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J. C. Penneys Fair and Square Pricing Strategy
The CEO of JCP devised a Fair and Square concept to enhance sales income and market recognition. However, he mainly changed the logo, spokesperson, environment of stores, sales structure, and pricing strategy. Nonetheless, the CEO primarily altered the brand, spokesman, retail atmosphere, sales organization, and price policy. In other words, the new Fair and square became a vital component of the redesigned program (Ofek & Avery, 2013). The plan initially comprised three price categories and eliminated traditional sales incentives in an attempt to simplify the buying experience for consumers, therefore moving J.C. Penney away from its prior high-low pricing approach.
However, poor first-quarter numbers that persisted throughout the summer season suggested that the companys customers were hesitant to adopt the revised pricing model and started abandoning the business in vast numbers. This was because they were used to getting JCP Cash discounts and brochures touting the weeks promotions. In anticipation of the crucial school opening and holiday spending spree, Johnson was pressured to improve the situation (Ofek & Avery, 2013). Therefore, Johnson opted to modify the initial price structure scheduled to be effective on August 1st.
The outcomes are the consequence of a flawed plan and poor implementation of a sound approach. Essentially, JCP intends to decrease consumer dependency on coupons and revert to an EDLP pricing strategy since high-low pricing may swiftly erode a companys performance and profitability. Unfortunately, aspects of the approach, such as the retail structure and spokesperson, lacked the cohesion with other components of the strategy necessary to make it effective company-wide. Similarly, the approach was poorly executed, particularly in terms of promoting the price and positioning adjustment.
There was virtually little advertising of the adjustments to raise knowledge and value to consumers. The company mistakenly thought that only a spokesman was needed to market the changes and influence customer perception. Moreover, if the adjustments had been executed gradually or in an alternative temporal order, JCP would have experienced comparable consequences. Although the outcomes were somewhat promising in a gradual sense, without sufficient advertising, the ultimate consequences would not be different since consumers would have poorly responded to the absence of promotions and full-priced items.
Essentially, a retail shop centered on customer satisfaction that emphasizes daily value and convenience rather than relying on discounts and special offers is essential for the companys long-term viability. The executives of the organization need to be made aware that this changeover cannot occur immediately. Customers must be educated and persuaded to embrace the companys new approach and convey the benefits to them. The marketing message, in this case, should emphasize efficiency rather than theatrics. Most essentially, Johnson must conduct market analysis on the modifications he introduces to forecast the future accurately and avoid underperforming for a third consecutive quarter.
In contrast, Johnson is determined to maintain his present position. Company executives are evaluated primarily on their short-term success. Hence they seldom have the luxury of waiting for customers to see the benefit of pricing reductions. Accordingly, he should embrace sales-generating steps in the future, such as launching seasonal medium-term specials, clarifying the pricing strategy, and enlightening consumers on the meaning of Fair and Square. Meanwhile, he must continue working toward the long-term objectives connected with the repositioning plan. This would be ideal, given that JCP wants to reverse its decline and maintain operations.
References
Ofek, E., & Avery, J. (2013). JC Penneys Fair and square pricing strategy. Harvard Business School.
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