JCPenney’s repositioning

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Penny Become ‘America’s Favorite Store? ‘ This article is by Alexander Churner, associate professor of marketing at the Kellogg School of Management, Northwestern University. On Jan. 25, J. C. Penny unveiled its new long-term strategy to improve declining sales revenues and profits. A key element of this strategy is its revamped pricing, which involves moving away from its frequent and deep promotional discounts to everyday low pricing with month-long, slightly discounted promotional prices on certain items ND bi-weekly clearance sales.

These pricing changes were complemented by a new brand identity that includes a revised logo, naming Ellen Degrees as the company’s new spokesperson, as well as a “reinvented” shopping experience that breaks up the store into a series of shops representing approximately 100 different brands (including J. C. Openers own labels such as Arizona Swears, Stafford, and SST John’s Bay; exclusive versions of upscale brands such as ENG by Mango; and most prominently, Martha Steward’s ponderousness). J. C.

Penny’s new strategy—which some deem visionary while others question its wisdom—challenges many of the assumptions behind the modus operandi of many fashion retailers. And whereas most media and analyst attention has been focused on Expenses new pricing, another more fundamental aspect of J. C. Openers strategy has been largely overlooked. This issue is the retailer’s desire to be “a store for all Americans—rich and poor, young and old, rural and suburban. “[I] While this goal cannot be faulted for lack of ambition, it goes against the conventional wisdom that it s difficult to succeed by trying to be everything to everybody.

In fact, many companies have failed because of their unwillingness to “give up” serving some customers in order to better fulfill the needs of others. The question then is: Will J. C. Penny be able to succeed where others have failed, or will it soon realize that to succeed it needs to focus on a particular customer segment? The concepts of segmentation, targeting, and positioning have been the marketing mantra for many decades for a reason. Because customers vary in their needs, an offering that appeals to some customers is likely to be rejected by others.

In this context, the problem with J. C. Penny’s broad-reach strategy is that it has to develop a value proposition and a positioning strategy that appeals to a very diverse set of consumers. And, by trying to reach everyone, it might end up pealing to very few. For example, most of J. C. Penny’s current customers are price and promotion conscious (a result of its decades-long tradition of running frequent deep-discount promotions). By elongating deep-Locknut sales, J. C Pennies new pricing strategy Is likely to be less pealing to deal-seeking consumers.

This, of course, is not necessarily wrong; rather, it suggests that the new J. C. Penny will alienate some of its current customers. Another example of the challenges in pealing to a diverse customer base involves the identity of J. C. Openers brand and the value system it represents. J. C. Penny’s desire to appeal to everyone has led it to combine two brands that represent very different value systems and audiences: its flagship brand ambassador-to-be Martha Stewart and its spokesperson Ellen Degrees.

The decision to hire Degrees spurred conservative group One Million Moms, a division of the American Family Association, to launch vocal protests that Expenses decision is counter to the values shared by “traditional families. ” J. C. Penny’s desire to be “America’s favorite store” and serve all customer segments is understandable because focusing on a particular customer segment meaner not serving another segment. Yet, in most cases, choosing a segment that is aligned with the company’s ore competencies and strategic assets, and for which the company can create superior value relative to the competition, is the right business decision.

As Bill Cowboys succinctly puts it: “l don’t know the key to success, but the key to failure is trying to please everybody. ” Sources [I] “Expenses Transformation Plans Revealed at Launch Event in New Yorktown,” Prizewinners, January 25, 2012. Also, “illimitableness Margaret Brenna” Bloomberg Television, January, 25, 2012. Http://www. Forbes. Com/sites/ on ma rocket Eng/2012/02/27/ca n-J-c- pen nee- become-a Americas-favorite-store/

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