Management at the Jones Blair Company (JBC) is looking for the best way to deploy corporate marketing efforts in order to increase sales for their architectural paint products in their Southwestern U.S. service area. The industry is facing slow sales growth and the number of paint producers is shrinking at a rate of two to three percent a year as a result of mergers and acquisitions by the large firms that seek to boost their specific market or geographic presence. The senior managers at JBC are reviewing four proposals in order to formulate a plan that will achieve their goals of capitalizing on their position in the market.
The Market
JBC currently holds 15% of the market share in their service area. The market is segmented in two geographic areas; the Dallas-Ft. Worth (DFW) metropolitan area that encompasses 11 counties and the non metro area that encompasses 39 counties (Non-DFW.) The total market share of JBC in DWF is 13% and 19% in Non-DFW. Each segment can be divided into two sub-segments; Do-It-Yourself segment (DIY) and the professional painters segment (Pro Paint.) JBC holds 10% of the DIY segment and 34% of the Pro Paint segment in their service area. To break it down further, JBC has just 5% of the DIY in DFW and 15% in Non-DWF. Their market in Pro-Paint is much larger with 29% in DFW and 56% in Non-DFW.
Proposals
There are four proposal presented by the senior managers:
V.P. of Advertising - Spend additional $350,000 on corporate advertising;
V.P. of Sales - Cut prices by 20%;
V.P. of Operation - Hire an additional sales representative.
V.P. of Finance - Do Nothing (maintain the status quo).
1.) The V.P. of Advertising proposes spending an additional $350k on corporate advertising and di ...