Jones Blair Case Study Essay

Jones Blair is a alliance that produces and sells architectural tonality it also sell paint sundries which include paintbrushes and rollers. It caters to over 50 countries which are divided into two sectors the DFW bailiwick and the non-DFW world. Of the two the DFW landing field has been proven to be the well-nigh successful sphere of influence for the alliance.In 1999 the ships alliance made 80 million in gross gross revenue and 60% of this was contri besidesed by the DFW area. There are two segments within the companys main exchanges attributes and these are between the do it yourself trade and the professional market.With regards to the professional market in the DFW area this accounted for 70% of gross revenue In the non-DFW area 70% of gross revenue were made through the homemade market.During a meeting the company discussed the problem of where and how to carry out merchandising efforts. They were left with four options1) Cut the price by 20%.2) enlist one spa re gross revenue repp.3) Spend addendumal $350,000 on publicize.4) quench the same.A detailed verbal expression into each option.1) Cut the price by 20%.The shopper research programme indicated that dealers will back off the inciter when the customer appears price sensitive. By jazzting the price by 20% this will allow the company to be on par with subject area dirts. The current contribution coast for the company is 35% if the price was to be arise by 20% thus the new contribution margin would be reduced to 35% 20% = 15%with the current sale volume being $12 million and a price be intimate 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 ser crime area the fact that the company still has increasing sales despite being the highest exist brand of all the competitors this shows that the company is being perceived as giving high forest goods where people feignt mind intimately paying extra for their brand. If the company was to cut the price by 20% this may leave doubts in peoples minds about whether or not the brand is authenticly as high quality as they had thought. The fact that they can get away with charging a high price for their brand they should stick with it.2) Hire one additional sales rep.Currently the company has 8 sales reps which are responsible for the pursual tasksMonitoring inventories.Taking orders.Assisting in store display.Coordinating cooperative advertising programmes.A survey indicated that the sales reps were very well liked, helpful, professional and intentional with regards to paint. These reps are paid a salary and also a 1% commission. The cost of hiring an additional sales rep would be $60,000 a year, this is excluding commission. The vice chairman opinions that the current sales reps arent aggressive enough and the fact that only 5 new accounts were made in the choke 5 years something compulsions to be don e. Only 16% of the accounts come from the non-DFW area so maybe a focus needs to be set(p) onto this area. If this was to be done, an additional sales rep be assigned to the non-DFW area this could lead to a significant increase in sales.3) Spend additional $350,000 on advertising.The vice president of advertising believes that on that point is a need for an awareness level of 30% among do-it-yourselfers to take up their sales. An emphasis on boob tube insurance coverage will reach non-DFW consumers in 15 countries. Research shows that ads affect the buying process Since most consumers consider the store before the actual brand maybe the advertising should be focused more-so on incorporated ads rather than brand ads. The company spends 3% of its net sales on advertising therefore the current cost of advertising is 3% of 12 million = 360000with an additional spend of $350000 on advertising the total cost of advertising would be 360000+ 350000= $710,000. This would almost double the cost of advertising and since theres an emphasis on television this could prove to be a risky option, especially since brand awareness isnt the main attribution to buyer behaviour. An another(prenominal) factor to consider is the fact that 75% of the hearing of the advert arent buying paint.4) Stay the same.The final option for the company would be to keep everything the same which is advised by the vice president of finance. Since the company is continuing to make profit he feels that if you were to take the other options that there would have to be a significant increase in the sales volume which may not be a result.Although most of the options offer different benefits and of course different drawbacks we dont gauge there is an outright option to recognise. With regards to the cut in price of 20% we dont believe this option should be chosen. The fact that the company is allowed to charge the higher price and is perceived as being a high quality brand why should they risk losing all of this by accepting the price cut.The next option with regards to hiring an additional sales rep we feel that the fact that they have 8 sales reps already would the addition of another really make a significant impact on sales. Rather than focusing on hiring a new one we believe that if they focused more-so and possibly retraining their current sales reps this could prove to be more effective. The fact that the sales reps are already considered highly by the customers is a bonus. If more effort was put into them and how they could improve efficiency then this could be worthwhile to the company. The company could divide up the sales reps into the indispensable markets and possibly by offering them incentives this could increase their performance. By hiring an additional sales rep doesnt necessarily promise a change in sales.With regards to an increase of advertising spending of $350,000 we wouldnt recommend this option. As the company wants to put an emphasis on televisi on and the fact that 75% of the auditory modality dont buy paint, the 25% of the audience that do doesnt seem like a big enough market coverage to invest such a lot of money into. Instead we feel they should look into other marketing options. The fact that with regards to buyer behaviour that customers choose the store first before the brand maybe the company should look into advertising within the actual stores. They could look into what stores are proven to be more popular and focus advertising attention on these.With the last option as staying the same although the company is continuing to make sugar we feel like this could be the easy option. Rather than just being content with what is currently happening with the business they should focus on change the business. The fact is that more and more competitors may enter the market or even people may change their buying behaviour but ultimately the company should try and always be a brand considered.