How and where will Janmar Coatings Inc. implement their corporate marketing efforts for the Architectural paint coatings business?
The architectural coating industry in divided into three major consumer segments 1) Do-It-Yourselfer 2) Professional painters and 3) Contractors/Other each making 50%, 25% and 25% respectively. This $16 Billion dollar industry is in the mature stage of the business cycle growing roughly at 1-2% annually. Within the Janmar Coatings service area there is $80 million worth of overall market sales. Janmar controls 15% of this market or $12M specifically. The Janmar service area is constructed of two distinct demographics, Dallas Fort Worth area (DFW) where they distribute to 80 retail stores and the Non Dallas Fort Worth area where they distribute to 120 retail stores. These current retail locations split sales dollar volumes 50/50 despite the 40/60 allocation of retail outlets.
Total Marketing spend over the past five years has averaged out to be 3% of Net Sales or $360K.
This is currently tenfold less than what competitors are spending in the same market. Previous marketing activities have been allocated in the following fashion: 55% of the marketing dollars are allocated to cooperative advertising within the 200 retail accounts that sell Janmar products; the remaining 45% is used for in-store displays, regional publications, promotions, signage and advertising production cost. These marketing efforts have roughly translated to 25% customer awareness within the current Janmar service area.
Janmar's Executive leadership is having trouble deciding between the following strategic marketing approaches to keep growing. Option one: do nothing and keep chugging along protecting our margins and grow at a rate twice the industry average. Option two: reduce their pricing by 20% to appeal to the DIY market consumers who are very price sensitive. Option three: focus their efforts on the DIY...