2. DFW Area: Professional shows the next greatest opportunity for Janmar making up 29.17% of sales. 3. Non-DFW: Do-it-Yourself this segment only represents 14.28% of sales. 4. DFW Area: Do-it-Yourself this segment has the least opportunity for Janmar since only 5.36% of sales come from this segment. Alternatives: 1. Do Nothing a. Pros: i. Janmar’s dollar sales has increased at an average annual rate of 4% per year over the last decade. Also our contribution margin will stay at 35%. ii. Janmar has been profitable and will continue to be by guarding their margins and controlling their costs. Consumer Type DFW Area Non-DFW Area Total= Do-it-Yourself: $1,800,000 ($6 million X 0.30) $4,200,000 ($6 million X 0.70) $6 million Professional: $4,200,000 ($6 million X 0.70) $1,800,000 ($6 million X 0.30) $6 million Total= $6 million $6 million $12 million
MKTG 45084 Paper #3: Janmar Coatings, Inc. 24 April 2018 iii. By sticking to the same plan they have now Janmar can focus more on customer service. iv. By doing nothing Janmar Coatings will gain more sales due to the increase in do-t-yourself household buyers. b. Cons: i. Janmar is the highest priced paint in their service area, competition will keep growing and effect Janmar’s profits. ii. Over the last five years Janmar’s sales representatives have only gained five new accounts. Sales representatives have not been performing well and will effect profits. iii. Janmar will become less competitive because it is becoming less accommodating. 2. Increase Advertising to Household Segment by $350,000 for Corporate Brand Awareness Dollar Breakeven Point= 350,000 ÷ 0.35 = $1,000,000 (sales required to cover cost of advertising) a. Pros: i. Increasing advertising will help Janmar Coatings reach non-DFW consumers in 15 counties. ii. Advertising on TV will help get Janmar’s brand inside consumer’s mind when they are choosing paint. It is said that brand name is important because consumers tend to think about paint they have seen advertising when choosing a brand. iii. Since architectural paint is a maturing industry using advertisements could help Janmar reiterate the differences between their brand and their competitor’s brands. b. Cons: i. Spending an additional $350,000 on advertising will almost double Janmar’s current advertising costs. 1. Current advertising costs= $360,000 (12 million X .03) 2. Total Advertising costs with additional $350,000 equals $710,000 ii. There is no way to prove that increasing brand awareness will lead to increased sales and that those sales will make up for the $350,000 spent. iii. Do-it-yourself consumer’s buying process shows that buyers first chose a retail outlet first then once at the outlet chose a paint brand. iv. 75% of the audience advertising will reach is not even buying paint. 3. 20% Across the Board Price Reduction Old CM= 0.35 Current Contribution dollars= $4,200,000 (12 million X 0.35) New CM= 0.1875 (0.80-0.65 ÷ 0.80) Sales Required to maintain current contribution dollar sales= $22,400,000 (4,200,000 ÷ .1878) a. Pros:
MKTG 45084 Paper #3: Janmar Coatings, Inc.
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- Summer '19
- Marketing, increase sales, Janmar, Janmar Coatings, Inc