J. C Penny is a U.S departmental store which has chain stores in over 1000 different locations it majorly sells conventional products and at the same time offers the lease of most of its departments for instance, for salons, jewelry repair, and optical centers among other others.
Briefly describe Johnson’s pricing strategy, also providing background on the company and department store industry.
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In the United States Business like Penny, the departmental store has a more significant opportunity to recuperate its position as the in the industry. That can only happen when the company embraces and commit itself to the actual innovation. Jonson scrapped the company’s uncertain pricing policies of increasing prices and then allowing discounts. Besides, he implemented heavy promotions coupled with coupons ( Berfield, 2012 ). He intended to avail more appealing products from the groups of Joe Fresh and Martha Stewart and offer them to the customer at a reasonable price at a constant supply.
Explain why Johnson’s pricing strategy did not work. Support your position regarding environmental factors such as the economy, the competition, and changing consumer behavior.
The sudden change in pricing implemented on the products that were already in store. The already existing merchandises were what the clients had known and used to, so Johnson would have executed increase in price on new products. Thus the approach did not work correctly since the customers due to bargaining hunters. The customers rebelled, the numbers of customers reduced, sales reduces as well, and the company sluggishly started adapting the previous pricing strategies coupled with a lot of promotions, as well as marked up prices which later reduced . The clients resisted and never gave any responses when Penny brought in once again the markdowns, and thus sales decreased further by about 25% which accounted for about $4.4 billion in revenues (Reingold, Jones & Kramer, 2014).
Another significant mistake that is that there was too much change in a very short time with no proper testing of the effect would be. Before Johnson’s leadership, the company was still lucrative, even though it was still seen as a failure which was giving away grounds to the competitors such as Kohl’s and Macy’s companies. Reingold, Jones & Kramer (2014 ) say that the company’s insistent discounts had reduced not only the pricing ability but also had the value of the brand in the eyes of the customers. The tired former stores offered no help, and the competitors such as Macy took away the business and clients.
What do you think Johnson could have done better? Take into account J.C. Penney's segmentation, positioning, and branding strategies to explain this issue.
One viable approach would be to change Penney into the organization a kind of business where shopping comes out to be cheap and enjoyable. Seemingly, Johns did not know what makes the shopping enjoyable, particularly for ladies. It is the fun of pursuing not mainly buying. Reingold, Jones & Kramer (2014 ) say that the eyes of the client do not need to be profound and inexplicable to be dominant , at times they are just as simple and obvious as shopping is entertaining. The company lost billions of dollars in sales, market and an extended period of dismal performance. Johnson would have brought over the element of customer buying behaviors given that the products and marketing strategies offered qualitatively varied. The most apparent marketing and pricing strategies to beat the competitors would be to double down on the shopping which affordable or rather cheap and exciting .
Compare J.C. Penney’s current pricing strategy and Johnson’s pricing strategy, based on your research on the most recent situation of J.C. Penney. How do you think J.C. Penney would perform in the next five years? Take into consideration the relationships between pricing and other aspects of the marketing effort such as a change in merchandising, logo, atmospherics, use of celebrity spokespersons, and so on.
The former strategies employed by John lost ground in 2011 and will lose grounds today and in future. It will only change if Johnson comes up with better merchandise and honest business practices. He was well aware of disparity the approaches he implemented and the position of manager the consumer culture, the product line, the marketing as well as economic and sales policies (Berfield, 2012). He knew very well the nature of the customer base, so he thought that what he did at Apple could work with Penny. All the same, it was an intrepid strategy, but the implementation was poor. Changing a low-end store as a high-end store wanted critical planning, repositioning, and implementation , but Johnson harried executed the strategy . With few weeks Penny had developed a new logo, new pricing and proposed a new task force of designers that would be responsible for establishing a collection for the company. He did all that without carrying out small-scale test so the company would still be a failure in five years to come because it would be struggling on how to regain its former status.
References
Berfield, S. (2012, May 24), Remaking J.C. Penney without Coupons. Bloomfield Business Week. Retrieved from http://www.businessweek.com/articles/2012-05-24/remaking-j-dot-c-dot-penney-without-coupons
Reingold, J., Jones, M., & Kramer, S. (2014). How to fail in business while really, really trying. Fortune , 169 (5), 80.
