Janmar Coatings Case Analysis

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Janmar Coatings, Inc.|
To:| Ronald Burns|
Subject:| Janmar Coatings, Inc. Suggestions|
Comments:| The problem facing Janmar Coatings, Inc. is deciding where and how to execute corporate marketing efforts in the southwestern United States. Janmar Coatings is currently marketing to 50 counties, their main focus area so far has been the 11 counties in the Dallas-Fort Worth area. The main issue Ronald Burns, the president of Janmar Coatings, is having is trying to come up with a solution to market his company in the most cost effective way during 2005. After 2 long meetings with his executive team he still has no clear direction. He has gathered an approach from each of his team members, including: VP of Advertising, VP of Sales, VP of Operations, and VP of Finance, and now has four solutions to consider. The VP of Advertising has proposed to increase corporate advertising with an large emphasis on television. The VP of Sales proposed hiring a new field representative to help generate new accounts. The VP of Operations has proposed a 20% price cut on all Janmar product sales. The VP of Finance proposed that nothing be done; that the company continue with their current efforts and keep a 35% contribution margin. After looking at the company’s overall goals and finances, I would agree with the VP of Sales. Based on his suggestion, I believe it would be a smart time to hire a new sales representative for Janmar. The cost attributed to company for hiring a new sales representative would be $60,000 per year. And the amount of sales revenue needed to cover this expense is $170,000. However, if this sales representative position is correctly used, they will be able to make this margin back rapidly. Because by concentrating on only developing new retail accounts in the non-DFW area, the company could generate lots of sales to a brand new buyer market. Janmar has realized that they need to focus more energy on the ‘Do-it-yourselfers’ as they say, or DIY...
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