John Blair Analysis

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If Jones Blair does agree to use this method the company will need to make at least 1 million $ sales to break even and cover the cost of this new promotion (3.500.000$/.35 = 1.000.000$). The cost of television advertisment target mainly in DFW area at the do-it-yourself market and also to reach non-DFW customer as well which will increase the awarness . But we must consider that75% of this viewing audience does not buy paint!

Cut Price 20% ($)

Sales 9.600.000

100%

Cogs

-

7.800.000

81%

Contribution Margin 1.800.000

19%

Fixed Operating Exp

-

3.060.000

32%

Net income 1.260.000

Break Even

16.320.000

Aditional Break Even

7.577.143

Current sales is 12 million dollars, in order to break even JBC will be requiredto increase sales to roughly 28 Million. (28/12*100=233% increase in oneyear)

Add a Sales Rep Salary ($)

Sales 12.000.000

100%

Cogs

-

7.800.000

65%

Contribution Margin 4.200.000

35%

Fixed Operating Exp

-

3.060.000

26%

New Sales Rep Salary

60.000

1%

Net income 1.080.000

Break Even

8.914.286

Aditional Break Even

171.429

Additional sales representative will be the best holistic solution for the company. The numbers reveal that this option requires the least amount of addition break even at 171,000 per representative excluding commission. By Hiring an additional sales rep will allow the company to focus on new markets. They would develop new retail account leads and call on profess

1. Which are the main characteristics of the U.S. painting products market

The U.S. painting products market is a maturing industry with slightly over 13 billion dollars in 1996. Further more it is divided into three broad segments:

- Architectural coatings: this consists out of general-purpose paints. It holds 43 percent of the total industry dollar sales.

- Original equipment manufacturing coatings: industrial buyer specifications are applied to original equipment during manufacturing (think automobiles, trucks….). It holds 35 percent of total industry dollar sales.

- Special-purpose coatings: for special applications or environmental conditions. It holds 22 percent of total industry dollar sales. Jones Blair is specialised in architectural coatings.

2. How would you segment this local market

Architectural coatings segmentation:

By end-user:

do-it-yourself painters

professional painters

By use:

Interior paints

exterior paints

Geographic:

DFW (eleven county Dallas-Fort Worth)

non-DFW

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