Marketing Management Case Analysis

Case Analysis: Jones Blair Company

Group 2: Lingling Lin, Yang Zhou, Jingyi Xu

Synopsis
Jones Blair Company is a corporate brand that produces and markets paint products. It markets
its paint and sundry items in over 50 countries in the four southern states in the US. 11 countries
in Dallas-Fort Worth (DFW) area are the major center in the southwestern area.

Competition in this market has increased with the coming of department stores like Sears, K-
Mart, and Wal-Mart, as well as Sherwin-Williams paint stores. Competition has also increased in
paint stores, lumberyard, and hardware stores. Competition at the paint manufacturing level has
increased as well. Paint companies that sell to contractors serving the home construction industry
have aggressively priced their products to capture a higher percentage of the home construction
market. Mass merchandisers control 50% of the do-it-yourselfer paint market in the DFW
metropolitan area.

The estimated dollar volume of architectural paint and allied products sold in Jones Blair’s 50
countries service area in 1995 was $80 millions. DFW was estimated to account for 60% of
market. The non-DFW market has been growing, and DFW market has slightly decreased. Do-it-
yourself household buyers account for 70% in DFW and 90% in other areas.

For Jones Blair Company, JB sales are distributed evenly between DFW and non-DFW accounts.
Moreover Mr. Barrett indicates that in the survey of retail outlets 70% of sales through JB’s
DFW dealers went to the professional painter while 70% of JB’s sales through non-DFW outlets
went to Do-it-yourselfers.

As competition intensifies and the peak painting season approaches, JBC need to consider the
question of where and how to deploy corporate marketing efforts among the various
architectural paint coatings markets served by the company.

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Marketing Management Case Analysis

The Architectural Paint Coatings Industry

The US paint industry is considered to be a maturing industry. Industry sales in 1995 were
estimated to be slightly over $13 billion. The US paint market is divided into three segments:
architectural coatings (43%), original equipment manufacturing (OEM) coatings (35%) and
special purpose coatings (22%).

The architectural coatings are general purpose paints, varnishes, and lacquers used on residential,
commercial, and institutional structures. They are sold through wholesalers and retailers.
Because of its usage, the purchasing frequency of architectural coatings is low.

The market share of architectural coatings in the US paintings industry is relatively high,
accounting for 43% in 1995, and original equipment manufacturing coatings account for 35%
and special purpose coatings account for 22%. Moreover, in 1995, the U.S. sales for architectural
paint coating accounts for about $5.5 billion (without sundries). However, the architectural
coatings are considered to be a mature market with long-term sales growth projected in the range
of 1 to 2 percent per year.

As for the competitive structure, there are three types of distributors: mass merchandisers and
home improvement centers (50%), hardware store and lumberyards (14%) and special paint
stores (36%). 50% of architectural coatings dollar sales are accounted for by do-it yourself
painters. Professional painter purchases account for 25% of dollar sales. The rest goes to the
government, exportation, and various commercial uses.

The Jones Blair Company’s Market Area

According to the material, we can learn that from 1995 to 1999, the total dollar sales have
increased by $4.3 million. And we can calculate the annual Total Dollar Growth Rate and the
Growth Rate for the 5 years.

Competition in this market has increased with the coming of department stores like Sears, K-
Mart, and Wal-Mart, as well as Sherwin-Williams paint stores. Competition has also increased in
paint stores, lumberyard, and hardware stores. However, the mass merchandisers control 50% of

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Marketing Management Case Analysis

the do-it-yourself paint market in the DFW metropolitan area, which is the major competitor of
DIY in DFW area.

DFW was estimated to account for 60% of market. However, we can see from the table below
that JBC's sales in DFW have decreased over the past five years, while non-DFW market has
been growing. This may be due to intense competition and the mass merchandisers has
dominated 50% of the do-it-yourself paint market in urban area.

Table 1. Sales Growth Rate for JBC from 1995 to 1999.

Architectural Paint and Sundry Sales Volume, Excluding Contractor Sales
(in Millions of Dollars)
Sales
Non-DFW Area
Year Total Dollar Sales DFW Area Sales Growth Rate
Sales
Annually
1995 $75.7 $50.9 $24.8
1996 $76.4 $50.8 $25.6 0.92%
1997 $77.6 $50.5 $27.1 1.57%
1998 $78.4 $50.7 $27.7 1.03%
1999 $80.0 $48.0 $32.0 2.04%
Sales Growth Rate 5.68% -5.70% 29%

Market Segmentation for Jones Blair Company

There are several types of segmentation variables, here we concluded two: (1) Socioeconomic
characteristics of consumers: gender, age, occupation, income, family life cycle, education, and
geographic location; (2) Behavioral variables: benefits sought from products and service, usage
behavior, lifestyle, attitude. According to the material, the geographic location and usage
behavior are the most relevant to identify Jones Blair Company’s target market.

The geographic location and usage behavior are the most relevant to identify Jones Blair
Company’s target market. This market can be divided into two geographic areas: DFW (urban)
and non-DFW (rural). And each segment can be divided into two sub-segments: household (do-
it-yourselfers) and professional, as shown in Table 2.

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Marketing Management Case Analysis

Table 2. Market-product Matrix for JBC.

Geography/User Household Professional

Urban (DFW) Urban household market Urban professional market

Rural (Non-DFW) Rural household market Rural professional market

The Opportunities in Different Sub-Markets

Overview of the industry
The estimated dollar volume of architectural paint and allied products sold in Jones Blair’s
service area in 1995 was $80 millions. Do-it-yourselfers market account for 78% in sales and
professionals market account for 22%. Do-it-yourself household buyers account for 70% in
DFW and 90% in other areas. And then, we can calculate the sales data of each segment of total
market size.

We can see from the table that professional market in rural area is only account for 4%, which
means this segment market has a lot of potential to grow in the Jones Blair Company’ market
area.

Table 3. Market shares for Architectural Paint Coatings Industry.

Geography/User Household Professional Total

$33.6M (70% of 48M) $14.4M (30% of 48M) $48 M

Urban (DFW)
(42%) (18%) (60% of 80M)

$28.8M (90% of 32M) $3.2M (10% of 48M) $32M

Rural (Non-DFW)
(36%) (4%) (40% of 80M)

$62.4M $17.6 M
$80M
Total (33.6M+28.8M) (14.4M+3.2M)
(100%)
(78%) (22%)

Different Users’ Requirements

Do-it-yourself painters first choose a retail outlet for paint and paint sundries, then choose a
paint brand. Do-it-yourself painters all too often view paint as paint—a covering—and try to get

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Marketing Management Case Analysis

the best price. But there is a significant number of people who desire service as well in the form
of information about application, color matching, surface preparation, and durability.
Professional painters do seek out quality products, since their reputation is on the line and
maintenance firms don't want to have to paint an office each time a mark appears on a wall. They
want paint that is durable, washable, and will cover in a single coat. They also look to retailers
who will go the extra mile to give them service. Many requests and get credit from stores. They
appreciate being able to get to store early in the morning to pick up paint and supplies. They deal
with stores that can mix large quantities of custom colors and expect to work with
knowledgeable store employees who can give them what they want. It is not surprising to me
that paint stores remain the preferred outlet for paint and sundries for professional painters.

Jones Blair Company’ competitive position

JBC is a corporate brand. Because it produces and markets architectural paint under the Jones
Blair brand name. It distributes its products through 200 independent paint stores, lumberyards,
and hardware outlets. 40% of its distributors are located in urban area. Also, it’s the highest-
priced paint in their service market.

Jones Blair Company’ sales volume in 1999 was $12 million, Jones Blair Company’ sales are
distributed evenly between DFW and non-DFW accounts. Moreover Mr. Barrett indicates that in
the survey of retail outlets 70% of sales through Jones Blair Company’ DFW dealers went to the
professional painter while 70% of Jones Blair Company’ sales through non-DFW outlets went to
Do-it-yourselfers. Here are the results of the calculation of the market segments in value and in
%.

Table 4. Market shares for Jones Blair Company in value.

Geography/User Household Professional Total

$1.8M (30% of 6 M) $4.2M (70% of 48M) $6 M

Urban (DFW)
(15%) (35%) (50% of 12M)

$4.2M (70% of 48M) $1.8M (30% of 6 M) $6 M

Rural (Non-DFW)
(35%) (15%) (50% of 12M)

Total $6M $6M $12M

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Marketing Management Case Analysis

(1.8M+4.2M) (4.2M+1.8M)
(100%)
(50%) (50%)

Table 5. Market shares for Jones Blair Company in %.

Geography/User Household Professional Total
$ 1.8 MM
= 5.4%*
$ 33.6 MM $ 4.2 MM $ 6 MM
Urban (DFW) = 29.2% = 12.5%
$ 1.8 MM $ 14.4 MM $ 48 MM
= 10.7%
$ 16.8 MM

$ 4.2 MM $ 1.8 MM $ 6 MM
Rural (Non-DFW) = 14.6% = 56.3% = 18.75%
$ 28.8 MM $ 3.2 MM $ 32 MM

$ 6 MM $ 6 MM $ 12 MM
Total = 9.6% = 34% = 15%
$ 62.4 MM $ 17.6 MM $ 80 MM

Market share varies greatly among four markets. After calculating the different segments’ sales,
we can conclude:
(1) JBS’ market share is 15% of the total market: For urban market, JBC accounts for 12.5% of
the whole urban market; For rural market, JBC accounts for 18.75% of the whole rural
market.
(2) For urban household market, the calculated number for JBC is 5.4%, but due to there’s 50%
urban household market share that occupied by mass merchandise, so the shares JBC hold
should be 10.7%; For rural household market market, JBC’s market share is 14.6%.
(3) For urban professional market, JBC accounts for 29.2%; For rural professional market, JBC
accounts for 56.3%.

In general, JBC has the most competitive position in rural professional market. The second
competitive market is the urban professional market. The third competitive market is the rural
household market. And the least competitive market is the urban household market due to the
mass merchandise. There is a relatively weak competition in rural markets. However, Walmart,
an effective competitor in rural market, is probably not a major threat in rural market.

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Marketing Management Case Analysis

The Market That Jones Blair Company Should Pursue

Jones Blair Company should pursue these following markets in this order in priority:
(1) Rural Household, a high potential for growth. Large volume distribution is not present in
this segment due to its low population density. Moreover, it appears as though the number of
brand names per store is lower than in urban areas. Price is a less important factor, whereas
the "client-seller" relation becomes a key element.

(2) Urban professional wants high quality paints. Here the key element is the quality and no
longer the price. Indeed, professional painters work for households as well as for companies
in charge of real estate management and maintenance. Professional painters are looking for
quality products as their reputation is linked to their work. They are looking for long-lasting,
washable paint which can be applied in one single coat. The quality is often linked to a
higher price. Professionals can accept to pay more for this higher quality. This segment is
made up of professional painters worried about their market image. Producers that are able to
convince consumers, and especially professional painters, that they have to highest quality
product will likely be successful.

(3) Rural Professional, already dominant. According to the calculation of market shares of
Jones Blair Company in percentage and value, we can see this company has become a
dominant in this segment, so that we should tilt our attention towards other segments.

(4) Urban Household, very price sensitive. This sub-segment is particularly difficult for
producers. On one hand, there is a well-developed network of distributors. On the other hand,
hardware and paint stores have higher prices than large distributors. As paint has come to be
seen more and more as a commodity, price is the most important element in creating a
competitive advantage for this segment. Moreover, the mass merchandisers control 50% of
the do-it-yourself paint market in urban area, which is the major competitor of DIY in DFW
area, JBC cannot compete with it due to its high price.

Strategy for Jones Blair Company

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Marketing Management Case Analysis

At present, the market that JBC needs to focus on, which means “where” to deploy corporate
marketing efforts, has been determined. And the “how” question is remained to be explored.
Form the material we can learn that There are currently four options available for JBC:
1) Do nothing.
2) Increasing advertising to household segment by $350,000 for corporate brand awareness
3) A 20% price reduction.
4) Add sales representatives to increase retail distribution or call on professional painters.

Below, we evaluate the benefits and advantages and disadvantages of each of the four options
mentioned above.
(1) Do nothing - Risk Avoidance Strategy
Pros:
1. A very conservative strategy, risk avoidance strategy, able to maintain a stable 4% return.
Cons:
1. The market share has not been expanded, and marginal revenue may decrease in the face
of competition in the industry.
2. In the short term, it is considerable, but in the face of long-term industry development,
not taking measures may lose the opportunity to expand the market.

(2) Increasing advertising to household by $350,000 – Brand Awareness focused Strategy

If there is an increase of $350,000 in promotional expenses, according to the BE ratio, JBC
need to add $1 million in income to cover this expenditure. According to the materials, many
household customers' purchases are influenced by brand awareness, while professionals are
mainly influenced by the excellent performance of the product, meaning that household
customers are the main audience for advertising.
Incremental Expenditure 350000
BEratio= = =1000000=1 million
Contribution Margin 35 %
Pros:
1. Enhance brand awareness and help solidify brand positioning.
2. The household market contributes nearly 78% of sales, which helps to increase the
brand's share in the household market and brings benefits.

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Marketing Management Case Analysis

3. Advertising promotion in the urban household market in store can effectively avoid direct
competition with direct sales contractors in the market.
Cons:
1. The advertising coverage is very wide, but the conversion rate is low, and the revenue
may not meet expectations.
2. The main target audience is the household customer group, but this group is very price
sensitive, and JBC's expensive product prices may weaken the impact of advertising.
3. DIY customer base will first choose a store rather than a brand, so perhaps cooperative
ads may be more effective rather than in-store advertising.
4. 50% of the urban household market has already been occupied by mass merchandise.
Compared to them, JBC does not have a significant competitive advantage due to its high
price, and its potential for development is limited.
5. The rural household market has great development potential, but due to the lack of
attractive product appearance, the promotion effect on rural TV may not be good.

(3) A 20% price reduction. – Pricing Strategy

If a 20% price reduction strategy is implemented, after calculation, an additional 22.4 million
in revenue is required to compensate for the loss of revenue caused by the price reduction.
This is a very large amount.
Table 6. Price contribution for JBC.
Current Price Reduction (20%)

Sales $1.00 $0.80

Variable cost 0.65 0.65
$0.15
Contribution $ 0.35
(new contribution=15/.080=18.75%)

JBC contribution=Contribution Margin∗S alesbefore=35 %∗12million=4.2million

4.2 million
Salesafter = =22.4 million
18.75 %
Pros:
1. Enhance JBC’s competitiveness in the DIY market, especially in the face of competition
from urban household mass merchandise and enhance price advantage.

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Marketing Management Case Analysis

Cons:
1. The increase in income required to make up for the price reduction is too large, close to
twice the current income, and the risk is high, which is equivalent to increasing the
volume to twice the current size, with a large span.
2. Dealers may experience dissatisfaction as it affects their profits.
3. Competitors may also adopt low-priced promotion strategies, causing vicious competition
in the market.

(4) Add sales representatives – Place Strategy

Pros:
1. Professional calling has high credit rating and conversion rate.
2. The cost is relatively low, requiring only 17 additional benefits, and the possibility of
investment return is high.
3. Low investment and low risk strategies with minimal losses.
Cons:
1. Can only have an impact on specific markets, with limited coverage.
2. Weak timeliness and longer reaction time required.

At the same time, this strategy can also have four sub strategies, finding a salesperson in each
of the four markets.
Incremental Expenditure 60000
BEratio= = =171428
Contribution Margin 35 %
a. Add sales representatives in urban professional market
4.2 million
Each Sales Prof ∈ DFW = =10500
400 Prof .
171428
Quantity Prof ∈ DFW = =17
10500
b. Add sales representatives in rural professional market
1.8 million
Each Sales Prof ∈ non− DFW = =9000
200 Prof .
171428
Quantity Prof ∈non−DFW = =19
9000
c. Add sales representatives in urban household market

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Marketing Management Case Analysis

1.8 million
Each Sales DIY ∈ DFW = =22500
80 Outlets
171428
Quantity DIY ∈ DFW = =8
225 00
d. Add sales representatives in rural household market
4.2 million
Each Sales DIY ∈non−DFW = =35000
120 Outlets
171428
Quantity Prof ∈ DFW = =5
35000
Adding sales representatives to the rural household market is the best choice. And adding
sales representatives to the rural professional market is the least attractive. Firstly, because
the number of professional painters is significantly smaller than DIY, it is more difficult to sell to
already small numbers of professionals, especially for rural professional market, which has lower
annual sales; And the annual consumption of professionals is relatively low, and the number of
new professionals who need to consume is too large; the reason why choosing the rural market in
the DIY market is rural has the highest annual base consumption, it indicates that it has a good
market base, and there are no contractors entering this market, which also avoids competition
with mass merchandise and has good development prospects.

In conclusion, we prefer to hire sales personnel at rural household market. Overall, it requires
lower costs and risks, allowing JBC to effectively expand its market share in key markets. More
importantly, its optimal output effect matches JBC's target development market.
- Why not choosing ads strategy: This strategy can maximize the market efficiency of urban
housing, but due to the price and 50% dominance of mass commerce in urban areas, the DIY
market share that can be expanded is very small. Moreover, due to the nature of the product
itself, TV promotion in rural areas with great potential for development is not effective.
- Why not choosing pricing strategy: The possibility of engaging in vicious price competition
against competitors cannot be ignored; At the same time, the return on investment is low,
making it difficult to reach the original breakeven point,
- Why not doing nothing: It is not advisable to completely avoid risks. Although a certain rate
of return can be maintained in the short term, giving up opportunities for market expansion in
the face of long-term competition is not conducive to the company's development.

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