Jones_Blair_Market_Segments

Jones Blair Case – Segmentation 1. U.S. paint industry Jones Blair Company (JBC) is a regional paint manufacturer mainly operating in the Dallas-Fort Worth area in Texas, USA and the surrounding counties. As the paint industry is considered to be a mature market, with little market growth (estimated at 1-2% per annum) and relatively steady prices, adjusted only by inflation levels, JBC faces the problem of maintaining needed growth and profit margins. The US paint industry generally divides in three segments, which are the architectural coat segment, original equipment manufacturing and special purpose coatings segment. The first segment, architectural coating consists of general purpose paints, which are used mainly for home and industrial constructions – and is the area in which JBC concentrates its efforts. This is the largest segment out of the total market turnover. The U.S. paint industry sales in 1995 were approximately 13 billion, where the architectural coats bring about 10 billion and more. Demands for this products reflect the levels of house redecorating and repair as well as the sales of existing homes, rather then the newly build homes. Two other factors also play its role on the general turnover of these products- firstly, the alternative materials on the market which can act as substitutes and secondly, the higher quality of the products, which reduces the amounts needed. Areas of distribution for these products are typically the warehouse-home-centers, lumberyards, hardware stores, specialty stores and membership clubs (department stores) and the contractors directly. Data shows that the do-ii-yourself outlets grow in importance as distribution channels. 2. Jones Blair market area segmentation Jones Blair Company is a regional player in the architectural coat segment of paints and sundry products. The paint industry typically divides within the architectural coat segment, in do-it-yourself customers (retail) and professional painters (contractors). JBC chooses to further segment its market geographically (regionally) and with respect to the distribution channels. JBC sells its products mainly in the DFW metropolitan area and in other non-metropolitan areas -some 50 counties in Texas, Oklahoma, New Mexico and Louisiana. Mainly because of readily available technology and difference in paint formulations associated with regional climatic needs, this regional paint manufacturer has been able to compete against nation-wide producers. The distribution is spread thru 200 independent paint stores, lumberyards and hardware outlets. 3. Opportunity segments for Jones Blair Company – segments to pursue in the future With respect to the fact that JBC’s sales in the retail segment have been decreasing in the DFW area over the years 1991-1995, the non-DFW-area represents an opportunity for sales growth. Data shows that there has been a steady increase in sales for this period. Further more this widespread of the market area would ease the impact of the accelerated competition between the retailers such as Sears and Kmart in the DFW areas. More distribution outlets would lead to an expansion of the business. An emphasis should also be given to the do-it-yourself channel of distribution, which is forecasted to be a growing market. This can be accomplished by an additional and more aggressive representative pursuing a higher non-DFW penetration of the market and thus consequently higher brand awareness. 4. Jones Blair’s competitive position JBC offers high end products at a higher price – premium positioning. This makes the products interesting for the contractors, which have to rely on quality and are ready to invest in a better product to eliminate quality arguments with end-customers. For JBC it is important to continue to have an eye on its margins and costs, but to also increase sales, so it can eventually lower the prices. With this JBC can become more competitive on the retail market and in return win market share in the (extended) market area. It is also important to strengthen the premium positioning of the brand with regards to the good cost-benefit of the paint.