Unilever Canada: Becel Margarine

Jones Blair

Problem

Jones Blair company is specialized in architectural coatings which consists of general purpose paints, varnish and lacquers, it is sold to households or do it yourself painters, and to professional painters. They also produce special purpose coatings which are formulated for special environmental factors and extreme conditions. The architectural industry as a whole is seen to be in its maturing stage, where it is highly competitive, this increase in number of private brands is gradually slowing the overall growth to 1 - 2 percent annually. The industry not only is it facing competition between manufacturing and retailing levels, but it is also facing an increased level of competition from substitute products, such as aluminum sidings, interior wall covering and wood paneling, which consumers see them as new trends, while architectural paintings became a durable commodity that is infrequently purchased. Jones Blair Company is losing

market share, since the whole industry is shrinking, and competition is increasing there slice of the pie is getting smaller and smaller every once in a while.

Analysis

Referring back to the case, it was apparent that the JBC architectural paint market area is based on a geographic segment. They sell to households and professionals in within Dallas Ft. Worth, and they also sell to households and professional painters in non DFW or rural areas. This could be observed as so:

The DFW area accounts for 60% of the majority of dollar paint, which is $48 million in year 1997; although the DFW dollar volume is flattening or declining slightly, and on the contrary non DFW dollar volume is increasing at an annual average rate of 21% per year. Now that we have characterized the Jones Blair segments, further analysis should be done to know which segment should be served and which segment is a potential, and what is the company's market share in each segment.

This information is taken from the Jones Blair case notes. The whole market size is $80 million, JBC sales volume in the urban segment is 60% therefore the rural segment's sales volume is 40%. The households account for 70% of dollar volume of the 60% ( DFW) and 90% of the dollar volume of 40% (non DFW). If these percentages where applied to add to 100% or the $80 million market size it will be explained as follows:

Urban = 60% of $80 million which is $48 million

70% of the $48 million goes to households = $33.6 million (42%)

30% of the $48 million goes to professionals = $14.4 million (18.2%)

Rural = 40% of the $80 million is $32 million

90% of the $32 million goes to households =28.8 million (36%)

10% of the $32 million goes to professionals = 3.2 million (4%)

The household market in both DFW and rural areas make up 78% of the market size which equals to $62.4 million; whereas the professional market in both areas make up 22% or $17.8 million.

After revising this data it is obvious that they should target the urban household segment because they make up 42% of the market size. But after referring back to the case, in each segment the buyer's requirements differ; due to pricing, retailers, and/or quality. For example, rural professional and urban professional segment want high quality paint, because of their reputation, price is not an obstacle. But on the other hand, urban households are price cautious, there is a large number of outlets where buyers can compare between products and its prices, they are not knowledgeable with the products quality, and do not comprehend how important it is.

Since the urban household segment requirements do not fit with the JBC product then this is not the right segment that should be served. Rural and urban professionals are the segments that JBC should go after since they are not price sensitive and quality is important to them.

Households Professional

Urban $1.8million/$33.6million = 5.4% $4.2million/$14.4million = 29.2% $6million/$48million = 12.5%

Rural $4.2million/$28million

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