Jones Blair Case Study

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Jones • Blair case study

Jones • Blair is a company that produces and sells architectural paint it also sell paint sundries which include paintbrushes and rollers. It caters to over 50 countries which are divided into two sectors the DFW area and the non-DFW area. Of the two the DFW area has been proven to be the most successful area for the company.

In 1999 the company made 80 million in sales and 60% of this was contributed by the DFW area. There are two segments within the company’s main sales attributes and these are between the do it yourself market and the professional market.

With regards to the professional market in the DFW area this accounted for 70% of sales In the non-DFW area 70% of sales were made through the do-it-yourself market.

During a meeting the company discussed the problem of where and how to carry out marketing efforts. They were left with four options:

1) Cut the price by 20%.
2) Hire one additional sales rep.
3) Spend additional $350,000 on advertising.
4) Stay the same.

A detailed look into each option.

1) Cut the price by 20%.

The shopper research programme indicated that dealers will back off the brand when the customer appears price sensitive. By cutting the price by 20% this will allow the company to be on par with national brands. The current contribution margin for the company is 35% if the price was to be cut by 20% then the new contribution margin would be reduced to: 35% - 20% = 15%

with the current sale volume being $12 million and a price cut of 20% the sales would have to increase significantly for the price cut to be effective. According to Barrett “we are now the highest price paint in our service area” the fact that the company still has increasing sales despite being the highest cost brand of all the competitors this shows that the company is being perceived as giving high quality goods where people don’t mind about paying extra for their brand. If the company was...
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