Pricing Case J.C.Penney
1- Evaluate the overall effectiveness of the "fair and square" repositioning strategy. How well or poorly do all of the elements work together or work at odds with one another to deliver a coherent whole? What elements are missing?
In order to evaluate the strategy, its several elements need to be analyzed:
The new name “Fair and Square” communicates honesty and simplicity to the consumers. It stands for a clearing up of the chaos the countless rebates and discounts, which were part of the past strategy. The new name aims exactly the perception consumers might had of being cheated by the department store. If JCP was able to give this huge amount of discounts (on average 40% off), what is the original price …show more content…
However to change the old-fashioned brand image and the brand position, all these changes in the business model mentioned above do not fit completely.
2- What do the first and second quarter results indicate about the "fair and square" strategy? Are the first two quarters of results enough to validate or invalidate the changes? How would you respond to them?
in million $ | Average quarter 2011 | First quarter 2012 | Second quarter 2012 | Revenues | 4315 | 3152 | 3022 | Profits | 1554,5 | 1186 | 1004 |
We can see that revenues and profits dropped dramatically about 1/3 in the first two quarters. This implies that customers do not accept the new business model as excepted. They do not respond positively to the new strategy yet.
Reasons for that are that mothers or housewives - a large target audience of JCP - decrease the value of the new prices as they don’t get the coupons delivered at home anymore which is a large weakness of the new strategy. In addition to that department store customers love playing the game of discounts and promotions and JCP ended the game by eliminating this. The shopping enthusiasm was crowded out by implementing