Creative Combustion Blog
Marketing and branding tips for the badass small business owner.
June 26, 2012
When it comes to bold moves, it does get much bolder. On February 1, 2012, J.C. Penney officially ditched their decades-long sales strategy comprised of hundreds of special promotions throughout the year for an “everyday low price model” (ala Wal Mart or Target). But instead of making a huge splash, comparable store sales for the first quarter of 2012 dropped 18.9%. Then on June 18, 2012, Michael Francis, Penney’s president and former Target executive who was brought in to help reshape the company’s brand, abruptly resigned.
I’m going to go out on a limb and say that’s probably not what CEO Ron Johnson had in mind when he made the shift. So what went wrong? Was their pricing strategy fundamentally flawed? Was it the marketing? A little bit of both?
First things first, it’s always hard for customers to make a change in the way they think about pricing and perceived value—especially after they’ve been used to seeing deep discounts of as much as 70-85% off over an extended period of time. When I was growing up, we would plan a lot of our purchases from J.C. Penney around those sales. And we were always overly ecstatic when we were able to get a great deal. It didn’t really matter if they were only able to offer those HUGE discounts because they were playing with some really high margins or because they were losing their shirts trying to get customers in the door—when they ran a sale, there was a pretty good chance you’d find us there.
But markets, consumers, and competitors change. And, whether you’re a small business owner or a 110+ year-old retailer such as J.C. Penney, sometimes that means you need to take some drastic measures in order to survive.
I remember the first time I saw the new J.C. Penney circular. Everything about it was different—the size, the shape, and even the logo. But looks aside, I still found myself having a hard time understanding their new pricing strategy. They decided to group items into three buckets: “everyday” (or everyday low price), month-long promotions (as part of the new strategy they were trying to avoid using the word “sale” but for all intents and purposes they’re month-long sales), and “best” prices which are available the first and third Friday of every month. If you’re confused, you’re not alone. So what’s to blame for their pricing woes? The marketing? The pricing strategy? Both?
Any time you have to provide a key to explain your pricing, you’re probably already in trouble. I’m sure some ineffective marketing has also played a hand, but when you’re asking your customers to triangulate their shopping trips around second and third Fridays of the month you’re definitely asking them to burn a lot of calories just to save a couple of bucks before they even walk in your front door. I know I would probably have enough trouble keeping track of which Friday falls on which week and that’s only one head of their three-headed pricing monster.
So what can small business owners take away from J.C. Penney’s recent struggles? Customers have A LOT of choices. When you decide to compete on price, your underlying strategy must be incredibly easy to understand and remember. You can market until the cows come home, but if you’re underlying pricing strategy is flawed there’s a pretty good chance your customers will take their business elsewhere.
What about you?
Do you think J.C. Penney’s pricing strategy was fundamentally flawed? Or do you think they could have done a much better job marketing the new strategy to their customers?
By: Shawn Graham
[Image: Flickr user Gary Stevens]
Categories: Marketing Strategy
Get Free Marketing Tips
Sign up to receive your very own small business nuggets, specially hand crafted and delivered fresh to your inbox.
Get the freshest content from Shawn’s Blog via RSS
May 14, 20138 Tips for Meeting Your Next Customer
May 8, 2013Join Me At The Entrepreneur’s Growth Conference Pittsburgh
May 2, 20135 Highly Effective Email Newsletter Examples
April 18, 2013[Survey] Small Businesses Struggle with Facebook
April 17, 2013What Should Be On A Business Card For Small Businesses
Hall of Fame
- Visual Interest: The Rise Of Photos In Online Marketing (15 comments)
- The Golden Rule Of Successful Social Engagement (14)
- Are Business Cards On Their Way Out? (13)
- Don’t Be An SEO Chaser (12)
- Using Holiday Cards To Deepen Customer Relationships (10)
- Is Going Viral An Effective Marketing Tactic? (10)
- 5 Must Read Books For Small Business Owners (8)
- Using Social Media To Break Into Your Local Market (8)
- Pittsburgh Young Professionals, PodCamp Pittsburgh, And Paneling (8)
- Delivering Killer Customer Service (8)
@dh that's one sweet ride about 8 hours, 17 minutes ago
@markmcneilly Thanks for the RT, Mark. In other news, Brian Urlacher retired. about 16 hours, 29 minutes ago
@rpetrocelli Thanks, Ross! about 16 hours, 49 minutes ago
My Fast Company Blog
Creative fuel for intrapreneurs and chronic idea generators
- The Telecommuting Genie Isn't Going Back In The Bottle; Here's How To Strengthen Its Magic
- Why Invasive Marketing Will Come Back To Bite You
- Managing Customer Service In The Age Of Instant Gratification
- 5 Smart Sources For Finding The Best Startup Talent
- The Key To Successful Cross-Channel Marketing
Sites I Like
- Get Your Own Badass Business Cards @Moo
- Build Ecommerce Stores That Exude Badassery @Shopify
- Make Your Phone System Simply Badass @Grasshopper
- Manage Your Social Media Badassery @Argyle Social
- Brand Marketing
- Customer Engagement
- Email Marketing
- Lead Capture
- Marketing Inspiration
- Marketing Strategy
- Social Media Marketing
- Website Design
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- November 2010