This case is about an organization doing business on paint coatings market served by company in the southwestern United States. The organization has some challenges on how to deploy marketing efforts among the various architectural paint coatings markets served in the southwestern United States.
1. Janmar Coating, Inc. Janmar Coating, Inc. is a privately held organization produces and markets architectural paint under Janmar brand name. In addition to producing a full line of architectural coatings, the company sells paint sundries (brushes, rollers, thinner, etc.) under the Janmar name, even though these item are not manufactured by the company. 2. Architectural painting Industry sources estimated U. S sales of architectural paint coatings and sundries (brushes, rollers, paint removers and thinners, etc) to be 12 billion plus in 2004.
Architectural coating are considered to be mature market with long term sales growth projected in the range of 1 to 2 percent per year. Demand for architectural coatings and sundries and sundries reflects the level of house redecorating, maintenance, and repair, as well as sales existing homes, and to a lesser extent new home, commercial, and industrial construction.
2. 0 Identify Problem 1. Competitor The competition in Architectural coating segment are increasing. Companies seeking growth and a higher sales base to support increasing costs are making acquisition. Major products of paint for the architectural coatings segment include Sherwin-Williams, Benjamin Moore, the Glidden unit of Imperial Chemicals, PPG Industries, Valspar Corporation, Grow group and Pratt & Lambert. These producers account upward for 60% of sales in architectural coatings segment.
They market under their own brand names and for retailers under private, controlled and store brand names. 2. Volatile Organic Compound (VOCs) U. S paint manufacturer are under growing pressure to reduce emissions volatile organic compound (VOCs) from paints and to limit the consumption of solvents. The Environmental Protection Agency (EPA) has adopted a three step plan for reduction of VOCs in architectural and industrial maintenance coatings. Compliance with EPA regulations eroded historically low profit margins in paint industry.
3 DFW and Non DFW Janmar Coating, Inc. market its paint and sundry item in over 50 countries in Texas, Okhlahoma, New Mexico, and Lousiana from its plant and headquarter in Dallas, Texas. The 11- Country Dallas – Fort Worth (DFW) metropolitan area is the major business and financial center in their company’s southwestern service area. According to Vice president of sales “ we have added only five accounts in the five years; our account penetration in non DFW areas is 16%” . 3. 0 Consider relevant information There are some alternatives that should be considered: 1. Customer advertising awareness at least 30 percent among do-it-yourselfers.
As per Vice President of Advertising, Ron, he believed that they must direct their efforts towards bolstering their presence in the DFW do-it-yourselfer market by at least 30 percent. The awareness is well related to paint purchase behavior. Through advertising, the customers will be aware about the Janmar Coatings’ paint as well as they have seen it been advertised via media. However according to Mr. Burns, advertising is not a good idea since he did not sure what advertising it is because 75 percent of the audience in DFW is not buying paint.
He suggested that the cost of advertising amounted $350,000 used for advertising in non DFW areas. 2. Price cut by 20 percent of all paint products. Based on Vice President of Operations, he suggested that they must cut price by 20 percent on all their products to meet customers’ wants. It is because the customers are price sensitive due to the research program. Their price is still higher than a mass merchandiser’s although they have advertised price-off special. But as per Mr. Burns, their sale representative has forecasted that their demand for paint will not increase next year.
Therefore, they cannot cut price this year. 3. Hire a sale representative costing $60,000 a year in non DFW areas. Vice President of Sales wants to develop a new retail account in non DFW areas after only five accounts for the last 5 years. They want to focus on non DFW areas because half of their sales and dealers exist in that particular area. It has been asking by Mr. Burns on what the sale representative will do, either focusing on retail account side or on recruiting the professional painter.
70 percent of sale is through their professional painters in DFW areas, while 70 percent of sale went to do-it-yourselfers in non DFW areas. They would need 40 percent price cut to attract contractors since they have minimum number of contractor sale in DFW and other areas. 4. Maintaining their current approach. Referring to Vice President of Finance, he want to pursue the current approach because they are in profitable based on contribution margin by 35 percent. The company just needs to monitor their margin in control their cost well. 4. 0 Choose the best alternative
The best alternative is sales representative, since it focuses on non DFW areas because half of their sales and dealers exist in that particular area. 5. 0 Implementation of the alternative: Based on the case study, the way to implement the problem is through market targeting. There is the way of target the market which is: 1. Where to compete Janmar Coating Inc. needs to specify the market segment that they want to pursue. They need to make marketing improvement in the Dallas-Fort Worth (DFW) and Non Dallas-Fort Worth (Non-DFW) to compete with their competitors such as Sherwin-Williams, Benjamin Moore and Grow Group.
They should pursue the 400 or so professional painting firms in DFW area and the 200 professional painters outside the DFW area or the do-it-yourselfer market. 2. How to compete Janmar Coating Inc. can compete with their rival by increasing the hiring of representative at the DFW area and non-DFW area. This strategy can make Janmar Coating Inc. customers feel convenience and can build a good relationship with them. The representative that had been hired by Janmar Coating Inc. is only eight people. Due to it, they cannot monitor each of the retail outlets all over 50 countries in Texas, Oklahoma, New Mexico, and Louisiana.
By adding representative and allocate them accordingly through the country, they can make a promotion aggressively and can get information about the buying trend of the consumer from the retailers. 3. When to compete Janmar Coating Inc. can start to make their new marketing targeting according to the seasonal or trend of the demand from the consumers. For an example, consumers will be attracting to purchase when there is a promotional allowances during seasonal festival such as Charismas festival. 6. 0 Conclusion:
It can be conclude that to make a decision for the problem of where and how to deploy corporate marketing efforts among the various architectural paint coating, the company should adding amount of representative to make a promotion that can increase level of the awareness of the Janmar brand among the consumer. Due to the new strategy, the sales of the architectural paint coating will be increase and it can compete with the rival product. 7. 0 Reference A. Peterson, R. A. (2013). Strategic Management Problems: Cases and Comments. Pearson Education. Kerin, R. A.