micro/macro analysis research papers
drp137
marketingplan_woodruff.pdf
Running head: MARKETING PLAN 1
Macro Marketing Plan: J. C. Penney
D’Nae A. Woodruff
Hodges University
MKT 6816
Dr. Peter Karastamatis
December 6, 2012
MARKETING PLAN 2
Table of Contents
Abstract ..................................................................................................................................5
1. Opening statement/current situation analysis ....................................................................6
2. Marketplace........................................................................................................................6
2.1 Overview ..............................................................................................................6
2.2 Forecast Analysis .................................................................................................7
2.3 Risks .....................................................................................................................7
2.4 Timing ..................................................................................................................8
3. PEST Analysis ...................................................................................................................8
4. Target Customer Analysis ..................................................................................................10
5. Competitor Analysis ..........................................................................................................12
5.1 Current Market Leaders .......................................................................................12
5.2 Innovators and Trendsetters .................................................................................13
5.3 Market Share ........................................................................................................13
5.4 Life Cycle Elements .............................................................................................14
6. Product ...............................................................................................................................14
6.1 Overview ..............................................................................................................14
6.2 Brand Related .......................................................................................................15
7. Place ...................................................................................................................................15
7.1 Overview ..............................................................................................................15
7.2 Geographic Analysis ............................................................................................16
7.3 Physical Evidence ................................................................................................17
7.4 Logistics Analysis ................................................................................................18
MARKETING PLAN 3
8. Promotion ...........................................................................................................................18
8.1 Overview ..............................................................................................................18
8.2 Theme ..................................................................................................................19
8.3 Budget ..................................................................................................................19
8.4 Objectives ............................................................................................................20
8.5 Public Relations Strategy .....................................................................................20
8.6 Promotional Activities .........................................................................................22
9. Price ...................................................................................................................................24
9.1 Overview ..............................................................................................................24
9.2 Positioning ...........................................................................................................24
9.3 Strategies ..............................................................................................................25
10. Objectives ........................................................................................................................25
10.1 Overview ............................................................................................................25
10.2 Product ...............................................................................................................26
10.3 Place ...................................................................................................................26
10.4 Promotion ...........................................................................................................27
10.5 Price ...................................................................................................................27
10.6 People .................................................................................................................28
10.8 Physical Evidence ..............................................................................................28
11. Financials .........................................................................................................................28
11.1 Overview ............................................................................................................28
11.2 Annual Revenues ...............................................................................................29
11.3 Second Quarter Summary and Recent Developments (2012) ...........................29
MARKETING PLAN 4
12. Timeline ...........................................................................................................................30
13. References ........................................................................................................................31
MARKETING PLAN 5
Abstract
The merger of brick-and-mortar stores with online commerce is causing a revolution in retail. J.
C. Penney Company, Inc., a leading department store retailer of apparel, accessories and home
furnishings, is one of the first major retailers to spearhead this transition and has the potential,
depending on its success, to dramatically transform the face of retail as we know it today. The
following marketing strategy for J. C. Penney will explore how the shopping experience is
changing and provide a vision for how the company might market its products in the near future.
MARKETING PLAN 6
Macro Marketing Plan: J. C. Penney
1. Opening statement/current situation analysis
The merger of brick-and-mortar stores with online commerce is causing a revolution in retail.
The transition from a brick-and-mortar to a brick-and-click organization is happening in a
wide range of industries including retail (Ranganathan, Goode, & Ramaprasad, 2003, p. 308).
J. C. Penney Company, Inc., a leading department store retailer of apparel, accessories and
home furnishings, is one of the first major retailers to spearhead this transition and has the
potential, depending on its success, to dramatically transform the face of retail as we know it
today. The following marketing strategy for J. C. Penney (JCP) will explore how the
shopping experience is changing and provide a vision for how the company might market its
products in the near future.
2. Marketplace
2.1. Overview
JPC CEO Ron Johnson was quoted in a 2011 Harvard Business Review interview on the
current marketplace trend of convergence in the retail sector: “It’s not as though there’s
a physical retail world and an online retail world, and as one grows the other declines.
What’s growing is the physical retailer’s expansion into the multi-channel world”
(Bishop, 2012, para. 4). In an era where online sales growth has far outpaced that of
traditional retail channels (Haynes & Taylor, 2006, p. 1), an increasing number of
retailers are looking to broaden their scope and cash in on new online purchasing
preferences. Realizing this potential, JCP is among many other companies that are
changing their marketing paradigms to focus on alternative channels in hopes of
increasing store asset productivity, customer satisfaction and overall profitability.
MARKETING PLAN 7
“Gone are the days when retail was all about brick & mortar. ‘Click to buy’ is the new
name of the game, as ‘transformation’ is the new mantra among the retailers” (Zacks,
2012, para. 4).
2.2. Forecast Analysis
JCP and many other brick and mortar retail stores are currently feeling the effects of
becoming “physical catalogs” where customers are browsing products in physical stores
and then going online to find more competitive prices and complete their purchases
without sales tax. Many analysts agree with Johnson and see the future of retail as a
convergence of physical retail stores and an online shopping environment that allows
customers to see a wider selection of inventory, compare similar products and pricing,
read product reviews from their peers, and benefit from the use online customer profiles.
In terms of physical stores, retailers need to create an experience that cannot be
duplicated online in order to give customers a reason to come through their doors. While
retailers may have ongoing efforts to improve their physical locations and their websites,
these efforts will need to be more closely intermingled in the future to create stronger
relationships with customers and build brand loyalty.
2.3. Risks
More risk lies in doing nothing than in embracing technology and finding new innovative
ways to create value for customers both in physical retail stores and on the Internet.
While many retailers are embracing brick to click as an opportunity, JCP and other
retailers must also avoid the risk of alienating more traditional shoppers that have been
loyal to the brand for many years and simply want to go to a physical store and make
purchases the way they always have. In addition, retailers should not get so caught up in
MARKETING PLAN 8
the latest and greatest technological craze that they lose focus on fulfilling customer
needs by providing the right products at the right time and right price.
2.4. Timing
JCP has the opportunity to be an innovator and pave the way for a new shopping
experience in department store retail just as Amazon.com has done for books. Current
trends include growth in multi-channel retailing, increasing impact of e-commerce on
retailing, and the increased use of social media and mobile marketing. In their 2011
Annual Report, JCP states: “As one of our nation’s first department stores, we’re
honoring our rich heritage as we boldly prepare for an exciting future. More than a
century ago, James Cash Penney founded his company on the Golden Rule philosophy to
always treat people the way we’d like to be treated: Fair and Square. It’s a simple idea
and it’s the basis on which we’re going to reclaim our birthright and become America’s
favorite store (p. 3). As JCP has seen sales and market share slip in recent years, the
timing could not be better to embrace a new philosophy that allows it not only to stay
current, but also grow into the future. In fact, it could be argued that JCP was on its way
to a slow, Sears-like decline and rather than sit back and watch, the company is bravely
charting a new course for itself and possibly the retail industry as a whole.
3. PEST Analysis
PEST (political, economic, social and technological) analysis of any industry sector
investigates the important factors that are affecting the industry and influencing the
companies operating in that sector.
Political factors that will be important to retail include what will happen to sales tax
for online purchases and what will happen to taxes in general. If taxes for the middle
MARKETING PLAN 9
class increase, consumers in JCP’s target audience will have less disposable income
to spend on discretionary purchases like clothes and retail sales will undoubtedly
suffer. However, if sales tax is required on online purchases, the playing field will be
more even for physical stores as the price of online purchases will increase. Other
political factors exist as well, but the ones that will most heavily affect the retail
industry are those ones that alter consumer spending abilities and confidence.
Economic factors include rate of economic recovery, unemployment, and consumer
confidence. These economic factors will continue to affect JCP and other retailer as
consumers have become accustomed to being more value conscious throughout the
recession and current recovery.
Social factors include an aging population, increased awareness of fashion trends, and
growing emphasis on individuality and self-expression. As baby boomers retire they
will have a major impact on retail and department stores such as JCP have the
opportunity to become their one-stop-shop and cater to their individual needs as they
change with age. At the same time, younger generations typically have less brand
loyalty and opportunity exist to change their tendencies. Just because younger
generations are not currently as loyal to a particular brand as other generations, does
not mean that it is impossible; perhaps there just isn’t a current brand that they can
completely identify and connect with.
Technology advances and adoption rates are some of the most significant factors
affecting the retail industry. While retailers cannot predict future innovations, they
can position themselves to be aware of new digital marketing opportunities and trends
and commit resources to act on those new technological developments.
MARKETING PLAN 10
4. Target Customer Analysis
J.C. Penney’s desire to be “America’s favorite store” and serve all customer segments – rich
and poor, young and old, rural and suburban – “challenges many of the assumptions behind
the modus operandi of many fashion retailers” (“Can J.C. Penney Become”, 2012, para. 2).
The concepts of segmentation, targeting, and positioning have been the marketing mantra for
many decades, but JCP is looking to revolutionize these practices by catering to a much
wider audience.
Currently, JCP customers are motivated to buy based on sales and coupons. According to a
recent Prosper Spending Index, “Among JC Penney customers, nearly half say they are
shopping for sales more often (45.4%) and/or are clipping coupons (42.1%) in efforts to help
balance their budgets – higher than the overall [industry] average” (Goodfellow, 2012, para.
6). In the short-term JCP may suffer as its customer base adjusts to the new everyday low
pricing strategy, but in the long term JCP could be poised to be a leader among retailers who
employ similar strategies. In fact, if JCP can prove that everyday low prices are successful,
JCP may be credited with revolutionizing retail price strategy and starting a trend that other
retailers eventually follow.
Demographics Identifying Segments Details and Explanations
Age
10% < 18 10% 18-24 23% 25-34 22% 35-44 19% 45-54 11% 55-64
5% 65+
Currently, 64% of customers fall into age range of most families (a major JCP customer
segment), 20% fall into young adults (a segment JCP hopes to increase), and 16% fall into mature
adults and seniors.
Gender 64% Female 36% Male
Almost 2 out of 3 JCP customers are female shoppers that are price savvy and looking to
purchase based on value.
MARKETING PLAN 11
Children 53% No Kids 47% Has Kids
Almost half of JCP customers have children and this will be an important factor in how JCP merchandises and design physical evidence strategies that cater to women and children.
Household Income
13% $0-50k 26% $50-100k 34% $100-150k
27% $150k+
JCP customers are affluent, yet they are looking to get the most value for their dollar as they feel the effects of the economy and there are many other expenses that pull on their purse strings.
Education Level 47% No College
40% College 13% Grad School
Over half of JCP’s audience is college educated.
Ethnicity/Race
77% Caucasian 12% African Am
2% Asian 9% Hispanic
1% Other
While the overwhelming majority of JCP customers are Caucasian, demographics are
shifting toward a minority dominance and this should weigh heavily on JCP strategies.
Behavioral Descriptives Types Descriptions
Activities & Interests Varied
Activities and interest are varied as JCP wants to cater to all. Certainly there are some activities
that span most all customers such as keeping up with friends and family on Facebook.
Group Affiliations Varied
Group affiliations are also varied and it might be tricky to narrow down target affiliations as
demographics shift in the future. Likely
Advertising Sources
TV, Print, Web, Mobile
As with other retail, customers are likely to respond to advertising on TV, in print, on the
web, and increasingly on mobile devises.
Likely Information
Sources
TV, Print, Web, Mobile
Similar to advertising sources, most Americans get their news and information using a variety of
means including TV, print (newspapers), web and on mobile smartphones.
Buying & Decision Making
Behaviors
Qualities Explanations
Single Purchase/ Repurchase
Returning Customers
On average, customers took advantage of promotional activities only 4 times a year, new
plans hope to bring customers back in the store at least once a month
Decision Making Cycle Short to Medium
With an average price per item of $9, customers do not prolong the decision making cycle,
MARKETING PLAN 12
however for larger items such as furniture and other purchases such as back to school clothes do require more planning and increase the decision
making cycle.
Potential Buying
Influences
Status of Influence Rationale of Influence
Family High Both family and friends influence buying behavior as they are likely to share information
about purchases they feel good about. Friends High
Status Medium
Although JCP has suffered from poor perceptions of the quality of their products in the past, as they mix up their product lines and include higher-end
brands status will become more of factor.
Safety or Security Low
Product lines do not cater to the safety or security of their customers, rather they fulfill needs for discretionary products like clothes, gifts, etc.
Customer Relationship
Strategy Qualities Explanation and Description
Limited/ Non-existent
Only Point-of-Sale Increasing
CRM is increasing as employees are now focused on assisting customers rather than marking down inventory. Additionally, on
jcp.com efforts are made to create and maintain customer relationships.
Rewards/Incentives Increasing On jcp.com customers can sign up for jcp
rewards which are earned through shopping qualifying purchases in store or online.
Social Responsibility Website/Other
Increasing
JCP cares is a program that allows JCP to give back to the community through a partnership with The Salvation Army among many other
charitable methods.
5. Competitor Analysis
5.1. Current market leaders
“While many shoppers go to Walmart for price, Target for cheap style, high-end stores
for luxury treats and the Web for ease, stores like J. C. Penney have faded into the
MARKETING PLAN 13
background” (Clifford, 2012, para. 8). With their own unique set of strengths and
weaknesses, prominent JCP competitors such as Macy’s, Kohl’s, Walmart and Target
have all felt increased pressure to solidify their brand and find innovative ways to keep
customers coming back and back again.
5.2. Innovators and Trendsetters
Certainly Walmart’s success with a low-price strategy has been greater than any company
in the history of commerce (Furtwengler, 2012, para. 5). Target has set a trend and
positioned itself in the affordable quality market with their brand named partnerships.
While Walmart and Target are known for their everyday low prices, Macy’s and Kohl’s
take an alternative approach. Macy’s, with their one day sales, and Kohl’s, with their
Kohl’s Cash, successfully use discount and coupon strategies to lure customers in their
doors and make them feel like they are getting a fabulous deal.
5.3. Market Share
“Penney's sales have lagged in an increasingly fierce retail environment, with stores such
as Walmart vying for customer dollars on the lower end, Kohl's and Target jockeying for
the middle market, and Macy's and Nordstrom reaching for the upper-middle end”
(Girard, 2012, para. 6). Since JCP has changed its pricing strategy, once loyal customers
that are still looking to shop endless clearance racks, use coupon on top of coupon, and
rush out and get the best deal are now being welcomed by Macy’s and Kohl’s. In April
2012, “a report from UBS said that there's a fight brewing between Macy's and Kohl's as
they both try to take market share from JCPenney. It touted Macy's as the "most-
improved" and "well-embraced" department store, and said that Macy's "elevated brand
position" will help keep it protected” (Lutz & Bhasin, 2012, para. 6).
MARKETING PLAN 14
5.4. Life cycle elements
Department stores have been around for a very long time and although they have changed
over the years, it is time for a major transformation. Many malls around the country have
declined in the last several years and their future stability and success may be directly
tied to how major department stores evolve into the future. In particular, because of a
lack of innovation over the last decade, JCP had become known as an old-fashioned and
stale store that people looked down upon. Johnson was quoted as saying “We knew that
at some point we needed to modernize JCPenney; it had a great heritage but it was seen
as your mom's or your grandmother's store, not a part of the consumer's everyday life”
(Blair, 2012, para. 5). This modernization will be crucial for JCP to prevent slipping
down the life cycle curve many companies and products experience as they are slowly
replaced or completely eliminated.
6. Product
6.1. Overview
“We’re breathing new life into the best of our existing brands and adding exciting new
ones, like Martha Stewart® and l’amour nanette lepore™. As part of our transformation,
we will work with the best partners in the world to deliver extraordinary global brands
that will forever change the way people view jcpenney” (2011 Annual Report, p. 5).
As we transform our merchandise offering, the entire jcpenney merchant, design and
sourcing teams are focused on elevating some of our most revered private brands by
improving quality and restoring brand integrity (2011 Corporate Report, p. 13).
Restoring brand integrity through key partnerships is causing many consumers to give
MARKETING PLAN 15
JCP a second chance as they visit the store or website to assess changes to the product
line.
6.2. Brand related
A major part of Ron Johnson’s radical transformation is the implementation of in-store
mini-shops: “transforming the 110-year-old department store from a sea of clothing racks
into an emporium of 100 branded shops – just might be its saving grace. At least that’s
what many in the analyst community seem to believe…So far, performance at the 12
shops that have been rolled out to nearly 700 stores are generating comp-store sales 20%
above the rest of the store” (Thau, 2012, para. 2).
The shops within the store concept will be implemented with some of JCP’s current
brands in addition to many new ones. As store transformation progresses, “brands will
include the ubiquitous Martha Stewart and Nanette Lepore's "l'amour nanette lepore" line,
a budget-friendly teen boutique. Existing brands including IZOD, Liz Claiborne, and The
Original Arizona Jean Company will receive refreshed displays (Girard, 2012, para. 18).
This concept is not new as other retail stores have had success incorporating the strategy
on a smaller scale, but Johnson hopes to radically expand the concept as it will be crucial
to JCP’s mission of becoming the favorite store of all Americans with drastically
diversified product lines that cater to multiple audiences.
7. Place
7.1. Overview
In their 2011 Annual Report, JCP states: “We are creating a store experience that will
make our customers love shopping again. From our largest mall anchors to our smallest
hometown stores, we’ll implement a month-by-month, shop-by-shop initiative, resulting
MARKE
in
w
kn
ce
lo
ar
T
br
H
re
ex
7.2. G
O
d
ap
ETING PLAN
n the comple
will consist o
nown as The
enter core ex
ove” (p. 5).
re generating
This is a prom
ringing in ex
Hopefully as
ealize they c
xciting place
Geographic a
One of Amer
epartment st
pparel and h
N
ete transform
f up to 100 c
e Street™. T
xperience of
So far 12 sh
g comp-store
mising and e
xclusive bran
more and m
an shop at th
e.
analysis
ica’s leading
tores in the U
home-furnish
mation of our
curated store
The Street wi
ffering fun, h
hops have be
e sales 20%
ncouraging
nds and cust
more shops ar
heir favorite
g retailers, JC
United State
hing sites (jc
r stores into
es, shops and
ill surround
helpful servic
en implemen
above the re
figure that J
tomizing the
re added the
store and ge
CP currently
s and Puerto
cp.com). Sto
three compe
d boutiques
The Square™
ces and attra
nted in nearl
est of the sto
JCP is makin
e shopping ex
effect will b
et everything
y operates ap
o Rico in add
ores are locat
elling concep
along an eng
™, which is
actions that c
ly 700 of JP
ore (Thau, 20
ng the right d
xperience to
be compound
g they need
pproximately
dition to one
ated in rural a
pts. The Sho
gaging pathw
a reinvented
customers w
C’s stores an
012, para. 7)
decision in
o its custome
ded as custo
in one cool a
y 1,100
e of the large
as well as ur
16
ops™
way
d
will
nd
).
ers.
omers
and
est
rban
MARKETING PLAN 17
areas include mostly mall-anchor formats as well as a few stand-alone stores. The
illustration above shows how JCP stores are dispersed around the United States and
Puerto Rico.
7.3. Physical evidence
JCP now recognizes the shopping experience is as important as the products themselves.
Currently, JCP is radically transforming its stores and physical evidence to create a
dynamic environment that will keep customers coming back time and time again. Stores
will be re-energized monthly to create a sense of newness and excitement. Following the
theme highlighted in the monthly book, stores will bring each month to life with a fresh,
clean look and bold color statements that showcase the must-have items of the season.
Sales floors now have wider aisles and considerably less signage so great merchandise
can stand out (2011 Annual Report, p. 14). Not only will this new image re-emphasize
that the brand is current and moving away from the stale JCP of yesteryear, but it will
also inspire customers and make shopping more of an all-encompassing sensory
experience that makes shoppers feel hip and in vogue.
Starting August 2012, JCP will unveil an inspiring new store environment that, over the
next few years, will offer The Shops for showcasing major apparel and home brands such
as Worthington, Liz Claiborne®, Martha Stewart and more. A dynamic collection of up
to 100 Shops will surround The Street, an engaging pathway through stores that gives
customers a place to browse, relax or simply meet up with friends. In 2013, JCP will
introduce The Square, a re-imagined center core experience. The Square will not be about
selling products, but rather a gathering place for ongoing attractions and services. By
2015, stores will be uniquely merchandised with a Street of Shops and a lively Square.
MARKETING PLAN 18
Soon, shopping at jcpenney will be unlike anything that exists in retail today (2011
Annual Report, p. 15).
7.4. Logistics analysis
According to Adam Blair of Retail Info Systems News, “a mobile POS deployment
beginning this fall is just the first step in an ambitious plan involving storewide use of
RFID to eliminate traditional cash wrap stations, allowing anywhere, anytime checkout,
including self-checkout, by 2014 (2012, para. 1). Johnson was quoted as explaining
“JCPenney will be moving to a 100% [item-level] RFID implementation by February 1,
2013…We'll be doing something that no other retailer has done completely. Most
retailers use RFID for internal operations and inventory management, but we're going to
jump right to the customer. My goal is to eliminate the cash wrap by the end of 2013"
(Blair, 2012, para. 2)
8. Promotion
8.1. Overview
According to the 2011 JCP Annual Report, “In 2011, jcpenney hosted more than 590
sales events. Yet, on average our customers shopped only four times during the year.
Essentially, more than 99 percent of the time our promotions didn’t work, which limited
the value we’ve been able to create…We’ll now host 12 meaningful events a year – each
focused on the month – and we’re syncing every element of our business to the monthly
rhythm of our customers’ lives”. “Virtually overnight, the retailer, which offered about
590 sales promotions last year, abandoned a strategy it had followed for decades to join
the ranks of retailers that offer low everyday prices” (Chernev, 2012, para. 1). Hopefully
the new promotional format will have customers looking forward to each month’s new
MARKETING PLAN 19
campaign and coordinated events as what the store is promoting is more in sync with
their lives and the purchases they will be making during the month.
8.2. Theme
JCP revealed a new logo design that supports its transition to a more modern brand,
speaks to its new “fair and square” pricing model, and encourages consumers to come see
what is new in the store and on the web. The new logo “will be featured in all brand
representations in store, online and in advertising campaigns and marketing materials
supporting J.C. Penney’s new retailing approach” (Enright, 2012, para. 11).
“We’re redefining the jcpenney brand to be a store for all Americans – young, old, rich,
poor, urban and rural – by offering an experience they can’t get anywhere else. To honor
our roots, we’ve introduced a new brand identity that reflects the classic elements that
have made jcpenney an enduring American name. This patriotic homage to our nation’s
flag signifies our brand promise to be Fair and Square in everything we do while
symbolizing the importance of framing the things that matter most” (2011 Annual
Report, p. 4). The new creative direction celebrates everyday life in America with a
nostalgic yet whimsical approach to promoting everything from cardigans to table lamps
in a unique a way that makes shopping jcpenney relevant to everyone (2011 Annual
Report, p. 11).
8.3. Budget
Repositioning an iconic brand such as JCP and reaching a broader audience does not
come cheap. According to Jennifer Reingold, senior editor of Forbes, "Fair and square"
is now the tag line for much of the $1 billion the company will spend this year on its new
message, with witty, high-profile TV ads, visible during the Oscars and elsewhere,
MARKETING PLAN 20
featuring Ellen DeGeneres (2012, para. 33). Similarly stated, “J. C. Penney will be
spending $80 million per month to sell its new approach to consumers. That spending
includes a TV ad campaign featuring comedian and talk show host Ellen DeGeneres—
who will also talk up J.C. Penney on her show—stickers promoting the Friday sales on
the front pages of 21 major newspapers, a monthly 96-page direct mail piece highlighting
that month’s themed promotions and new products, and weekly distribution of 27 million
inserts in Sunday newspapers” (Enright, 2012, para. 11).
Although the new promotional budget is similar to that of 2011 which preceded
Johnson’s transformation, promotion dollars will be spent in a much different manner.
Last year JCP spent $1.2 billion -- almost 7% of sales -- on a stunning 590 promotions
just to get customers inside its 1,100 stores. The result: Just 0.2% of sales were made at
full price. Some 72% of goods were purchased at a discount of 50% or more. List prices
were effectively fiction, and no one knew that better than customers.
8.4. Objectives
The main object of current promotional activities is to get customers in the door so that
they can witness for themselves the transformations that are taking place. In addition to
luring customers with new, lower everyday prices, the promotional activities are aimed at
changing the perception of the brand in customers’ minds from stale and outdated to new,
value-oriented and chic.
8.5. Public relations strategy
“JCPenney Co.'s new marketing leadership has made another revision to its agency
roster: It has hired PMK-BNC, an entertainment and consumer PR agency, as its agency
of record… The new agency relationship likely represents an attempt to strengthen its
MARKETING PLAN 21
image, via lifestyle and entertainment, with midmarket consumers” (Bruell, 2011, para
1).
8.5.1. Organizational positioning
JCP is positioning itself as a retail innovator and encouraging consumers to visit
stores and its website to observe the changes for themselves. If JCP wants to
change consumer perceptions and become America’s favorite store, it will be
critical for customers to re-experience the brand and buy-in on the new marketing
strategies.
8.5.2. Activities
The most effective public relations activities have focused on leveraging the new
high-profile, highly respected executives in the company. With such well-
publicized success for well-known brands like Apple and Target, the star-studded
executive team is drawing lots of hype and attention from the retail and marketing
communities, financial analysts, and the general public. People are keeping tabs
on JCP to see if it is going to be successful in transforming its image and
revolutionizing retail. Without a doubt JCP is creating quite a buzz and will
continue to do so as it moves forward with its transformation into America’s
favorite store.
8.5.3. Collaborative with Promotional/Advertising Mix
In coordination with its advertising mix, JCP has hired Ellen DeGeneres as its
new spokesperson to help refresh perceptions of JCP and promote the brand on
her day-time show. The strategic move has stimulated a great deal of feedback,
both positive and negative.
MARKETING PLAN 22
8.6. Promotional activities
8.6.1. Website
jcp.com has a very clean and user-friendly design that follows the new look of the
company’s redesigned logo. Its purpose is to increase brand awareness, inform
customers of new changes taking place throughout its transformation, allow
customers to shop online, build relationships with customers through the accounts
they set up, provide customer service information and avenues, and explain social
responsibility activities.
Although this is a tall order for a single website, jcp.com is succeeding with
online sales of $1,590,000,000 and growth of %3.9 in 2011. In addition it is
ranked number 20 on internet Retailer’s Top 500 Guide that ranks business-to-
consumer retailers in the U.S. and Canada based on online sales and other
information.
Most interestingly, the number of unique shoppers to visit the website over the
last year proves that customers are interested in checking out how the company is
evolving. This is an important factor as JCP wants retail shoppers to get in the
habit of coming to the website when they are making purchasing decisions.
Before the transformation began, jcp.com was not on the radar for many
consumers. Now, as consumers visit the site to see what has changed, they will
hopefully come back next time they want to purchase online.
As reported by Caine (2012), “Despite lackluster sales, all of the hype is paying
off in the form of increased interest in its site. JC Penney attracted an additional
MARKE
8
8
ETING PLAN
2.3M
(para.
Uniqu
.6.2. Social
JCP is
Pintre
activit
range
.6.3. TV
Two i
Flashy
consu
the br
shopp
betwe
N
unique shop
3).
ue Shoppers
l Media
s actively pu
est, and YouT
ty pays off b
of target ma
important tel
y new comm
umer interest
rand is being
ping sprees, t
een Ellen and
ppers – a 13%
s, JCPenney
ursuing socia
Tube. Study
big because i
arkets in add
levision prom
mercials are a
t as they tout
g promoted o
talks up her
d JCP are en
% increase –
y.com (Feb.
al media cha
y after study
it is cheap an
dition to honi
motional act
appearing re
t the new cha
on the Ellen D
“love” of jcp
ndorsed.
– from Febru
. 2011 to Feb
annels such a
y shows that
nd companie
ing in on par
tivities are pr
egularly on T
anges taking
DeGeneres s
penney, and
uary 2011 to
b. 2012)
as Facebook,
this type of
es are able to
articular cust
roving succe
TV and are in
g place at JC
show as she
d joint charita
February 20
, Twitter,
promotional
o reach a bro
omer segme
essful for JC
ncreasing
CP. In additi
gives away
able program
23
012”
l
oad
ents.
CP.
on,
free
ms
MARKETING PLAN 24
8.6.4. Print
Every month, 14 million homes across the country will receive a stunning book
that creatively showcases JCP merchandise in a way that reflects the spirit and
energy of that month. Backed by a robust marketing campaign, this monthly
book serves as an introduction to all the great things available at jcpenney.
Additionally, JCP will add special touches – like a free family portrait in March
or bunny ears in April – to help customers celebrate what makes each month so
special (2011 Annual Report, p. 10).
9. Price
9.1. Overview
“JC Penney is putting away their passion for putting merchandise on sale and trying on a
new pricing strategy” (Rohde, 2012, para. 1). JCP’s decision calls for a transition from
the “high-low” pricing popular among apparel retailers such as Macy’s, Nordstrom and
Kohl’s—which involves frequent deep discounts from relatively high base prices—to the
“everyday low pricing” popular among mass retailers such as Wal-Mart, Home Depot,
and Target (Chernev, 2012, para. 2).
9.2. Positioning
Positioning is an important consideration both before the purchase and after the purchase
as customers need to perceive value and feel good about purchases they have made, but
they must be compelled to purchase the product in the first place. Traditionally JCP has
been a mid-range retailer, but this positioning is changing as JCP expands its product line
and caters to a wider audience. The new JCP will feature partnerships with many well-
MARKETING PLAN 25
known brands in its mini-shops and provide trendy, lower-end brands in addition to
higher quality brands for fashion staples.
9.3. Strategies
“Johnson believes that because consumers will ‘not pay a penny more than the true
value’ of items, the iconic department store needs to shift away from their pattern of
inflating regular prices and then frequently marking them down” (Rohde, 2012, para. 2).
The new price strategy features 3 kinds of pricing: “Every day, regular prices, which are
always great; Month-Long Values, even better prices on the things you need now; and
Best Prices, jcpenney's lowest prices, which always happen on the 1st and 3rd Fridays of
every month as jcpenney makes room for exciting new merchandise” (PRNewswire,
2012, para. 3). “Johnson expects that consumers will find it easier to shop at Penney’s by
replacing red SALE tags with red EVERY DAY price tags around the store. Shoppers
will still be able to snag deals with white MONTH-LONG VALUE tags and blue BEST
PRICE tags” (Rohde, 2012, para. 4).
10. Objectives
10.1. Overview
JCP is in a transitory phase, trying to remold itself from the way it had operated before
Ron Johnson took charge and become America’s favorite store. To this end, the
company is pursuing an array of measures, which include new pricing strategy, fresh
logo, strategic merchandise initiatives, cost reduction and enhancement of customers
shopping experience, which in turn will augment store sales productivity and lead to
margin expansion and bottom-line growth (Zacks, 2012, p. 4). The new changes to JCP
are all-encompassing and intertwined into every aspect of the company’s marketing
MARKETING PLAN 26
efforts including product, place, promotion, price, people, process, and physical
evidence.
10.2. Product
Much of the success of JCP’s new strategic plan is dependent on whether they are able
to update and diversify their product line to serve the needs of the broader range of
consumers the company is targeting. The mini-shops within JCP are being welcomed
by consumers as evidenced by the success of Sephora and other partnership brands.
Piggy-backing on the success of these well-known brands allows JCP to offer their
customers an exclusive experience and update their own image through association.
10.3. Place
The concept of The Square, The Street and The Shops is an interesting one that will
help break down the new diversified product line into manageable chunks that
customers can easily navigate and find the items that match their unique needs. In
addition, JCP should remember that the experience is as important as the products. A
café and beer/wine bar may help to make JCP a destination where customers spend
more time and in the end more money. Nordstrom and Barnes and Noble have had
success with their cafes because it creates an environment that encourages customers to
simply hang out for a while. Also, in catering to the needs of mothers with kids and
families, an indoor play area adjacent to The Square would provide moms and families
the opportunity to come into the store and enjoy it for extended periods. Ikea is trying
out an idea where they provide free monitoring of children while parents shop. The
children love to go in the fun play area and adults love knowing their children are
supervised while they get to shop in peace. These types of big ideas are what JCP
MARKETING PLAN 27
needs to create an environment where people want to come and make meaningful
connections both with each other and the JCP brand.
10.4. Promotion
JCP must stay the course with the new promotional activities they have introduced as
consumers need to time to adjust. For customers like me, sometimes digging for an
exceptional deal is fun and warrants bragging to friends and family, bust most of the
time I avoid coupon wars and one-day-only sale traffic and shop with stores that allow
me to find what I need quickly, easily and at a fair price. I am intrigued by the idea of
the new month long promotions that help me connect with the things I want to buy for
that month. Although the reduction in the number of JCP promotions might take some
customers some time to get used to, in the end customers will appreciate that JCP is
saving them time and hassle, while at the same time providing everyday low prices.
In addition, the use of clever promotions such as free children haircuts in October and
free family portraits in November is encouraging customers to come into JCP stores
and experience the changes taking place inside the store. Also, these promotions play
into the deal-prone audience without discounts being applied to the actual products
themselves.
10.5. Price
The new pricing strategy is closely linked to the new promotion strategy in that it
replaces deep discounts, coupons and large clearance sections with simple,
straightforward pricing that allows the store to move inventory more quickly and the
customer to feel they are getting a good deal, fair and square. Although there has been
considerable backlash from JCP’s dedicated customer base of loyal shoppers that
MARKETING PLAN 28
enjoyed taking advantage of previous promotional activities, they should eventually see
that the new everyday low prices allow them to pay about the same amount with a lot
less work. Furthermore, the everyday low prices could potentially be even lower in the
future if JCP works with its channel partners and finds creative ways to reduce the cost
of products along the supply chain.
10.6. People
Obviously the innovation and creativity of the new executive team is going to be a large
factor in JCP’s future success, but the company is also changing management practices
and how the time of store employees is spent. Already JCP has been able to realize
significant cost savings from a flatter organizational hierarchy as many management
positions have been eliminated. In addition, since in-store employees are not constantly
changing sales tags on merchandise they are able to spend more time with individual
customers and help them form more meaning relationships with the brand.
10.7. Physical evidence
In stores and online physical evidence is going to be a significant factor as JCP tries to
differentiate itself from competitors and provide a worthwhile experience for customers
that encourages them to return more often and start believing that JCP truly is
America’s favorite store.
11. Financials
11.1. Overview
“Year over year, J. C. Penney Company, Inc. has seen net income shrink from a gain of
$389.0M to a loss of $152.0M despite relatively flat revenues. A key factor has been an
increase in the percentage of sales devoted to the cost of goods sold from 60.81% to
MARKETING PLAN 29
63.97%” (Businessweek). Another key factor is the productivity of the square footage
of physical stores. “Today Apple is the most profitable retailer on the planet, averaging
some $6,000 in revenue per square foot (compared with $156 at Penney's, $194 at rival
Kohl's (KSS), and $171 at Macy's)” (Reingold, 2012, para. 23).
11.2. Annual Revenues
2010 2011 2012 (E) 2013 (E)
$17.8B $17.3B $13.5B $13.6B
11.3. Second Quarter Summary and Recent Developments (2012):
For the second quarter of 2012, net loss was $147 million, or $0.67 per share,
compared to net income of $14 million, or $0.07 per share, for the corresponding
prior year quarter. Results included $159 million, or $0.45 per share, of
restructuring and management transition charges and $102 million, or $0.29 per
share, of markdowns taken to clear discontinued inventory in preparation for new
product arriving for shops.
Comparable store sales decreased 21.7% for the second quarter of 2012 reflecting
lower sales during the quarter as JCP continued with the early stages of its
transformation strategy. Sales were also negatively impacted by the Company’s
decision to significantly reduce its marketing activities in the latter half of the
quarter, as it reconsidered its approach to pricing and marketing in time for back to
school.
For the second quarter of 2012, gross margin as a percentage of sales decreased 510
basis points compared to the same period last year due to lower than expected sales
MARKETING PLAN 30
in the quarter as well as $102 million of markdowns taken to clear discontinued
inventory in preparation for new product arriving in its shops.
Selling, general and administrative expenses (SG&A) decreased $193 million, or
15.5%, for the second quarter of 2012 as compared to the corresponding quarter in
the prior year as JCP continues to realize the benefits from cost savings initiatives.
12. Timeline
All stores will be completely remodeled in the next four years. Ultimately there will be a
“town square” center-store surrounded by 100 brand-specific “store within the store”
departments that will highlight the range of products available and offer immersive shopping
experiences (Bishop, 2012, para. 9). JCP began the transformation of its brand on February
1, 2012 with the implementation of its new logo, pricing strategy and monthly cadence,
including new in-store signage reflecting true price clarity as well as edited merchandise
assortments for the monthly store set. In August 2012, the store began a month-by-month,
shop-by-shop strategy to update all stores with new and exciting merchandise and
presentation. Two to three shops will be installed monthly, each and every month, over a
four-year transformation period, including the debut of Town Square during 2013. These
initiatives will culminate in the complete transformation of jcpenney by the end of 2015
(PRNewswire, 2012, para. 11).
MARKETING PLAN 31
References
Bishop, B. (2012, April 9). JCPenney: Can lightning strike twice?. Retrieved from
http://www.brickmeetsclick.com.
Blair, A. (2012, July 24). JCPenney uses RFID to go cash-wrap free by 2014. Retrieved from
http://risnews.edgl.com/retail-trends.
Bloomberg Businessweek (2012). J.c. Penney Co Inc (JCP:New York). Retrieved from
http://investing.businessweek.com.
Bruell, A. (2011, December 5). JCPenney brings on new PR agency: Retailer continues wave of
marketing changes. Retrieved from http://adage.com.
Caine, J. (2012, March 23). The new JCPenney – How things are going so far. Retrieved from
http://blog.compete.com.
Chernev, A. (2012, May 17). Why everyday low pricing might not fit J.C. Penney. Retrieved
from http://www.businessweek.com.
CMO Network. (2012, February 27). Can J.C. Penney become ‘America’s favorite store?’.
Retrieved from http://www.forbes.com.
Cullinane, S. (2009). From bricks to clicks: The impact of online retailing on transport and the
environment. Transport Reviews, 29(6), 759-776. doi:10.1080/01441640902796364
Enright, A. (2012, January 25). J.C. Penney maps a new path. Retrieved from
http://www.internetretailer.com.
Girard, K. (2012, March 5). Is JC Penney's makeover the future of retailing?. Retrieved from
http://hbswk.hbs.edu.
Goodfellow, P. (2012, September 20). The not-so-jolly holiday outlook for JC Penney shoppers.
Retrieved from http://www.forbes.com.
MARKETING PLAN 32
Haynes, P. J., & Taylor, V. A. (2006). An examination of strategic practices in online retailing.
Journal of Internet Commerce, 5(3), 1-26. doi:10.1300/J179v05n03_01
J.C. Penney 2011 Annual Report. (2011). Retrieved from http://jcp.com.
Lutz, A. & Bhasin, K. (2012, Mary 10). Macy’s is steading eating up market share from JC
Penney. Retrieved from http://articles.businessinsider.com.
PRNewswire. (2012, January 25). jcpenney's transformation plans revealed at launch event in
New York City. Retrieved from http://www.prnewswire.com.
Ranganathan, C. C., Goode, V., & Ramaprasad, A. (2003). Managing the transition to bricks and
clicks. Communications of the ACM, 46(12), 308-316.
Reingold, J. (2012, March 7). Ron Johnson: Retail’s new radical. Retrieved from
http://management.fortune.cnn.com.
Rhode, J. A. (2012, February 13). Did JC Penney do market research?. Retrieved from
http://www.jamesarohde.com.
Thau, B. (2012, September 22). Will in-store mini-shops revive J.C. Penney? Analysts say yes.
Retrieved from http://www.dailyfinance.com.
Zacks Investment Research. (2012, September 19). J. C. Penney Company, Inc. Retrieved from
http://www.zacks.com.
