The U.S. paint coatings industry is a matured industry which had $16 billion sales in 2004. This industry is expected to have a 1% to 2% sales every year. The industry is segmented into three types: -
1. Original equipment manufacturing- It occupies 35% of the market share
2. Architectural- It occupies 43% of the market share.
3. Special purpose coatings- It occupies 22% of the market share.
Janmar coatings has high quality architectural paints, OEM paints and sundries because of which they have a presence globally. Janmar coatings distributes paints to 50+ counties in texas, Oklahoma, New Mexico and Louisiana. JAnmar has headquarters in Dallas, Texas. It has 1000 plus outlets in the 50 county service area and out of these 1000 outlets, 45% are in DFW. In 2004 Janmar’s did sales of nearly $12 billion and managed to make $1,140,000 net profit before taxes. …show more content…
In 2004, cost of good sold and freight expenses was nearly 60% of the profit. Janmar’s stores are present in 200 paint stores , lumberyard and hardware outlets. 80 stores located in the DFW area and the remaining 120 in the non-DFW area.
The cost of promotions are nearly 3% of the total net sales. 55% of advertising and sales promotion dollars go to co-operative advertising programs and the remaining 45% is spent on in-store displays, corporate brand advertising, outdoor signs, regional magazines, premiums, etc.
Suggestions from the experts 1. VP of sales: The VP of sales suggested to add a sales representative. This will help them develop new leads and presentations. This would cost the company approx. $60,000 excluding commissions per year. 2. VP of operations: The VP of operations suggested that we should cut the sales by 20% since Janmar’s paints are costlier than most of the products in the market and the first thing that a customer looks at is the price. 3. VP of advertising: The Vp of advertising suggested that the company should increase the advertisement and focus on the television marketing. This is a costly expense as it would cost them around $350,000. Dollars needed to breakeven (x) Advertising Expense $350,000 Contribution Margin 35% X= 350,000/ 0.35 Breakeven = $1,000,000 Operations Sales= 12,000,000 After 20% price cut (X)= $ 7,800,000 Contribution margin = 35% New CM= 18.75% Since CM = (present $ sales – new $ sales after cut) / present $ sales Breakeven= $22,400,000 Sales DFW area Non- DFW area Professionals Cost for # of prof= $10,500 #of prof = $9000 Retailers #of stores= 22,500 #of stores= $35,000 Cost of hiring new sales person= $60,000 CM= 35%, So breakeven= $171, 428 After looking at the Brakeven analysis we can easily figure …show more content…
This is what should be done if the company chooses to hire a sales representative:
1. Trend: We should focus on the new market trend.
2. Time and Money- The company should invest its full time and money on the new project.
3. Technology- The company should be updated with the latest technology for the new stores
4. Store- Before buying a store, check thoroughly about the area and know about the local price, the highest quality product there and try to make it a one stop shop.
5. Consumer Behavior- The company should send out its team to talk to friends and family, check the latest trend in magazines, talk to real estate builders and search the internet to know what the consumer
1. Original equipment manufacturing- It occupies 35% of the market share
2. Architectural- It occupies 43% of the market share.
3. Special purpose coatings- It occupies 22% of the market share.
Janmar coatings has high quality architectural paints, OEM paints and sundries because of which they have a presence globally. Janmar coatings distributes paints to 50+ counties in texas, Oklahoma, New Mexico and Louisiana. JAnmar has headquarters in Dallas, Texas. It has 1000 plus outlets in the 50 county service area and out of these 1000 outlets, 45% are in DFW. In 2004 Janmar’s did sales of nearly $12 billion and managed to make $1,140,000 net profit before taxes. …show more content…
In 2004, cost of good sold and freight expenses was nearly 60% of the profit. Janmar’s stores are present in 200 paint stores , lumberyard and hardware outlets. 80 stores located in the DFW area and the remaining 120 in the non-DFW area.
The cost of promotions are nearly 3% of the total net sales. 55% of advertising and sales promotion dollars go to co-operative advertising programs and the remaining 45% is spent on in-store displays, corporate brand advertising, outdoor signs, regional magazines, premiums, etc.
Suggestions from the experts 1. VP of sales: The VP of sales suggested to add a sales representative. This will help them develop new leads and presentations. This would cost the company approx. $60,000 excluding commissions per year. 2. VP of operations: The VP of operations suggested that we should cut the sales by 20% since Janmar’s paints are costlier than most of the products in the market and the first thing that a customer looks at is the price. 3. VP of advertising: The Vp of advertising suggested that the company should increase the advertisement and focus on the television marketing. This is a costly expense as it would cost them around $350,000. Dollars needed to breakeven (x) Advertising Expense $350,000 Contribution Margin 35% X= 350,000/ 0.35 Breakeven = $1,000,000 Operations Sales= 12,000,000 After 20% price cut (X)= $ 7,800,000 Contribution margin = 35% New CM= 18.75% Since CM = (present $ sales – new $ sales after cut) / present $ sales Breakeven= $22,400,000 Sales DFW area Non- DFW area Professionals Cost for # of prof= $10,500 #of prof = $9000 Retailers #of stores= 22,500 #of stores= $35,000 Cost of hiring new sales person= $60,000 CM= 35%, So breakeven= $171, 428 After looking at the Brakeven analysis we can easily figure …show more content…
This is what should be done if the company chooses to hire a sales representative:
1. Trend: We should focus on the new market trend.
2. Time and Money- The company should invest its full time and money on the new project.
3. Technology- The company should be updated with the latest technology for the new stores
4. Store- Before buying a store, check thoroughly about the area and know about the local price, the highest quality product there and try to make it a one stop shop.
5. Consumer Behavior- The company should send out its team to talk to friends and family, check the latest trend in magazines, talk to real estate builders and search the internet to know what the consumer