Introduction
Janmar Coating is a privately owned organization, which produces and retails architectural paint under their brand name Janmar. Janmar is also selling paint sundries such as brushes, thinners, rollers, etc. and the company has an OEM (original equipment manufacturing) coatings division. This case discusses how Janmar is facing few challenges on deploying their marketing efforts among several markets of architectural paint coatings served in the Southwest United States. The President Janmar, Ronald Burns mainly needs to decide where and how to deploy company’s corporate marketing efforts.
Problem Statement
Janmar Coating is facing trouble of choosing the most cost effective markets and the most suitable location for marketing the product. Janmar is facing trouble in deciding how they can decide how and where to execute Janmar’s corporate marketing efforts in their Southwestern U.S. market. Janmar is dependent its leadership to make major decisions, but after two meetings between senior executives there has not been a resolution. Above all, Janmar needs to maintain their market share with competitors offering lower rates.
Alternatives
The advertising VP is suggesting an increase of $350,000 in the ad budget for increasing awareness of their product in the DFW service area. The operation VP is suggesting a decrease in the product price that can increase the company’s market share. The sales VP is suggesting that efforts need to be increased in areas outside the DFW services which carries the majority of the sales and the penetration is relatively lower. The Finance VP is asking to maintain the current situation to ensure Janmar remains profitable and requests to find other ways to reduce costs.
Evaluation of Alternatives
The first alternative requires increasing the advertising budget and it has one of the major impacts on decreasing the net profit of Janmar Coatings. The second alternative is to decrease the product price to ensure Janmar focuses only in the DIY market, the end result is the increased net profit for the company. The third alternative is to hire a sales representative and focus on non-DFW markets, the end result is positive in terms of net profit but it does not match the second alternative. Finally, maintaining the current conditions are also not able to deliver the same results as the second alternative of reducing costs.
Recommendations
The best option for Janmar Coatings is reduce the price of their products as it increases the net profit. Also, the second option will also increase their sales by around 10 percent and compete better with low price competitors. In terms of profit, sales and overcoming competition, the second alternative is the most suitable and logical one.
Rationale
The aim of the business is to ensure that they make the highest possible profit, increase their sales and overcome challenge of their competitors. All these targets are best achieved by implementing the reduction of the price proposed by the operations VP. Other options proposed by other leaders in the organization are unable to match the numbers in terms of sales and net profit. In addition, the price reduction option also ensures that Janmar can finally overcome their competitors who are challenging them with lower rates.
Supporting Calculations
