Janmar Coatings, Inc. | To: | Ronald Burns | Subject: | Janmar Coatings, Inc. Suggestions | Comments: | The problem facing Janmar Coatings, Inc. is deciding where and how to execute corporate marketing efforts in the southwestern United States. Janmar Coatings is currently marketing to 50 counties, their main focus area so far has been the 11 counties in the Dallas-Fort Worth area. The main issue Ronald Burns, the president of Janmar Coatings, is having is trying to come up with a solution to market his company in the most cost effective way during 2005. After 2 long meetings with his executive team he still has no clear direction. He has gathered an approach from each of his team members, including: VP of Advertising, VP of Sales, …show more content…

And their variable cost will not be effected by this price cut to their cost of goods sold will be held constant. In the end reducing their gross profit by 50%, which is extremely high. By implementing this price cut too, they would be lowering their contribution margin by almost 60%. While initially, a price cut may seem very appealing to the consumers, the overall toll it will take on the contribution margin and sales dollars generated by Janmar, it would not be a smart decision to move forward in making that a reality.Now, the Vice President of Finance suggested pursuing the current approach. His idea is that Janmar Coatings has always, and will continue, to be successful. The contribution is high, just because an increase in costs doesn’t mean there will be an increase in sales, so why do anything different? Although the VP of Finance has valid points, there is obviously something that needs to be done, or else 22 meetings would not have been necessary. Yes there is a great contribution now, but if things stayed the same, other companies may become more popular and generate more sales than we do and push us out. Based on information from 2004, Janmar currently has a 15% market share in the 50-county service area. If Janmar just stays where they are, they could lose market share as well. It is true that with any expenditure, sales have to increase to compensate for those expenditures, but a company cannot merely