J.C. Penney's Fair and Square Pricing Strategy
1. Evaluate the overall effectiveness of the "Fair and Square” repositioning strategy? How well or poorly do all the elements work together or work at odds with one another to deliver a coherent whole? What elements are missing?
Fair and square is a transposing strategy which is value based, where J.C. Penney is trying to increase value through everyday low prices, hence changing the perception of the customers, making them to see the company as an everyday shopping, rather than a company which only strives on promotions (Elie & Jill, 5). The store aims at capturing value with its new strategy, and not to create. The elements of the strategy are well organized in the sense that they allow the customer to see the value of shopping in the store, hence increasing the number of customers, which translates into huge profits. On the other hand, the failure of the store to conduct a marketing research, is its main mistake, simply because the strategy may not be as effective as the management of the store thought.
- What do the 1st and 2nd quarter results indicate about the “Fair and Square” strategy?
The 1st and 2nd quarter indicate the new strategy had a considerable negative impact on JCP (Elie & Jill, 9).
- Are the first two quarter results enough to validate or invalidate the changes? How would you respond to them?
The first two quarters are enough to invalidate the changes, since the revenue earned from products sold after the implementation of the strategy dropped 86.5% to 84%, in a period of 6 months. This explains why the strategy is not a success, and should therefore be done away with, or JCP should start a promotion to boost the sale of its products (Elie & Jill, 10).
- Are the results due to a faulty strategy or to a faulty execution of a solid strategy?
The results are due to both a faulty strategy and due to a faulty execution of a solid strategy. This is basically because, the company did not conduct a market research, to understand what customer want. In addition, the company did nothing to show the customers, the reasons for lowering the prices (Elie & Jill, 10).
- Is J. C. Penney a brand that can be Target‐ized or Apple‐ized? Why or why not? In what fundamental way does J.C. Penney differ from these two brands? Does Johnson’s plan address these differences in ways that make the success of J.C. Penney’s new strategy more or less likely?
JCP can be Target-ized, however it cannot be Apple-ized, due to the following reasons: Target-izing would allow JCP to add expensive products to its product mix thus targeting customers who may be willing to pay more to purchase stylish products (Elie & Jill, 11). JCP cannot be apple-ized because the products purchased from the store do not require any form of professional advice or assistance.
JCP is different from target simply because its main goal is not necessarily to be on the lower end of the market as a mass merchandizer. In order to address this difference, JCP is pairing high-end brands with cheap brands, to create a market for both products (Elie & Jill, 12). On the other hand, JCP differs from Apple, because of its target market, consumer purchase process, and the product line of breadth. JCP consequently fails to address these differences, due to poor customer service, and poor buying process, which affects the efforts of the strategy.
- Do you agree with the changes Johnson is making to the pricing scheme that are set to take effect August 1st? Are they enough to turn things around?
I do not agree with the changes in the pricing scheme which JCP is set to make on August 1st, if the company wants to continue with EDLP (Elie & Jill, 12). If the company eliminates Fair and Square, then the ads which it had earlier on ran, will have gone to waste, a factor which will confuse the customers, and also affect the company’s profits.
- What should Johnson do now? Looking 1 year out, will J.C. Penney be a stronger or weaker brand if he stays on the current course?
Johnson should conduct a market based research, to understand the needs of the customers (Elie & Jill, 14). In addition, he should also focus on a single strategy, which will enable the company to forge forward, and forget about promotions. In so doing, JCP will be able to attract most customers, hence increasing profits.
Reference
Elie, Ofek. & Jill, Avery. J.C. Penney’s “Fair and Square” Pricing Strategy: Havard Business School. 2013. Print.
