Jones Blaire

ARTICLE REVIEW: GROUP 1

• 001/2019Aashee Gupta
• 002/2019Bhavdeep Singh
• 003/2019Himani Dangwal
• 005/2019Saksham Gupta
• 007/2019Ansal Gupta
• 008/2019Pulkit Garg
 • Actively Pursue Non-DFW Households-
This provides a good opportunity for growth since a large volume
distribution is currently absent in this segment owing to low population
density.
• Seek more retail accounts in non-DFW markets-
The company should concentrate on increasing the number of
distributors of its products in rural areas since the market there is still in
expansion and in need of a producer to fill the quality-service niche.
Opportunity • Engage in cooperative advertising with current advertising
budget-

Identification The audience reached by expensive television campaigns comprises of

people who don’t buy paint which comprises of about 75% of the
audience. Moreover, most consumers decide which brand they will buy
before entering the store and most of the advertising is based on price.
• Utilize other forms of publicity-
In order to overcome advertising inconveniences, in-store promotion
should be tested and further developed if resultants are positive.
• Hire one additional sales representative for developing new
accounts-
They can be assigned to Professional and Household markets,
respectively.
Opportunity-Organization Matching
 Current standing of the company(Competitive position)-
• Jones Blair holds the high-end trade market catering mostly for do-it-yourself customers, who want good
services.
• It also caters to professional painters, who want high quality paints. In addition, it has a line of painting
accessories, which are increasingly demanded among do-it-yourself clients.
 What needs to be done to convert opportunities into success-
• Retail accounts in Non DWF Household market requires lowering of prices: It is noticed that rural
customers are more price sensitive than other paint consumers. Thus, it is important to lower the prices in
order to be competitive with other national brands in rural market that provide the same quality.
• Developing new accounts would require more sales representatives: One additional sales representative
could generate significant sales if the are rightly assigned to territories. This will significantly improve reach
to customers through better distribution.
• Effective advertisement with current budget: In rural areas rather than television promotion more focus
should be on in store promotions. The reason for this is that it is more economical than television campaign
which can be quite expensive. It would thus reduce the overall cost.
Opportunity Evaluation

• Spend additional $350,000 on corporate advertising- Jones- Blair should focus on cooperative
advertisements and not brand advertisements, since household buyers typically choose a store first. They
should also allocate some funds to in-store advertisements and displays to better reach their target
audience.
• Have an overall 20% price cut- In order for Jones- Blair to be successful in this market they must
reduce their product cost. The twenty percent price cut, as indicated in the break even analysis is a steep
step. According to one of the representatives, there is no way of differentiating between high priced paint
and low-priced paint, if Jones-Blair lowered their prices there would not be a noticeable difference.
• Hire additional sales representatives- According to the case, their current sales team has been lacking as
far as gaining new accounts and being aggressive. Based off the break-even analysis adding an additional
sales representative will increase overall sales because the customer will now have one-on-one attention.
• Continue to guard margins and control costs- Jones- Blair should keep doing what they do best and
continue to guard margins. This approach has worked for them till now as they are currently profitable.
Increasing into non-DFW demand would keep them sailing.
 OPPORTUNITY EVALUATION
A) Do Nothing Sales $12,000,000
Less: Prime Cost $7,800,000
Contribution Margin $4,200,000
Less: Fixed Operating Exp $3,060,000
Net Income $1,140,000
Break Even $8,742, 857
B) Spend additional $350,000 on Sales $12,000,000 75% of this viewing audience does not buy
corporate advertising Less: Prime Cost $7,800,000 paint. How will this budget increase really be
Contribution Margin $4,200,000 effective?
Less: Fixed Operating Exp $3,060,000
Less: Additional Advertising $350,000
Net Income $790,000
New Fixed Cost $3,410,000
Break Even $9,742, 857
Additional Break Even $1,000,000
C) Have an overall 20% price cut Sales $9,600,000 Current sales is 12 million dollars, in order to
Less: Prime Cost $7,800,000 break even JBC will be required to increase
Contribution Margin $1,800,000 sales to roughly 28 Million.
Less: Fixed Operating Exp $3,060,000 (28/12*100=233% increase in one year)
Net Income $1,260,000
Break Even $16,320, 000
Additional Break Even $7,577,143
 D) Hire additional sales representatives Sales $12,000,000 • The required additional sales to
Less: Prime Cost $7,800,000 recover cost of sales rep is
Contribution Margin $4,200,000 171,428 (60,000/.35)
Less: Fixed Operating Exp $3,060,000 • Sales per professional in non
Less: 1 Year Sales Rep Salary $60,000 DFW region is 9,000/year
Net Income $1,080,000 (1.8M/200) (20 new customers
needed)
Break Even $8,914,286 • Sales per retailer in non DFW
Additional Break Even $171,429 region is 35,000/year
(4.2M/120) (5 new retailers
needed)

The Break-Even Analysis explains how Jones-Blair will be affected overall by each option. Based on these numbers it
appears that Option D adding an additional sales representative will be the best holistic solution for the company. The
numbers reveal that this option requires the least amount of additional break even at 171,000 per representative excluding
commission.
Thank You