John Blair Analysis

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JONES BLAIR COMPANY

1. Objectives

We want for Jones Blair Company to keep a premium price. Indeed, the company is not a low cost firm but practices a differentiation strategy. Indeed, with higher quality, performance and specialized representatives, Jones Blair can take the liberty of having higher price than its competitors.

However how to keep the 4% margin growth in the mature painting industry?

We suggest increasing the volume (by maximum 500.000 liters) in the two most interesting market, i.e., non-DFW Household and DFW professional painters. Why these markets? In non-DFW area, there are not the large volume distribution centers due to the low population by m². In addition, it appears that the number of brand names per stores is lower. Finally, the buyers in this non-urban area are less sensitive to price but highly sensitive to the relation with the seller. For the professional painters markets, we want to target it because there are more sensitive to quality than the price. Their reputation is linked to the quality of the work and the painting. That is why they search for the best performance painting on the market. In addition, when we look at the Jones Blair’s market shares, we can observe that these 2 segments are underdeveloped among professional non-DFW area. We can also see that households DFW segment is really small but the mass and hard discounters enhance the sales of Jones Blair’s products. Consequently, it is not a strategic decision to be implanted on that segment.

•  Total sales: 12 million$ 50% in DFW (6million $) and 50% in non DFW (6million $)
• 70% DFW go to professional painters (4.2million $) and 70% non-DFW go to do-it-yourselves clients (4.2million $)

Moreover, it is essential for Jones Blair to increase its brand awareness. Indeed, it has been proved that it is a major factor in purchasing decision. For this, we will do advertising campaign in specialized newspapers (25,000$ a week).

Furthermore, we would like to increase loyalty of customers. We propose using loyalty card. Customers will gain some points each time they will buy Jones Blair products and after 10 gallons they will have 10% discount on their next purchase in order to reward their loyalty. This process is valid for both professional painters as well as do-it-yourself clients.

Next, we intend to enter a new market: the child painting. Indeed, Jones Blair wouldn’t need additional devices or machines. The company must only investigate in washable solutions painting and make a market research about the opportunities on this segment.

The last objective is about the representatives. First of all, we want to hire a new representative because. Secondly, we will invest in sales training in order that the representatives will be more performing and efficient. Finally, we suggest increasing the incentive from 1% (75.000$) to 2% (90.000$) of sales and reduce the salary from 60k to 40k for motivating them to sale more. The cost of hiring a new representative is 75.000$

Scenario

With current sales team and sales volume, cost to Jones Blair is the nearly the same. Reallocate accounts so that each sales rep has a new market to “break” along with a stream of current customers so they don’t feel set up to fail.

1. Profit and loss plans

• Do Nothing
• Spend additional 350,000 on corporate advertising
• Cut price by 20 %
• Hire one additional sales representative