The plan stems from johnsons realization that threequarters of everything sold at j. In store retail environment as a series of specialty shops. Jc penney tried to take advantage of this by enacting a permanent sale called fair and square pricing. The jc penneys fair pricing failure shows consumers do not make rational market choices. Former apple executive ron johnson became jcpenneys ceo in the fall of 2011.
This report on jc penney pricing strategy was written and submitted by user adrian. 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. The narrative as you tell it is the one most favorable to ron johnson. Penneys fair and square pricing strategy case solution,j. Penneys fair and square strategy abridged case analysis. The road to a very dark, fiery place is paved with good intentions. Approved in the department of information and service economy 01. In addition to the radical change in jcpenneys pricing strategy, johnson and.
Jcpenney s new pricing plan is similar to the every day low price strategy practiced by retailers like walmart, with a few variations, as this tiered strategy is meant to meet shoppers needs on a more consistent basis, thereby making erratic sales, coupons, and promotional events unnecessary. Instead of using deep discount sales to attract customers, it launched its simple new fair and square every day pricing strategy. Evaluate the overall effectiveness of the fair and square repositioning strategy. Weve written several blogs following jcpenney since the new strategy was rolled out. Charlie mungers human misjudgment framework and jc penney.
He was going to do away with many of the deceptive. The creation of instore sephora beauty care locations will. Finally, it was also foolish to create three tiers to the pricing scheme without conducting the market research. Penneys fair and square pricing strategy case study solution, j. Jcpenneys failed pricing strategy to change insights2. The dramatic shift from discounting to johnsons fair and square pricing underwhelmed the market.
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. Weifei li jcpenney case study marketing management overview founded by john cash penney in 1902, jcpenney is the american chained department store sells mass merchandise, including apparel, home decoration, jewelry, cosmetics, and kitchenware. This is what drives them into the store throughout the year. There is a story about a pet food company that created and brought to market a new dog food. Aug 09, 20 the pricing strategy was created by the ceo and is called fair and square. A new pricing scheme he put in place in february, dubbed fair and square, was a central component of the new strategy. Jc penneys fair and square pricing and the problem of. Jc penneys fair and square pricing strategy the case. Reinventing fair and square deals, case study, darden business.
Key marketing issue the key marketing issue that j. Penneys fair and square pricing strategy case harvard. Reinventing jcpenney management case studies and articles. Jc penney has seen sales drop by 20% in a single quarter and their recent marketing strategy failed. Penney stores across the southland are rolling out the retailers new pricing wednesday.
Jan 30, 2012 fair and square pricing is a strategy being implemented before its time. Penneys fair and square pricing strategy excel file, subjects covered brands change management consumer behavior decision making marketing strategy pricing strategy by elie ofek, jill avery source. The wide fresh, open spaces can draw new customers for the exclusive and private label brands. Penneys fair and square pricing strategy harvard business. The stuffy retailer has become emboldened under new ceo ron johnson, with plans for an innovative store upgrade, simplified prices, and a brand polish. This relied on the customers trust with the jcpenney brand since they were being given a fair price for their merchandise. This first part of a twopart case contextualizes the initiative and provides a means of exploring differentiation in an evolving market. Penneys fair and square pricing strategy case analysis, j. The strategy jcpenney has in campuses their vision. When it comes to perceived value, we can never discount the role of price. Jcpenney claims new pricing is fair and square, but is it. Jc penneys fair and square pricing and the problem of perceived value.
In 2017, 8 jcpenney stores were closed, which is 14% of their locations. Penneys fair and square pricing strategy case analysis. Jcpenney pricing strategy and its july 4th sale business. Penney ceo ron johnson went bold in his attempted rescue of the fading retailer, but his toptobottom makeover failed. Briefly describe penney proposed new pricing strategy, also providing bit of background on the company and department store industry. 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. Off to a great start leadership development training opportunities for all staff create opportunities for staff to build careers in an industry where this is not a given aragon sanchez 2003. First, all merchandise gets a fair and square price of about 40% less than the average ticket. The idea behind the new pricing strategy, which involves reducing. Feb 06, 2012 jcpenney claims fair and square pricing. Jcp, the company with a new pricing strategy revive based on everyday fair prices. The basis for its new strategy is the realization that less than 1% of everything sold at its stores sells at full price.
Penneys fair and square pricing strategy case solution, as he gets ready for the 2 quarter 2012 results will publish ron johnson, the new ceo of jc penney department store, think about the dramatic changes he in. 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. The pricing strategy was created by the ceo and is called fair and square. Penneys fair and square pricing strategy hbr store. Charlie mungers human misjudgment framework and jc penney part ii, stocks. Penneys fair and square strategy abridged case solution, as he prepares to release second quarter 2012, ron johnson, the new ceo of jc penney is reconsidering the dramatic changes made in the image of the busines. The scheme initially had three pricing tiers and eliminated typical sales promotions in an attempt to simplify the shopping experience for consumers. Instead, sales would be replaced with fair and square pricing that revolved around. As a he gets ready to release 2nd quarter 2012 results, ron johnson, the new ceo of department store j. The company said the fair and square pricing plan will help put an end to the confusion of. Learn vocabulary, terms, and more with flashcards, games, and other study tools. On every visit, customers will discover great prices every day in a unique shops environment that features exceptionally curated merchandise, a dynamic presentation and unmatched customer service. Feb 24, 2017 a strategic mistake that still haunts jc penney.
Mar 01, 2016 in fiscal 2015 ended january 30, 2016, jcpenneys net sales grew by 3% over those of the previous year. He was tasked with bringing new life to the store, and decided on a fair and square approach. The risks of an ethical brand david vinjamuri contributor opinions expressed by forbes. Is the initial market reaction an indication of likely success. Mistakes and lessons from jc penneys marketing strategy a sale is only a sale if its a sale. Free essays writing guides referencing study 101 free. The centerpiece of the repositioning initiative was a switch from j. Feb 01, 2012 retail store begins new concept for customers nationwide. Retail store begins new concept for customers nationwide. Buy books, tools, case studies, and articles on leadership, strategy, innovation.
In fiscal 2015 ended january 30, 2016, jcpenneys net sales grew by 3% over those of the previous year. The old pricing strategy has been popular among retailers, because it hypes shoppers, making them feel smart and encouraging them to talk with. If youre making price adjustments, make them easy to understand, and your customers will follow. Jcp, invigorate the company with a new pricing strategy based on everyday fair prices.
Its discounting is supposed to be limited to a best price friday every other week, along with monthlong sales. A multiple case study from the it service sector in finland. But thats not the story that was being told before the strategy flopped. In reality, rons strategy was to change the image of jc penneys. Fair and square pricing is a strategy being implemented before its time. The following entry is a record in the catalogue of catastrophe a list of failed or troubled projects from around the world. 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. 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.
Jcpenneyweifeili weifei li jcpenney case study marketing. Penneys fair and square pricing strategy case solution, as he gets ready for the 2 quarter 2012 results will publish ron johnson, the new ceo of jc penney department store, think about the. Jcpenneyweifeili weifei li jcpenney case study marketing management overview founded by john cash penney in 1902 jcpenney is the american chained. A couple years back, a clothing department store jc penneys had ron johnson step into the ceo role. The jc penneys fair pricing failure shows consumers do not. Penney lacks the differentiation to make this pricing strategy successful. Jc penney pricing strategy 1083 words report example ivypanda. Professor rajiv lal discusses whether johnson can repeat his previous magic at apple and target. This approach would basically do away with seasonalimpromptu sales along with the use of coupons. Penneys fair and square pricing strategy xls file, j.
Reinventing fair and square deals a case solution, the new ceo and the new president of jc penney company, inc. The fatal assumption in ron johnsons fair and square pricing strategy is that consumers are rational and therefore, when you get rid of all the pricing. Even though jcpenney tried to come through with a fair pricing strategy and new logos, their efforts ended up backfiring. Penneys fair and square pricing strategy case solution. 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. Penneys revitalization is a new fair and square every day pricing strategy. But what about jcpenney ceo ron johnsons fair and square pricing strategy. Jcpenneys new pricing plan is similar to the every day low price strategy practiced by retailers like walmart, with a few variations, as this tiered strategy is meant to meet shoppers needs on a more consistent basis, thereby making erratic sales, coupons, and promotional events unnecessary.
Jcpenney new retail strategy is missing somethingcustomers. Thereafter, it was widely reported in the press that the results of this new pricing strategy were. This is because having three different tiers in a single store proved to be confusing for the customers. Jc penneys failed attempt at fair and square pricing. 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. We will write a custom report on jc penney pricing strategy specifically for you. This also provides a new experience for core loyal shoppers. Jcpenneys failed pricing strategy to change insights2ignite. Support your position in terms of the environmental factors such as economy, the competition, and the changing consumer behavior. Penney rolls out fair and square every day pricing plan.
Does using a coupon to save some money give you a bit of an adrenaline rush. May 15, 2016 the centerpiece of the repositioning initiative was a switch from j. The old pricing strategy has been popular among retailers, because it hypes shoppers, making them feel smart and encouraging them to. Marketing expert rajiv lal explores what went wrong and why jcp has an even more difficult road ahead. Penney is facing here is the inability to communicate to their customers that they offer the best deals for the products at their stores. Charlie mungers human misjudgment framework and jc penney part ii. The heart of the strategy was the fair and square approach to pricing. Online tutoring solutions manual study 101 test prep textbook rental. Weifei li jcpenney case study marketing management overview founded by john cash penney in 1902. Do you think jcpenney did the right thing bringing back coupons. But the benefit of a product is only part of the equation. Sep 27, 20 a strategic mistake that haunts jc penney.
Penny founded in 1902, now jcpenney seems to be thinking different. The recent fair and square pricing technique is expected to lure many. How well or poorly do all of the elements work together or. Compare jcpenneys former traditional approach to pricing versus the fair and square pricing strategy. The jc penneys fair pricing failure shows consumers do. Jc penney marketing strategy despite mounting negative financial indicators. The company said the fair and square every day pricing plan will. What are its key strategic priorities for fiscal 2016.
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