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Strategic Marketing: JC Penney

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Briefly describe Penney proposed new pricing strategy, also providing bit of background on the company and department store industry.

Do you think JC Penney's new pricing strategy will work? Support your position in terms of the environmental factors such as economy, the competition, and the changing consumer behavior.

How does this pricing strategy complement Penney proposed new merchandising and promotion strategies? (You need to take into account JC Penney's segmentation, positioning and branding strategies to explain this issue.)

Please consider the following articles:
How to Stop Customers from Fixating on Price
Bertini, Marco and Wathieu, Luc
http://search.proquest.com/docview/227839259?accountid=28844

U.S. Warns Apple, Publishers --- Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing
Catan, Thomas; and Trachtenberg, Jeffrey A
http://search.proquest.com/docview/926639928?accountid=28844

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Solution Summary

The pricing strategy of JC Penney is explained in this response. The answer includes references used.

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JC Penny is a mid-ranged chain store. It has always positioned itself as a store where premium products are available at reasonable prices. The company has 1,107 departmental stores in US and Puerto Rico. It sells merchandise and at the same time leases departments to firms such as Sephora, and Martha Steward, which complement its premium positioning. The focus of JC Penny is on clothing, footwear, furniture, jewellery, beauty products, electronics, and house-wares. The cause of recent change in the pricing policy of JC Penny is its sales performance. Its 2012 income statement shows a decline in sales revenues from $17.8 billion in 2011 to $17.3 billion in 2012. What is more significant is that the company had a net income of $389 million in 2011 which has declined to a net loss of $152 million in 2012.

The new pricing strategy of JC Penny is discounts and price cuts. First it used sales to attract customers but after six months the company changed over to a three tier pricing approach that had lower everyday price, month long sales, and holiday or seasonal sales. In November 2012, the stock prices of JC Penny fell by nearly 13% on one day of trading. Standard & Poor lowered JC Penny's credit rating into junk status. The third quarter sales figures for 2012 and income show a decrease in sales and an ...

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Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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