Blair

Company Profile

Jones . Blair company is a privately held corporation with manufacturing plant and headquarters located in Dallas, TX. The company produces and markets architectural paint under the Jones Blair brand name. The company also sells paint sundries like brushes, rollers, thinners, et., that are manufactured by other companies. Jones Blair company markets its paint and sundry items in over 50 counties in the states of Texas, Oklahoma, New Mexico, and Louisiana. The 50-county service area consists of two distribution segments: the eleven county Dallas-Fort Worth (DFW) metropolitan area and the 39 county non-DFW area.

Jones . Blair's net profit before taxes in 1999 was $1,140,000 on a sales volume of $12 million selling architectural paint and allied products in the 50-county service area. The estimated dollar volume for these products sold in the same service area during the same period was $80 million, excluding contractor sales, giving Jones . Blair a market share of 15% in its service area.

Problem

Jones . Blair Company's dollar sales had increased at an average annual rate of four percent per year over the past decade, though paint gallonage had remained stable over the past years. Based on the Company's sales forecast, the gallonage demand for paint in the 50-county service area is not expected to increase next year and the company will be hard pressed to increase prices as its paint products are the highest-priced in the service area. There is a pressure on the profit-margins with the 1999 paint cost-of-goods sold, including freight expenses, was 60 percent of net sales. The senior management of Jones . Blair Company has to decide where and how to deploy corporate marketing efforts among the various architectural paint coatings markets served by the company.

Assumptions

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