The result of the market research data given analysis from the case documentation are summarized in Exhibits 1 and 2. The professional painter market segment accounts for 50% of sales of architectural coatings is an important segment for JB. The do-it-yourself segment is growing and presently accounts for half of Jones-Blair?s sales. Large Accounts (annual purchase > $50,000) account for 56% of JB?s sales. 10% of these are Non-DFW area and carry JB line exclusively. Retail accounts in Non-DFW area account for 60% of sales. 30% of these accounts with annual purchases of less than $25,000.
3. Problem statement Where and how to deploy corporate marketing efforts among the various architectural paint coatings market served by JB in the 50 counties (39 Non-DFW and 11 DFW) in order to maintain its position as a minimum or further improve it.
4. Identification of alternatives There are four alternatives appear to be viable solutions to the problem, they are mutually exclusive.
Those alternatives are: 1- Do Nothing: Just maintaining the costs and thus keeping the contribution margin at 35%. JB has been successful to date with its existing approach.
2- Increasing advertising to expand awareness in DFW Area. Where the current awareness (ÃÂ»20%) is lower than competitors. At least 30% awareness is required among do-it-yourself customers. The 30% can be achieved through investing $350,000 more in corporate brand advertising.
3- Reducing prices. Where a price cut of 20% on all paint products to achieve similarity with national paint brands. Thus making JB more competitive.
4- Increasing sales force in Non-DFW Area. Where currently there are 8 sales representatives. And the current penetration is 16%. The associated cost of adding one sales rep is $60,000 per year Plus 1% commissions on sales.
5. Decision criteria The following decision...