What went wrong jc penney case

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Questions and Answers

What was the main concern with Johnson's new pricing strategy?

It was not tested on a limited basis before implementation (correct)

It was confusing to customers

It was too similar to Apple's pricing strategy

It was too expensive for the target market

What did Johnson want JCPenney to be for customers?

A destination for thrift-minded shoppers

A place to find discounted products

A 'favorite place to shop' where customers could hang out (correct)

A store with a wide range of specialty merchandise

What was a major mistake Johnson made in his strategy?

He did not hire enough sales associates

He did not offer enough discounts to customers

He did not change the store's branding quickly enough

He did not test the new pricing strategy on a limited basis (correct)

What did JCPenney's loyal customers love?

The prospect of finding a 'steal' via rounds of markdowns Signup and view all the answers

What was Johnson's vision for JCPenney stores?

Boutiques with specialty merchandise Signup and view all the answers

Why did Johnson's era at JCPenney end prematurely?

He misread JCPenney's brand and customer base Signup and view all the answers

What was the result of Johnson's misread of JCPenney's brand?

JCPenney's customers did not align with Johnson's vision Signup and view all the answers

What can be learned from JCPenney's mistakes?

The importance of testing new strategies on a limited basis Signup and view all the answers

What was the primary goal of JCPenney's fair and square pricing strategy?

To offer a fair price from the start, eliminating the need for frequent sales Signup and view all the answers

Why did JCPenney's customers initially abandon the store after the implementation of fair and square pricing?

They were not used to paying full prices for products Signup and view all the answers

What was the main difference between how consumers buy technology products and clothing, according to the text?

Consumers pay full price for technology products but not for clothing Signup and view all the answers

What was the mistake made by Johnson in implementing fair and square pricing at JCPenney?

Equating technology product buying behavior with clothing buying behavior Signup and view all the answers

What was the consequence of JCPenney's failure to test the fair and square pricing strategy in advance?

The company was unable to anticipate the negative response from customers Signup and view all the answers

What was the result of JCPenney's use of two tiers of pricing, with red tickets and blue stickers?

Customers were confused by the terminology and didn't understand what the terms meant Signup and view all the answers

What did JCPenney's customers perceive as a 'game'?

Waiting for sales and discounts to buy products Signup and view all the answers

What was the outcome of JCPenney's fair and square pricing strategy?

The strategy led to a significant decline in customer loyalty Signup and view all the answers

What was Ron Johnson's goal when he joined JCPenney as CEO?

To revitalize the firm by breathing new life into its stores and brand Signup and view all the answers

What was the outcome of Ron Johnson's 17-month tenure at JCPenney?

Loyal customers deserted the company, and employee morale hit an all-time low Signup and view all the answers

What was the primary focus of Ron Johnson's marketing strategy at JCPenney?

To revamp the company's pricing strategy Signup and view all the answers

What was the 'fair and square' pricing strategy introduced by Ron Johnson?

Offering 'fair and square' everyday low pricing Signup and view all the answers

What was Ron Johnson's position at Target?

Vice President of Merchandising Signup and view all the answers

What was the outcome of JCPenney's sales during Ron Johnson's tenure?

Sales plummeted from $17.5 billion to $13 billion Signup and view all the answers

What was Ron Johnson's role at Apple?

Senior Vice President of Retail Operations Signup and view all the answers

What was the primary mistake Ron Johnson made during his stint at JCPenney, according to a general consensus?

Making three primary mistakes involving marketing facets Signup and view all the answers

Study Notes

Ron Johnson's Mistakes at JCPenney

Ron Johnson, former CEO of JCPenney, made three primary mistakes during his 17-month tenure, leading to a significant decline in sales from $17.5 billion to $13 billion annually.
Johnson's goal was to revitalize JCPenney's brand, change its pricing strategy, and overhaul the company's business operations.

Mistake #1: Fair and Square Pricing

In 2012, Johnson introduced "fair and square" everyday low pricing, eliminating sales and discounts.
This strategy failed to account for customers' love of finding bargains through sales and discounts.
The new pricing terminology (red tickets for everyday pricing and blue stickers for clearance) caused customer confusion.

Mistake #2: No Testing of Ideas in Advance

Johnson did not test the "fair and square" pricing strategy before implementing it system-wide.
This lack of testing prevented Johnson from anticipating the negative customer response.

Mistake #3: Misread of JCPenney's Brand

Johnson envisioned JCPenney as a destination store like Apple, with "stores within stores" and boutique-like experiences.
However, JCPenney's core customers were thrift-minded shoppers who valued convenience and price, unlike Apple customers.
Johnson's vision was incompatible with JCPenney's brand and customer base.

Lessons for Start-Ups

Establishing a brand involves understanding the target audience and their preferences.
Misjudging the target market can lead to costly mistakes, as seen in JCPenney's decline under Johnson's leadership.

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