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JC Penny Pricing Strategy

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I am having problems developing an analysis of JC Penny's pricing strategy and understanding how marketing segmentations played a role. These are the 4 questions that I am having problems finding sources and analysis for.
1. Briefly describe Johnson's pricing strategy, also providing background on the company and department store industry.
2. Explain why Johnson's pricing strategy did not work. Support your position in terms of environmental factors such as economy, the competition, and changing consumer behavior.
3. 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.
4. 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.

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Solution Summary

This solution discusses the new pricing strategy of JC Penny and analyzes it for flaws and areas of improvement.

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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

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