This is not the first time that this company has been faced with adversity. The first time was in the 1960’s when shopping went from downtown locations to more uptown locations in malls. The company transitioned to mall locations to cope with the change. This time the change did not come easy to the company. In fact this change has cost the company millions. This time JC Penney’s was faced with a challenge that they wanted to change. They wanted to transition the public’s perception of them. They no longer wanted to be viewed as an old fashioned department store. The company no longer wanted sales or clearance racks.
They wanted to change the whole retail climate. They called it fair and square pricing (Baskin, 2013). This came off a lot like Wal-Mart’s always low prices campaign. This sounds like a great idea to me. However, it failed for many reasons. The main reason because it was confusing to consumers. While the other main reason being poor marketing. Many people sat in anticipation of this new campaign by JCPenney’s. There were just as many supporters in the beginning as well. When I heard of this I thought of an upscale Wal-Mart. Low prices I do not have to shop for sales anymore because these should be low prices every day.
However, very shortly after this I found myself not shopping there at all. Consumers want a deal, and they do not feel that deal when they shop there anymore. It is the thrill of the hunt for consumers. Not only that but the sales ad and clearance racks used to change. They are no longer changing prices so there is no need to go daily, weekly, or even monthly. Customers may check there as a way to show case, but they are not buying. Without the sales and without the sale advertisements the company is not bringing in nearly the amount of people that were coming into the store to score the best deal.
Next the advertisements they are sending out are worded poorly. They are no longer doing sales but they do mail out what they called month long value. Customers did not understand the wording of it. It was never broken down for them. Ideally they had sales, but they were not called the standard name. Therefore, customers missed out on them and they were not bringing in the clientele like a “sale” probably would have. They were not able to embrace JC Penney’s new tactic. Another problem with this campaign is that the average consumer does not know what the clothing costs. Therefore they think it should be or could be marked down.
They have no idea if they were getting a good deal or not. Again the thrill of the hunt is gone, and still makes the customers confused. It was confusing to customers and that means there is a problem in marketing. When a place makes changes that could potentially be confusing marketing is the key. However, there advertisements were so irreverent that they made even less sense to begin with. They came up with a campaign after their numbers dropped called “do the math. ” It was supposed to show how much easier it is to just get a low price in the beginning rather than use a coupon. This action failed for the company.
The CEO Ron Johnson came out and reported later that “it was confusing” to some of their consumers (Baskin, 2013). It’s no wonder that they lost customers. They did not target other competitors about their prices just what the company was trying to do. Last but not least they attempted to open little stores inside their stores. It was a Martha Stewart collection like IKEA. Even that failed because Martha Stewart was not able to put her name on it, because she was still in litigation over her brand. So, it was still branded as JC Penney’s. Not that the name would have made much difference, but it was not thoroughly hought out within the company. Also, this is not a new tactic stores have been doing this for years. The renovation of the stores to add in this small store was costly. It has cost the company millions of dollars. It has depleted their cash, and has also caused their credit rating to drop (Baskin, 2013). This was a costly decision to make when sales were already down. Here is the largest problem that they had they wanted become a high end store in a low end economy. If I were the CEO of JC Penney I would make quite a few changes. My first change would have been to go back to traditional wording for now.
These are the words that customers are the most familiar with. I understand that some companies like to do all their changes at once because it is cheaper. However, when you are changing familiar terms it is wise to do it slowly. Or at least explain it as thoroughly as possible. Change is needed as a society, but no one likes change, because of this I feel that they should be done slowly and over a period of time. I would also have changed the price tags on their merchandise. In order to make someone feel like they are getting a deal I would change how they were priced.
I would put a suggested retail price and then put “our” price on the label. This would appear to customers that they were getting a deal. Sales are because the prices are higher than what they need to be. The advertising is all about “trickery” to pull people in. In reality they were still doing sales but they were not called sales, and people did not buy into it. By changing the price tags on the items the customers are still getting the thrill of the buy. They can see what their item is going for at their competitor’s location, and impulse buy. This helps eliminate “showroom” shopping.
Or leaving to check their prices somewhere else. If it is a matter of a few dollars they will not go back to purchase. However, if they can see the deal they will buy. Instead of focusing on expanding a business inside of an already expanding business I would have spent the money elsewhere. Imagine if they could have established new rules for buyers. Gone back to JC Penney’s original roots and prove their claims. It could have created new financing and lay-away policies that communicated value, and used social media to create meaningful communities of consumers who wanted to track and participate in conversations about prices.
Employees could have been recruited and trained to offer a fundamentally new customer experience based on integrity. They could have changed the way Americans shop and feel they should stop. I would not have wasted money on an advertisement that was bewildering. I would have spent money marketing on calling competitors out on their prices. Sharing the news on how Penney’s was changing. How they were forward looking. Instead of making confusing ads with no sales just to avoid the word sale I wouldn’t have tried to stay away from it.
Since they were still doing sales but not doing sales on certain items. Limiting the sales options were not the problem the problem was using unfamiliar wording. Measuring some of these techniques could be hard to do. Going back to traditional wording would be one way that is hard to track. However, I believe it would go hand in hand with how you would track the new price tags. That would be sales. With these new changes and advertisements I would think that sales would increase. I would not look at the actual accounting book but do a twelve month comparison on the sales on each individual store.
This is time consuming and costly but I think it is the only way to see how each store is doing in comparison to how they were doing the previous month and year. During high sale times I would make sure I would have as much staff as possible on the floor to assist our customers. Maybe they do not need help but a casual conversation can lead into why they came into this department store and not the one across the way. Along with this I would like to institute team meetings once a week where department heads meet with their front line employees on all shifts. To find out their ideas and where they are hearing concerns are.
Then I would have them write them up and do a teleconference with each store head to hear these ideas, questions, or concerns. I feel this is an open door policy. I would also include suggestion boxes not only in the store, but in the break room for employees so they could bring these up anonymously if they felt the need to. Also, I would work on getting the contact information to employees for everyone in charge. Change can happen and many great ideas come from the front line, because they see and do it every day. However, their voices are not often heard.
To measure the effectiveness of advertising I would do a few things. I would add a survey at the end of their receipt to figure out what they thought about the advertisement. I would also add a quick questionnaire in the store that the customer could fill out. I would also make it known that there is a number they can call at any time with questions. I would make it so that they could be heard with questions and concerns. Before I launched a campaign I would have a test market so that we could see what people could recall from the add, as well as find out if there was any confusion on what may have been advertised.
The sales would play a large part also in whether it was an effective campaign. A company that has been operating for 100 years is struggling. JC Penney ’s was once a fashion icon to children, young adults, and teens. Beginning in 1913 it currently operates over 1000 stores. Growing up my sister and I waited to go through their catalogue. However, in the last few years something has changed. The company didn’t look far enough ahead to the future to predict these changes. They tried to become a higher end boutique like store in an economy that could not support it.
Poor marketing and too many changes has made this one booming store one of the top ten stores that are predicted to be out of business in the next year. Works Cited Baskin, J. (2013, January 2). Lessons From JC Penney’s Doomed Marketing Makeover. Retrieved May 12, 2013 , from Forbes: http://www. forbes. com/sites/jonathansalembaskin/2013/01/02/lessons-from-j-c-penneys-doomed-marketing-makeover/ Tuttle, B. (2012, June 19). More Troubles for JCPenney: Top Executive Departs Amid Sales Slump. Retrieved May 12, 2013, from Time Magazine: http://business. time. com/2012/06/19/more-troubles-for-jcpenney-top-executive-departs-amid-sales-slump/