University of Chicago
Type of paper: Thesis/Dissertation Chapter
Jones Blair Case Analysis
Decide where and how to deploy corporate marketing efforts among the various architectural painting coatings markets serviced by the company in the southwestern United States. Situation Assessment The US paint industry is a very mature market. The case goes as far to say that paint is can now be considered a commodity. There are 3 main sectors of the paint industry with 2, Architectural coatings and OEM coatings, holding more then 3 quarters of the market and Special purpose paints at 22% Being a mature industry they are not expecting any growth in sales figures except for the growth to stay inline with inflation.
It would be useful to know where the 3 segments are at now in 2012 after the financial crisis hit and use for paint materials must have declined when housing construction (architectural) car manufacturing (OEM) and state budgets (special purpose coatings) saw a large decline. Also with customers wanting a thicker coating with less paint at a cheaper cost and strict EPA guidelines; balancing R&D cost and maintaining a strong contribution margin is becoming increasingly difficult.
Jones Blair is particularly concerned with how to grow their market share in the Architectural Paint coatings segment. This is the largest of the 3 segments at 43% of the market with minimal expected future growth. The success of this industry is tied to the housing market as most of the materials sold in this segment are used in relation with construction and residential and commercial property remodeling. It would be useful to know much of a hit this segment took with the recent housing crisis. For a while there was no new lending or construction so this segment must have been hit hard.
Now that the economy is starting to grow again and people/business are starting to take on improvement projects and buy new properties It would be interested to see what kind of growth is expected over the next few years and if it is considered to be sustainable growth. The competition in the Architectural Coatings market follows the industry standard as being a mature market and there is minimal organic growth within companies. Since R&D costs are high and market segments are well developed most growth is seen with the acquisitions of competitors.
The number of paint companies has almost been cut in half since the 1980’s as companies continue to merge together. The paint itself is sold with a 50/50 mix between consumer store fronts and specialty yards. I have a feeling this may also be changing as stores like The Home Depot and Lowe’s cater to the do it yourself market along with contractors. Mom and Pop hardware stores, and Paint Brand (I. E. Sherman Williams) store fronts are starting to diminish. The direct to consumer sales are taking place in super centers like Wal-Mart, Sears and Lowe’s, while contract and industrial sales are primarily seen in specialty stores and Lumber yards.
The case says the sales are split between private brands and specialty stores, but I have a feeling as these “Super Stores” become more prevalent and more people looking to the internet to learn how to do the jobs themselves that sales would shift towards these larger stores. A trending report over the past 10 years with the sales dollars in Architectural paint sales I think would help show this shift. I think it would also be beneficial to see just how many people are painting their homes.
It say roughly the average painter will spend $86 on paint and sundries, but I wonder just how many homes are taking on improvement projects. Jones Blair is primarily based in the in the South West Market primarily around the Dallas Fort Worth Area. With growing competition it’s harder to standout in the DFW area as brands battle with in Super Stores due to the number of stores merging or going out of business. The competition is cutting their prices to gain market share making sure you are in as many stores as possible has become a key factor to success.
Full product penetration in all areas of the market will be key to ensure strong sales figures and growth. The distribution of sales in this area are relatively split between mass merchandisers and the specialty stores. I think a population analysis of the area would be beneficial to see what areas have a growing population as this would have focus sales efforts for not only contractors developing land but also DIYers who are moving out of the metropolitan area. Over all the sales are relatively split relatively even between the DFW metropolitan areas and the surrounding counties.