Penney's Pricing Strategy
When Ron Johnson took over as J.C. Penney 's CEO, one of his first steps was to look over "the landscape which involved steps like signing up for email marketing from the company, reviewing sales figures, and reviewing the number of promotional sales the company was having. On joining the firm, he said, “In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement. It will be a period of true innovation for this company”(Ferrell, Gatewood, Ferrell & Taylor, 2010, p. 192).
Mr. Johnson abruptly scrapped JCPenney’s dubious pricing policies of marking up prices and then offering discounts, with heavy promotions, and coupons. He proposed to offer more interesting products, from lines like Martha Stewart and Joe Fresh, at reasonable prices all the time. But the change in pricing occurred with merchandise that was already in stores and that customers were used to, rather than on brand-new merchandise. The approach didn’t fare well with Penney’s customer base of bargain hunters. They rebelled, traffic declined, sales fell and Penney slowly returned to the prior era of pricing, with lots of promotions, lots of price-focused ads, and marked-up prices that would be later marked down(Kinicki & Williams, 2013).
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(2010). Principles of Management. Savant Learning Systems, Inc.
Kinicki, A., & Williams, B. K. (2013). Management: a practical introduction
(6th ed.). New York, NY: McGraw Hill
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