This also provides a new experience for core loyal shoppers. There was a gradual decline in stock performance exhibit 1 from. The heart of the repositioning strategy was a switch from j. Feb 06, 2012 jcpenney claims fair and square pricing. View notes j c penneys case study final slides from info 490 at university of illinois, urbana champaign. When jcpenney announced its fair and square pricing last january, investors cheered, sending its stock up. The value of fair and square pricing we believe in fair honest prices.
Under ceo marvin ellison, the company had identified three strategic objectivesa focus on omnichannel, private label goods, and increasing revenue per customerto guide all company initiatives. Penneysbottomqand toplinegrowth 121 224 198 498 salesperretailsq. Johnson outlined a fair and square pricing strategy that included cutting down promotions, hosting only 12 themed promotions a year compared to the 590 j. Scheme originally had three price levels and eliminated typical sales promotions in an attempt to simplify the shopping experience for consumers. Jc penney failed pricing strategy linkedin slideshare. When it comes to perceived value, we can never discount the role of price. Jc penneys failed attempt at fair and square pricing. Penney, ron johnson switched to a new fair and square pricing strategy, but failed to effectively market the benefits of this strategy to their customers, leading to loss in revenue and decrease in number of customers in the second quarter of 2012. Feb 24, 2017 a strategic mistake made six years ago by celebrity ceo ron johnson continues to haunt popular retailer jc penney, as evidenced by the ongoing sluggish sales growth and store closings that have. Customer traffic dropped sharply, and without that, j. The depths of the recession made this everydaylowprices strategy difficult to carry out. Penneys fair and square pricing strategy case solution,j.
The jc penney rebranding strategy of fair and square pricing. Penney is launching a fair and square pricing strategy, which will mean up to a 40% cut in prices and the end of clearance sales. Feb 15, 2012 jcpenney has a new fair and square every day pricing strategy. Jc penneys fair and square pricing and the problem of. Fair and square pricing strategy khairul muiz dzulfikar aizat hairul james. We take pride in being a onestop shop for all your needs, with as many options as you can imagine. Feb 17, 2018 new pricing strategy average discounts to get customers to buy went from 38% to 60% too expensive for jc pennys to sustain old strategy of highlow pricing becoming too expensive and addictive implemented edlp similar to walmart new strategy to implement every day low pricing fair and square pricing strategy. Penneys fair and square pricing strategy case harvard. In 2016, jcpenney was in the midst of a multiyear turnaround after coming dangerously close to bankruptcy. Penneys fair and square strategy p roblem s tatement the main problem is j. For example, in regard to the new pricing models that are part of the fair and square model.
Penney off its preceding high low pricing practice. The new pricing strategy would take effect in all jcp stores across the nation on february 1, 2012, only a few. Amazon and other online retailers have continued to chip. If youre making price adjustments, make them easy to understand, and your customers will follow. Fair and square pricing is a strategy being implemented before its time. Jc penney tried to take advantage of this by enacting a permanent sale called fair and square pricing. Penneys fair and square pricing strategy case study harvard business school mentioned that the average selling price of a tshirt at. Retail store begins new concept for customers nationwide. The one that best described their pricing strategy is goodvalue pricing because goodvalue pricing offers just the right combination of quality and good service at a fair price. But nevertheless they launched fair and square pricing whereby promotions and sales would be a thing of the past, for the most part, and in their stead would be everyday prices, best prices. Penneys traditional highlow pricing strategy, in which the retailer ran frequent sales to offer customers discounted pricing off of its higher daytoday list prices, to a new pricing strategy the company dubbed fair and square pricing.
Nordstrom, kohls, and jcp, the latter being the subject of analysis in this paper. Therefore, prior to changing the store layout, johnsons first order of business as ceo was a complete overhaul of jcps pricing and branding strategy by introducing fair and square pricing. The plan stems from johnsons realization that threequarters of everything sold at j. In store retail environment as a series of specialty shops. A fresh pricing scheme he set in place in february, dubbed fair and square, was a fundamental part of the brand new strategy. Penneys existing highlow pricing strategy, in which the retailer ran frequent sales to offer customers deep discounts off of its higher list prices, to a new strategy the company dubbed fair and square pricing. Penney heavily advertised the concept of their new pricing strategy, fair and square pricing, but when their implementation involved color categories, flowcharts, and was anything but simple. Penneys fair and square strategy abridged case analysis. Penneys fair and square pricing strategy free essay. The wide fresh, open spaces can draw new customers for the exclusive and private label brands. Mistakes and lessons from jc penney s marketing strategy a sale is only a sale if its a sale. New pricing strategy average discounts to get customers to buy went from 38% to 60% too expensive for jc pennys to sustain old strategy of highlow pricing becoming too expensive and addictive implemented edlp similar to walmart new strategy to implement every day low pricing fair and square pricing strategy. Our new pricing strategy is called fair and square and includes three types of prices. Jan 31, 2015 the heart of the repositioning strategy was a switch from j.
The fair and square strategy had three pricing tiers and got rid of traditional promotions and offers, trying to simplify the shopping experience for consumers. Walmart environmental climate the most important factors of jcps environmental. Jcpenney has a new fair and square every day pricing strategy. The companys strategy misstep was that fair and square raised prices for most of jcpenneys customers. Jc penny final pricing retail free 30day trial scribd. Penneys fair and square pricing strategy case analysis. The companys strategy misstep was that fair and square raised prices for most of jcpenney s customers.
Jun 15, 2012 but nevertheless they launched fair and square pricing whereby promotions and sales would be a thing of the past, for the most part, and in their stead would be everyday prices, best prices. Penneys fair and square pricing strategy hbr store. Whole department stores industry, especially middle market retailers experienced declining in consumers demand. However, troubling first quarter results that continued into the summer months seemed to indicate that j. Penney company is commonly referred to as jcpenney. Founded in 1902 by james cash penney, the company has grown into a major retailer, with 1,104 stores and approximately 116,000 employees as of february 20. To be fair, far too many thing things have been changed since 2012 to put the blame for jc penney s recent woes on a single old strategy. In fact, price often trumps a benefit, especially if the consumer doesnt recognize the benefit a potential problem with the fair and square pricing strategy of jc penney. For example, in regard to the new pricing models that are. The creation of instore sephora beauty care locations will. The scheme initially had three pricing tiers and eliminated typical sales promotions in an attempt to simplify the shopping experience for consumers.
Economic recession hit them badly and increased in consumers economic conservation. At jcpenney, were always helping you find amazing deals on all your favorite items. The 5 big mistakes that led to ron johnsons ouster at jc. The square frame imagery will be evident throughout all of jcpenney s marketing, to remind customers to frame the things they love. The heart of the strategy was the fair and square approach to pricing.
Jcpenney has been experimenting with and tweaking their business model under new ceo, ron johnson, as they respond and adapt to a changing economic. After 16 months, with ron johnson as ceo, sales had declined more than 25%, and the stock price had decreased by almost 50%. Jcpenney tried to cut back the number of sales, and instead offered customers a flat rate that they deemed was the best price for the item. Penneys fair and square pricing strategy case study. The principle is simple, and shows why cheating is. The store will have only three simple prices every day red stickers, month long value for theme sales, white stickers and best prices for clearance items. Jan 30, 2012 fair and square pricing is a strategy being implemented before its time. Turnaround strategy turnaround strategy aimed at increasingj.
A new pricing system, was established in february, called fair and square was a central element of the new strategy. The fair and square repositioning strategy is a valuebased proposition, where j. Penney company, inc jcpenney fair and square project. This further resulted in a round of layoffs, with 19,000 people losing their jobs. But the benefit of a product is only part of the equation. A new pricing scheme he put in place in february, dubbed fair and square, was a central component of the new strategy. Alternative pricing strategies competitor advantage through customer loyalty 1. Penneys fair and square pricing strategy case study solution, as a he gets prepared to discharge 2nd quarter 2012 results, ron johnson, the innovative ceo of department store j. Jcpenney fair and square case free download as pdf file. The idea is to keep pricing simple and build longterm relationships with customers. Jcpenney claims new pricing is fair and square, but is it.
Penneys fair and square pricing strategy harvard business. But several months later, the company delivered disappointing results. Marketing mix of jcpenney company jcpenney company. Penneys previous highlow pricing program to a new everyday low pricing policy that aimed to fit with a radical repositioning of the jc penney business model and brand. In early 2012, johnson announced a major overhaul of the way jc penney does business, with a new fair and square everyday low pricing scheme to replace the fake prices used commonly in the past. The first quarter showed positive results with 67% of the products sold at the fair and square price however, results started to decline as mothers, the most important target customers steadily scored jc penny lower on valueperception scores lack of discounts and weekly price promotions were cited as primary reasons for turnaround, even.
A new pricing model he introduced in february, called fair and square, was a central component of the new strategy. This relied on the customers trust with the jcpenney brand since they were being given a fair price for their merchandise. The scheme was originally three price levels and eliminates typical sales promotion in an attempt to simplify the shopping experience for consumers, and so move jc penney from his former highlow pricing policy. Announcement of fair and square pricing encouraged the investors, sending its stock up. Shop our mattresses and save on brands such as sealy and serta. Penneys fair and square pricing strategy case solution. Feb 01, 2012 retail store begins new concept for customers nationwide. Penneys revitalization is a new fair and square every day pricing strategy.
The scheme initially had three pricing tiers and removed typical sales promotions in an effort to simplify the shopping experience for consumers. Jcps seemingly secondary efforts to create value along with this pricing. Jcpenney ditches fair and square pricing for old sales. Jcpenney has focused more on gaining new customers while appearing to abandon its traditional customers. The new jcpenney logo, which combines the elements that have made jcpenney an enduring american brand, by evoking the nations flag and jcpenney s commitment to treating customers fair and square. Compare jcpenneys former traditional approach to pricing versus the fair and square pricing strategy. This is what drives them into the store throughout the year. Employees share this same confusion when adopting this new companywide rebranding strategy.
Penneys fair and square pricing strategy case study solution, as he prepares for the release of its second quarter 2012 results, ron johnson, the new ceo of department store jc penney, revising the dramatic changes he. The idea behind the new pricing strategy, which involves reducing. Here is the marketing mix of jcpenney shows how it sends emails to its customers about upcoming happenings like a clearance sale. I didnt know that this brand strategy had such an impact on other aspects of this. Customers, on the other hand, are accustomed to shop for discounts, especially lower and middleincome families, while the boutiques didnt want their brands diluted by discount pricing. Penneys fair and square pricing strategy case analysis, j. Penney lacks the differentiation to make this pricing strategy successful. A strategic mistake made six years ago by celebrity ceo ron johnson continues to haunt popular retailer jc penney, as evidenced by the ongoing. Jcp had, like most department stores, had higher retail prices subsidized by nearlyperpetual sales. Penneys fair and square pricing strategy harvard case study solution and hbr and hbs case analysis. A brief analysis of jc penneys failed pricing strategy. This move meant the death of complicated discounts and coupons in favor of everyday flat and honest prices.
Mistakes and lessons from jc penneys marketing strategy a sale is only a sale if its a sale. Our transformational strategy is based on 6 ps of retail price, promotion, personality, product, presentation and place as outlined below. Shop with us and enjoy an unbeatable selection of jewelry, clothing, shoes and more. May 29, 2012 when jcpenney announced its fair and square pricing last january, investors cheered, sending its stock up. The square frame imagery will be evident throughout all of jcpenneys marketing, to remind customers to frame the things they love. The centerpiece of the repositioning initiative was a switch from j.
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