(Revised Jan. 25, 1999)
(Note that I indicated
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.
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 include sales of products primarily for households, contractors, and
professional painters, known as
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
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
Third, improvements, in paint quality had reduced the amount of
paint necessary per application and the frequency of repainting.
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.