Case write-up_ J

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Apr 3, 2024

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Jade Ramones Professor Runshan Fu Intro To Marketing 25 March 2024 Case write-up: J.C. Penney J.C. Penney's "Fair and Square" pricing strategy was implemented in 2012 under the leadership of CEO Ron Johnson. The strategy aimed to simplify the company's pricing structure by eliminating frequent sales, discounts, and coupons, and instead offering consistently lower prices. The core principles of the "Fair and Square" strategy were everyday low prices. J.C. Penney aimed to offer products at a lower price point every day, eliminating the need for customers to wait for sales or use coupons to get the best deal (Exhibit 7), they also strategized implementing monthly promotions. Instead of frequent sales events, the company planned to offer monthly promotions on certain items to drive traffic and sales. Clear pricing was another strategy used by the company, they planted prices to be straightforward and transparent, without hidden markups or confusing discounts, Johnson states “Sale is not in our vocabulary…every item in the store is priced to be its best every day”. The company adopted these strategies for several reasons, that being….Simplification. The traditional pricing model of frequent sales, discounts, and coupons had become complex and confusing for customers. J.C. Penney aimed to simplify the shopping experience by offering consistent and transparent pricing. Differentiation was another factor. They thought by adopting an "Everyday Low Price" strategy, J.C. Penney sought to differentiate itself from competitors like Macy's and Kohl's, which relied heavily on promotions and coupons ( exhibit 2 and 3). Cost reduction was implemented to seek Constant promotions and discounts that can erode profit margins and require significant investment in

marketing and advertising. By offering lower prices consistently, J.C. Penney hoped to reduce promotional costs and improve profitability. The company believed that transparent pricing and a focus on value would build trust with customers and encourage repeat business. But with any company, comes with its challenges. Some of the struggles they faced were customer perception shifts. One of the biggest challenges was changing customer perception accustomed to heavy discounts and promotions. J.C. Penney's shift from frequent sales to everyday low prices confused and alienated many customers. For example, customers were used to receiving coupons and discounts, and suddenly transitioning to a flat pricing model left them feeling like they were no longer getting a good deal. Another challenge would be Loss of Foot Traffic. The elimination of promotions and sales events led to a decline in foot traffic as customers no longer had the same incentive to visit the stores regularly. Without the allure of discounts, customers were less motivated to make unplanned purchases. This was exemplified by a decrease in sales and revenue following the implementation of the new strategy. The initial results of J.C. Penney's "Fair and Square" pricing strategy was largely unfavorable, indicating several key issues, one being negative customer perception. With this case, the customers perceived the "Fair and Square" pricing strategy as eliminating the value they previously associated with shopping at J.C. Penney. The absence of discounts and promotions made them feel like they were no longer getting a good deal, leading to dissatisfaction and a loss of brand loyalty Reevaluate Pricing Strategy: Ron Johnson should reevaluate the "Fair and Square" pricing strategy in light of the initial negative results. This could involve reintroducing some elements of promotions and discounts while still maintaining a focus on transparency and simplicity in pricing.

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