Share
Explore BrainMass

J.C. Penney Pricing and Promotion Strategy

Task : Develop a report which addresses the following issues:

1) Briefly describe J.C. Penney's new pricing strategy, also providing background on the company and department store industry.
2) Do you think J.C. Penney's new pricing strategy will work in the long run even if it seems to be not working at the current stage? Support your position in terms of environmental factors such as economy, the competition, and changing consumer behavior.
3) How does this pricing strategy complement J.C. Penney's new merchandising and promotion strategies? Take into account J.C. Penney's segmentation, positioning, and branding strategies to explain this issue.
4) What can you learn from this case? Consider this pricing issue from both short-term and long-term perspectives.

Helpful Resources:

Lublin, J. S., & Mattioli, D. (2013, Apr 09). Penney CEO out, old boss back in. Wall Street Journal (Online). Retrieved from http://search.proquest.com/docview/1324471578?accountid=28844.

Glazer, E., Lublin, J. S., & Mattioli, D. (2013, Apr 9). Penney backfires on ackman. Wall Street Journal (Online). Retrieved from http://search.proquest.com/docview/1324721270?accountid=28844.

D'Innocenzio, A. (2012). J.C. Penney slashing prices on all merchandise. USA Today (January 27). Accessed 5/5/12 at: http://www.usatoday.com/money/industries/retail/story/2012-01-25/penneys-price-overhaul/52787388/1

Mattioli, D. (2012). How J.C. Penney was minted. Wall Street Journal (January 25). Retrieved October 9, 2013 from http://online.wsj.com/news/articles/SB10001424052970204624204577183471514403532

Mattioli, D. (2012). J.C. Penney chief thinks different. Wall Street Journal (January 26). Retrieved October 9, 2013 from http://online.wsj.com/news/articles/SB10001424052970203718504577182751798318594

Reingold, J. (2012). Retail's new radical. Fortune, 165:4(March 19).
Retrieved October 6, 2013 from http://management.fortune.cnn.com/2012/03/07/jc-penney-ron-johnson/

There's a lot going on at J.C. Penney these days. With a new CEO, Penney, confronted with pressing competition up, down, and sideways in the department store wars, is reinventing itself in terms of merchandising, supply, and pricing strategies. Here we will concentrate only on the pricing aspects of these new directions. However, this is ultimately about positioning; trying to find a space that is responsive to potential customers as well as differentiating the Penney brand from Target, Kohl's, Wal-Mart, and Macy's.

These articles shed additional light on the implications of Penney's new direction:

Beltrone, G. (2012). Ad of the day: J.C. Penney - Peterson Milla Hooks brings its poppy visual style to the retailer's big new rebranding effort. Adweek (February 3). Accessed 5/5/12 at: http://www.adweek.com/news/advertising-branding/ad-day-jcpenney-137988

Berfield, S. (2012), J.C. Penney vs. the bargain hunters. Bloomberg Business Week (May 25), pp.21-2. Retrieved October 6, 2013 from http://www.businessweek.com/articles/2012-05-24/remaking-j-dot-c-dot-penney-without-coupons

Conte, C. (2012). Stein Mart reducing coupon use, lowering prices, Jacksonville Business Journal (March 8). Accessed 5/5/12 at: http://www.bizjournals.com/jacksonville/blog/2012/03/stein-mart-reducing-coupon-use.html?ana=RSS&s=article_search&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_jacksonville+%28Jacksonville+Business+Journal%29
Stein Mart plans to reduce its dependence on coupons and return to the everyday low-pricing strategy it became known for, with plans to cut prices between 5% and 10% on much of its merchandise. "We don't want our customers to think they have to use a coupon to get a better price at Stein Mart," said Jay Stein, chairman of the board and interim CEO.

Girard, K. (2012). Is J.C. Penney's makeover the future of retailing? Harvard Business School Working Knowledge (March 5). Accessed 5/5/12 at: http://hbswk.hbs.edu/item/6944.html

Halkias, M. (2011). J.C. Penney buys stake in Martha Stewart's company. The Dallas Morning News (December 7). Accessed 5/5/12 at: http://www.dallasnews.com/business/retail/20111207-j.c.-penney-buys-stake-in-martha-stewarts-company.ece

Should Martha Stewart target markets or mass merchandise?
Talley, K. (2012). Penney CEO says profits won't suffer. Wall Street Journal (January 27). Retrieved October 9, 2013 from http://online.wsj.com/news/articles/SB10001424052970204573704577184951220641144

Timberlake, C., & Townsend, M. (2012). Macy's says Martha's dance card is too full. Business Week (February 28). http://www.businessweek.com/articles/2012-02-28/macys-says-martha-stewarts-dance-card-is-too-full

Solution Preview

J C Penny Case

Department Store Industry:
Companies in department industry sell many items under one roof such as clothing, footwear, cosmetics, and home furnishing. Due to sluggish economy the future of the industry has been adversely hit due to which their bottom lines have declined. As a result, the department store industry has witnessed consolidations. Others who have not consolidated have undergone major internal restructuring initiatives or have adopted cost cutting measures to survive in the industry. Competition has increased which has caused companies to devise new strategies to provide differentiated products, superior customer service and strong store presence.
About J C Penny

J C Penny is one of America's largest apparel and home furnishing retailers with more than 1100 department stores across United States. Most of the stores are located in suburban shopping malls. Before relocating to, J C Penny stores were located in downtown areas but as shopping malls became one stop destination for customers, J C Penny was quick to identify the trend and relocated to shopping malls. The company has also been prominent over internet. It has renovated the retail stores and streamlined catalogs for online distribution. Main competitors of J C Penny include Kohls, Sears, Macy's, Dillards in the US, marks & Spencers and Debenhams in UK El Corte Ingles (Spain), Galeria Kaufhof (Germany), Galeries Lafayette (France), and Tokyu Department (Japan) ("Department stores...", n.d).

When Johnson Bob assumed his role as CEO of J C Penny he brought with him his experience of making Target get good prices with great design and creating most profitable Apple retail stores. J C Penny had the image of that of discount retailer where customers would flock to avail heavy discounts.

New Pricing Strategy
J C Penny's image with customers had started fading as customers due to which ...

Solution Summary

The expert examines J.C. Penney pricing and promotion strategies. The current stage supports are given.

$2.19