Janmar Coatings

Topics: Sales, Retailing, Marketing Pages: 7 (2286 words) Published: July 31, 2013
Janmar Coatings, Inc.

I. Summary of Facts
A) Market – Paint coatings industry
1) Three broad segments
a) Architectural coatings: general-purpose paints, varnishes, and lacquers used on residential, commercial, and institutional structures. Purchased by do-it-yourselfers and is commonly called shelf goods. Accounts for 43 percent of industry market. b) Original equipment manufacturing (OEM) coatings: formulated to industrial buyer specifications and applied to original equipment during manufacturing. Used for automobiles, trucks transportation equipment, appliances, furniture and fixtures, metal containers and building products and industrial machinery and equipment. Represents 35% of the total industry market. c) Special-purpose coatings: formulated for special applications or environmental conditions, such as extreme temperatures, exposure to chemicals, or corrosive conditions. Used for automotive and machinery refinishing, industrial construction and maintenance, bridges, marine applications, highway and traffic markings, aerosol and metallic paints, and roof paints. Makes up 22 percent of total industry dollars. 2) Primary markets

a) 50% of architectural coatings are sold under private, controlled, or store brands such as Sears, Lowe’s, Wal-Mart, Home Depot and hardware stores such as True Value and Ace hardware. Patronized by do-it-yourself painters. b) Specialty paint stores, lumberyards, and hardware outlets have also been able to compete in the paint business despite competition from mass merchandisers. Specialty paint stores account for 36 percent of paint and sundry sales while hardware stores and lumberyards account for 14 percent. Non-metropolitan areas have outdistanced mass merchandisers. Patronized mostly by professional painters. 3) Janmar Coatings, Inc.

a) Privately held corporation that produces and markets architectural paint. Also produces a full line of architectural coatings and paint sundries. The company also operates a large OEM coatings division that sells its products throughout the U.S. and worldwide. b) Sales of $12 million in 2004 with net profit before taxes of $1,140,000. Dollar sales increased at an average annual rate of 4% per year over the last decade. c) Paint cost-of-goods sold, including freight expenses, was 60% of net sales. 4) Competition/Threats

a) Janmar is facing increased competition at the retail level and at the manufacturing level. There is also an increase in competition from alternative solutions such as aluminum and vinyl, interior wall coverings and wood paneling. b) Paint companies have developed higher-quality products that reduce the amount of paint necessary per application and the frequency of repainting. c) Monopolistic-Oligopoly – Industry sources estimate there are currently 600, or about 40 percent fewer companies than in 1980. Major producers of paint in the architectural coatings segment include Sherwin-Williams, Benjamin Moore, Glidden, PPG Industries, Valspar, Grow Group, and Pratt & Lambert. These major produces account for almost 60 percent of sales in the segment. d) Slow sales growth is fueling increase in merger and acquisitions within the U.S. paint industry by companies seeking growth and higher sales base to support increasing costs. B) Products – Janmar focuses on two segments

1) Full line of architectural coatings/paints
a) General-purpose paints, varnishes, and lacquers.
2) Paint sundries (brushes, rollers, thinners, etc.).
3) Benefits
a) Sales representatives are well liked, helpful, professional, and knowledgeable about paint. 4) Product life cycle
a) Maturity – considered a mature market with long-term sales growth projected in the range of 1 to 2 percent per year. C) Price
1) Industry average of $74.00 per paint purchase and $12.00 industry average per sundry purchase 2) “Highest-priced paint in our area” –...
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