revjo2 - Jones-Blair Company(Revised Jan 25 1999(Note that...

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Jones-Blair Company (Revised Jan. 25, 1999) (Note that I indicated in bold the correct changes in the last paragraph, as well as two percentages in the sales volume figures in Exhibit 3.) Alexander Barrett, President of Jones-Blair Company, slumped back in his chair as his senior management executives filed out of the conference room. "Another meeting and still no resolution," he thought. The major point of disagreement among the executives was where and how to deploy corporate marketing efforts among the various trade paint markets served by the company. He asked his secretary to schedule another meeting for next week. THE PAINT INDUSTRY The market for paint coatings can be divided into trade sales and industrial sales . Trade sales include sales of products primarily for households, contractors, and professional painters, known as shelf goods . Industrial sales include sales of numerous products for original application by manufacturers. Principal industrial customers are manufacturers of furniture, appliances, transportation equipment (autos, ships, trucks), construction components, and farm implements. Most coatings sold to industrial customers are special formulations designed to meet specific needs and application methods. Total sales of paint coatings in the United States are divided equally between trade and industrial sales. Market Outlook for Trade Paint Sales Industry sources estimated U.S. trade sales of paint and allied products (brushes, paint thinners, etc.) to be $5.1 billion in 1984, with projected sales of $6 billion in 1987. The average annual growth rate in dollar sales during the 1980s was considerably below the growth rate observed in the 1960s and 1970s. Some observers expected the rate of increase in paint volume to slow down further in the late 1980s, for a variety of reasons. First, there would be increased use of materials such as aluminum, plastics, and other nonwood products that require little or no painting. Second, producers of coatings had developed more durable products, and industrial paint users had developed more efficient application techniques. Third, improvements, in paint quality had reduced the amount of paint necessary per application and the frequency of repainting. Counteracting these factors, industry observers foresaw increasing demand for miscellaneous products such as paintbrushes, rollers, and other paint sundries. Paint manufacturers in general had had to contend with a cost-price squeeze in the early 1980s, and there was no end in sight. Cost of raw materials and increased competition were expected to remain major threats to industry profitability. Competition
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There were an estimated 1,200 paint manufacturers in the United States in 1985, compared with 1,600 manufacturers in 1968. The increased concentration of paint manufacturing was due to business failures and acquisition of regional manufacturers by national firms. Still, because of a readily available technology and differences in paint formulations associated with regional climate needs, a large number of regional manufacturers have competed effectively against national manufacturers.
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