Jones Blair

FACT SHEET FOR JONES BLAIR

Describe and analyze the US paint industry and more specifically the architectural coatings segment?

The paint industry is divided into three broad segments: Architectural coatings, Original equipment manufacturing (OEM) and Special Purpose coatings.

Industry sales for paint are slightly over 13 Billion 1997

Currently 600 paint companies about 40% lower than in1975

It is a maturing industry

Typical Paint Stores have annual sales of 400,000 with 3 brands

Typical Lumberyard Hardware store gets 10% of it's volume (65,000) from paint

Average paint purchase is $74/occasion

Average sundry purchase is $12/occasion

-60% annual sales are for interior paints which is equal to 3.35 Billion

-38% annual sales are for exterior paints

*Architectural coatings A/KA (Shelf goods)

General purpose paints, varnishes and lacquers used on residential, commercial, and institutional structures

Sold through wholesalers, retailers, DIY, paint contractors and professional painters

AC accounts for 43% of total industry dollars which is 5.59 Billion out of (13B)

It is a mature market with Long term sales growth of 1-2 % year

60% of AC sales from producers like Sherwin-Williams, Benjamin Moore, Glidden unit of imperial chemicals, PPG industries, Valspar Corporation, Grow Group, Pratt & Lambert which is equal to 3.35 Billion out of 5.59 Billion.

50% of AC sales are sold under private, controlled or store brands (sears, k-mart, Wal-mart, Home Depot) which is 2.795 or 2.8 Billion out of 5.59 Billion

36% of paint and sundry items are sold in specialty store which is 3.6 Billion took out of 10 Billion

14% of paint and sundry items are sold in Hardware and lumber yards which is 1.4 Billion out of 10 Billion

50% of sales of AC are DIY, which is equal to 2.7 Billion out of 5.59 Billion

25% of sales of AC are professional painters which is equal to 1.3975 or 1.4 Billion out of 5.59 Billion

Architectural Coatings Purchase Behavior

60% annual sales of AC are for interior paints which is equal to 3.35 Billion

38% annual sales of AC are for exterior paints which is equal to 2.12 Billion

2% are made of laquers and other applications

*Original equipment manufacturing (OEM) coating

Formulated to industrial buyer specifications, it is used for durable goods.

Applied to original equipment during manufacturing

Automobiles, trucks, transportation equipment, appliances, furniture, fixtures, metal containers, building products, industrial machinery

35% of total industry sales which is 4.55 Billion

*Special-purpose coating

Formulated for special applications or environmental conditions

Extreme temperatures, exposure to chemicals or corrosive conditions in automotive and machinery refinishing, industrial construction and maintenance, bridges, ships, aerosol, metallic paints, roof paints

22% of total industry sales which is 2.86 Billion out of 13 Billion

What are most important facts, trends and external forces for change?

Jones-Blair want to deploy corporate marketing efforts among the various AC paint markets served by the company in SW United States. - Fact

Declines are 2-3 % a year in the paint industry- Trend

External Environment

Pressure to reduce emissions of Volatile Organic Compounds (VOC). Environmental Protection Agency had 3-step plan which has lowered profit margins

-1st reduce VOC's by 25%

-2nd reduce VOC's by 35%

-3rd reduce VOC's by 45%

Companies are making acquisitions to seek growth and higher sales - Trends

Identify and describe Jones Blair's external and customer environment?

This includes size, growth rate, demand drivers, competition, # of competitors and share of total sales at both the manufacturer and retail levels, structure of retail distribution (channel structure) and share of total sales for each type, buyer behavior customer preferences and purchasing processes.

Demand Drivers

Demand reflects the level of house redecoration, maintenance, repair and new home construction

Increase demand for sundries due to DIY

Competition

Competition from alternative materials like aluminum and vinyl siding, interior wall coverings

Competition from companies that have higher-quality products that reduce the amount of paint per application and frequency

Competed successfully against paint companies that distribute nationally

Competition at the paint manufacturing level has increased

Consumer buying decision process - Purchasing processes

-Decide of project/product

-Gather information

-Decide on store

-Decide