This sales associate will be tasked to address the rural markets for his location, and focusing his efforts on the professional painters.
This segment is currently under accessed by Jones Blair and offers a opportunity in which they can grow. The cost of $60,000 dollars would ultimately cost Jones Blair $171,500 dollars in annual revenue. This strategy is also in alignment with the overall strengths of the company of maintaining a superior product for professionals, and backing that with unquestioned customer service. The rural/professional market is the target for this action and best aligns to strategically meet the needs of the current problem.