Case Questions: J C Penny

Evaluate the overall effectiveness of the Fair and Square strategy. How well or poorly
do all the elements work together or work at odds with one another to deliver a
coherent whole? What element are missing?

This new strategy at JC penny is majorly an attempt to try and change the perception of
customers to see JCP as an everyday shopping experience versus a store that flourishes
on deals and promotions.

1. The first major mistake they made was a failure to conduct market research to
assess customers current perception of JCP and their thoughts on the pricing
change. In terms of performance, JCP knows they are positioned between price-
oriented mass merchandisers, such as Wal-Mart and Target and higher end
department stores like Macys and Nordstrom.

2. JCPs new logo, spokesperson, store design, and sales structure gave the customers
mixed signals:
A. The new logo and store design worked well to promote the new Fair and
Square pricing strategy visually. However, adding high level brands and the
specialty store layout confused the customers because then the low prices
lowered the perceived value of the products.
B. The sales structure created dissonance because the staff was valued less,
although they should have been communicated about the strategy and
should have been acting as product experts
C. The spokesperson; EllenDeGeneres might not have been the right fit as
JCPenny did not know much about the customer and their perception of her.

3. The ad campaigns lacked in communicating the right message and this lack of
communication probably caused the customer confusion and perceptions of lower
value-perception, higher prices, and less bargains.
4. Pricing was the central element of this new strategy, focusing on three levels
Everyday fair and square, Month Long Values Event, Best Price Fridays. A 3 level
pricing can be very confusing for the consumer. Lack of market research to
understand consumer reactions and expectations from this strategy and ineffective
communication led to the cold response and failure of this strategy.
 What do first and second quarter results indicate about the Fair and Square strategy?
Are the first two quarters of results enough to validate or invalidate the changes? What
is your evaluation of this?

Are these results due to faulty strategy or to a faulty execution of an excellent strategy?
Would you expect similar or dissimilar results if the changes had been implemented
more slowly or in different timing sequence

Is J.C. Penny a brand which can be Target-ized or Apple-ized? Why or why not? In
what fundamental ways does J.C. Penny differ from these brands? Is Johnsons past
retail experience in these companies helping or hurting J.C. Penny?

Do you agree with the changes Johnson is making in the pricing scheme that are set to
take effect August 1st? Are they enough to turn things around?

What will be your overall vision for J C Penny and your strategies on the pricing policy
after firing of Johnson?