Janmar Coatings

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JanMar Case Study Case Analysis
United States Paint Industry
The US paint industry is divided into three broad segments: architectural coatings, original equipment manufacturing (OEM) coatings, and special-purpose lacquers. The paint industry is a maturing industry. In 2004, sales were estimated to be slightly over $16billion and an average growth of 1-2% per year.
Architectural Paint Coatings Industry
The industry estimates that architectural coatings and sundries (brushes, paint removers, thinners, etc.) created sales of $12 billion in 2004. The architectural paint coatings segment is also considered to be projected between the 1-2% increase per year. The demand level for this segment is reflected by the level of home improvements
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To efficiently create awareness, JanMar would need to produce a cooperate ad with a retail outlet to get the buyer in the store. They would also need to increase sales by 8.3% or $1 million to cover the cost of increase in advertising. (See appendix 1.2). 2) To make a price cut of 20% would be unreasonable considering the costs of JanMar are unlikely to go down. Cutting price by 20% with the same variable costs would bring their contribution margin down to 19%. To get the same net contribution of $4.2 million using their current new contribution margin, they will have to generate $22,105,264.16 in sales which is far above their past sales of $12 million and creating more volume to increase sales at this lower cost is not feasible which just one manufacturer in the Dallas Fort Worth area. (exhibit 1.3) JanMar needs to focus not on cutting prices but positioning themselves differently from competitors as a superior quality and service company since they are a privately owned, focused just in the market of southwest United States. 3) Increasing the sales force could have a positive effect if the sales representative is assigned to the non Dallas Fort Worth area since account penetration there is only 16% and focusing on the “Do it Yourselfers” because of the amount of sales they accumulate in that area. The amount of sales revenue needed to cover the cost of the one added sales representative of $60,000 base salary
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