Ron Johnson Case Summary

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Ron Johnson is the CEO of a company known as J.C Penney, referred as one of the most recognized department stores in America. In 2008, with the beginning of the economic crisis, markets were affected. Johnson realized that the company results were not successful, opposite to what they were expecting. That is to say, they had losses, decreases in revenues and reduction of customer purchases in their own stores. Moreover, stores became obsolete, chaotic and old. Therefore, in order to deal with the situation, Johnson decided to restructure the company. The main change was switching the pricing strategy they were using. From High-low pricing strategy (HLP) to a "Fair and Square" pricing strategy, or in other words, an Everyday-low-price strategy (EDLP) which represented a huge change for the company. This pricing plan included several stages and united both pricing methods, such as decreasing prices, represented by EDLP, appointing …show more content…

In consequence, this pricing strategy leads to two types of customers. Customers that wait for special offers, special sales or prices in order to do their purchases, and customers who purchase products only when they need them, no matter what the price is. However, there is a problem with customers that realize that maybe, they could be buying the same product but for a lower price. On the other hand, Everyday-low pricing strategy (EDLP) allows customers to pay low prices every day. This strategy has benefits not only for consumers, but also for retailers, i.e., customers don't have to wait for special offers to arrive while retailers save the need of launching new promotions and discounts. The goal of this strategy is to provide clients a satisfactory service when purchasing any product, by assuring them they are buying it at the best price

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