Changes to the business model Pricing, Promotion & Product Essay
Changes to the business model Pricing, Promotion & Product, 497 words essay example
Essay Topic: pricing, business, promotion, model
After joining J.C. Penny, Johnson spent a few months in crafting his plan and quickly concluded that transformative changes were required to save J.C. Penney. In January 2012, Johnson revealed his plan that proposed changes spanning seven key areas Personality, Price, Promotion, Product, Presentation, Place and People . Johnson believed these changes would once again make J.C. Penney the Americas favorite store. The proposed changes to seven key areas are expected to affect J.C. Pennys business model, its customers & its employees.
Changes to the business model Pricing, Promotion & Product
Retail stores for decades had been using promotions and discount coupons to attract customers. Johnson concluded that the overwhelming streams of coupons and discounts make shopping a very complicated affair for customers and affects customer loyalty since such discounts affect the brand image. Therefore, rather than using promotions and discounts to attract customers, Johnson introduced Fair and Square pricing model. As per Johnson, the newly simplified pricing strategy was expected to make it easier for customers to understand how to shop at the best price everyday rather than relying on coupons. Fair and Square pricing had three tiered pricing Everyday, monthlong and best price. Everyday price was set at 40% lower than previously markup prices for all merchandise. Monthlong price was for the new merchandise on a rotating schedule and would be at a 25% further discount than those of everyday prices. Best price was the clearance price on the items that would be put on sale first and third Friday of each month. The return policy was also revamped to allow customers to return any items anytime, anywhere which Johnson called as happy returns policy.
As of 2011, J.C. Penney hosted over 590 sales events with limited success. Despite of numerous events, on an average customers shopped only four times a year. Johnson proposed to limit the number of promotions to twelve a year one every month focused on reflecting the spirit of that month such as valentines day in February or Mothers day in May etc. Changes were also proposed to J.C. Pennys product line. Johnson took a twopronged approach that focused on transforming existing merchandise by improving quality and restoring brand integrity while also adding new global brands such as Martha Stewart and lamour nanette lepore to lure new generation customers.
New Shopping experience Presentation and Place
Johnsons past experience with Apples retail stores was likely to have shaped his thoughts surrounding creating a new shopping experience at J.C. Penney. Johnson proposed retail stores be modified to accommodate what he called shop the shops, the street and the square experience. Under this plan, Johnson proposed shopwithinashop concept. Each store will have up to 100 designer shops which would showcase major apparel and home brands. These shops would be placed surrounding an engaging pathway called the streets and the streets would surround the square. The square was expected to provide an unparalleled retail experience by offering customers a place where they can get important information, helpful