Jc penney ppt draft new
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Transcript of Jc penney ppt draft new
Price
Personality
History
Place & Presentation
Product
Promotion
Conclusion
CompanyHistory
Price
Personality
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• At the turn of the century, JCPenney celebrated 100 years in the retail industry
• Founded in 1902 by James Cash Penney when he was just 27-years-old
A focus on understanding the JCPenney brand
Catering to the needs of their customers
Offering fashionable, high-quality merchandise at affordable prices
A retail legend born
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Grew its success by following 3 key principles:
“A merchant who approaches business with
the idea of serving the public well has nothing to
fear from the competition.”
— James Cash Penney
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Growth periodSales had reached $250 million and JCPenney had 1,496 stores, in nearly every state
Reached 2,053 active stores, 300 of which were full-line establishments
Positioned itself a department store, and discontinued all product lines outside of fashion apparel and home goods
Successfully transitioned to become one of the biggest names in department store apparel
1936
1973
1985
1982
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• JCPenney’s success could not be sustained in the 1990s
• Management lost focus on the company fundamentals and lost its brand identity
• For the first time in the company’s history, a decline in sales occurred
• Historically, the retailer attracted middle-income families and had a strong private label program.
• In the late 1990s, the retailer modified its inventory to appeal to higher-end department store customers and put more emphasis on brand names
1990s—Growing stale
DECLING
SALES
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• Heading into the new millennium, growth further declined for the retailing giant
• In order to compete, JCPenney launched hundreds of sales per year.
• Executives believed loss of volume was due to location, and underperforming stores were relocated from mall locations.
• New stores opened with at-the-door parking to contend with discount competitors Kohl’s, TJ Maxx and Target.
• Despite these efforts, from 2003 to 2011, JC Penney’s sales declined by a whopping 45% from $32.3 billion to $17.8 billion.
Priced to move
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• In November 2011, JCPenney’s CEO Mike Ullman was ousted and replaced by Ron Johnson
• The man who brought high-end designer wares to Target and who made Apple’s retail stores into an unexpected phenomenon.
• Believed that rebranding JCPenney’s image to be more “hip” would save the company.
Changing of the guard
Ron Johnson
"The first and most encouraging thing to me is I
am completely convinced that our transformation is on
track. We are making extraordinary progress in everything we’re doing.”
— Ron Johnson
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Personality - “Focusing strategic initiatives around the elevation of JCPenney brand”
Price - “Establishing “fair and square” approach across all platforms”
Place and Presentation - “Creating a relevant and inspiring shopping experience”
Product - “Obtaining market share by appealing to every American”
Promotion - “Capturing customers’ attention through amplified messaging and media”
5 Point Project Scope1
Johnson broke down his plan into the retailing P's:
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Elevation of the brand• Rebranded the old-age retail store by removing “Penney” from its
name, and reducing its moniker to simply “JCP.”
• Came paired with a sleek red, white and blue logo that channeled the feel of the American Flag
• The logo shape took on a boxy shape, going hand-in-hand with Johnson’s infamous “Fair and Square” pricing strategy.
• New brand name and logo was not tested prior to its launch, the first indicator of the over-confident manner in which Johnson would move throughout his tenure at JCP.
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• Johnson wholeheartedly believed customers would accept the shiny refurbished version of the brand with open arms
• In reality, the company had a 113-year brand that was deteriorated in the minds of its customers
• The radical rebranding effort was too abrupt, and made loyal customers feel unwelcome.
Total flop with customers
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• The second phase of Johnson’s project was “Establishing a “fair and square” approach across all platforms”
• Pricing program that completely abolished JCP’s traditional sales strategy which offered customers a never-ending stream of sales, coupons, and rebates.
• Implemented three levels of new prices offered to customers: Everyday Price, Month-long Values, and Best Prices
• Promotions were reduced to just 12x per year— a drastic
change for JCP’s core consumers who were offered 590 promotions in 2011.
“Fair and Square”
590 12!
reduced
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• Fair and Square intended to show the company would not play into the popular gimmick of high-low pricing
• Johnson drove away and confused customers who were accustomed to coupons, deals and aggressive promotions
• He failed to understand that JCP’s established customers enjoyed the thrill and challenge of finding a deal
Total flop with customersPersonality
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Inflated ConfidencePersonality
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• Johnson had failed to pilot the new pricing strategy in a smaller region prior to a national rollout.
• He had an inflated sense of confidence stemming from his tremendous success at both Target and Apple, which led to implementing ideas without adequate testing.
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Stores-within-a-Store• The third major facet of Johnson’s vision for JCP was
“Creating a relevant and inspiring shopping experience.”
• Johnson decided to implement stores-within-a-store (SWAS)
• Johnson envisioned 80-100 branded retail shops and services placed
• Johnson made major investments in new infrastructure, merchandise, and advertising necessary to make his plans come alive
History
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• They were crippled by hundreds of custom legacy applications whose maintenance took up 95 percent of their $400 million IT budget in 2011
• The Project Management team agrees with the vision of his strategy, however, we believe it should have been implemented over more time.
• We believe the partnership with the boutique brands and JCPenney as a retailer is a win-win for both parties
Partial flop with customersPersonality
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Cotton Kills• The fourth point to Johnson's plan was to “Obtaining market
share by appealing to every American”
• Johnson wanted to enter the high-end home furnishing and clothing business
• Cotton prices would increase dramatically due to flooding and shortages on cotton farms worldwide
• Affected consumer purchasing power and increase inventory turnover for the company.
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• Middle class Americans will not spend $3000 on a couch.
• In turn, they will shy away of stores that carry expensive merchandise they cannot afford.
• Market analysis and foresight can be used to act quickly in reducing the impact of rising material cost.
Total flop with customersPersonality
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Promotion
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Advertising • The fifth and final point to Johnson's plan was to “Capturing
customers’ attention through amplified messaging and media”
• Using traditional print and TV platforms the company increased advertisings spending to a record $504 million dollars
• This led to $289.1 million dollars in TV spending and another $124.5 million on print.
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• This resulted in an increase in cost of goods sold (COGS) of over 60% of total revenue.
• Limited Social Media and online engagement
Total flop with customersPersonality
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Summary and Conclusion• Johnson’s 5-step program was a major departure from the
existing JCPenney business model and represented the largest platform project in the company’s history.
• Failed to include appropriate change management activities
• leverage a J-shaped project lifecycle that starts slowly , proceed slowly, and then finish rapidly.
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Conclusion