1. Case Study
◆ Adwait Joshi
◆ Chaitanya Charabuddi
◆ Chao-Hui Yin
◆ Ming Chang
◆ Yiwen Shao
◆ Yu-fan Huang

2. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action
Agenda

3. Who is J.C. Penny
◆ Founded by James Cash
Penney in 1902.
◆ Serves more than half of
America’s household.
◆ Bargains and Coupons.

4. J.C. Penny is here for you
◆ Largest departmental store chain.
◆ Operates 1100 stores by 2012.

5. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action
Agenda

6.
Re-invent J.C. Penney
◆ Stop decline in sales, regain mkt share
◆ Regain customer loyalty
◆ Reinvent brand
◆ Review Fair-and-Square Price strategy as it has failed

7. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

8. JCP has Lower core shoppers
and higher peripheral
shoppers◆24% Core shopper – accounts 66%
revenue
(Vs 35% for peer group avg.)
◆40% peripheral shopper –
accounts 9% revenue
(Vs 32% for peer group avg.)
◆Customer’s have lowest
household income $65000
(Vs $76,000 for peer group)
◆Shops during weekend
sales
◆During big holidays with
great discounts and
promotions
◆Addicted to Sales,
Coupons, Price promotions
Who?
When &
Why?
◆ Stores located in small
towns and metropolitan
areas
◆ Catalogs and web Where?

9. Men’s and Women’s apparel
are the highly bought
products
What?

10. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

11. Steady decline in the
market share of
department storesPercentage of total retail accounted for
Department stores
0%
3%
5%
8%
10%
2.60%
2.40%
5%
8%
10%
mid-1980s 1990 2000 2009
2011

12. Intense competition from
all segments
Mass Merchandise
◆Walmart
◆Target
Small Specialty
Stores
◆GAP
◆ J.Crew
Departmental
Stores
◆Kohl’s
◆Macy’s
International
Retailers
◆H&M
◆ZARA
J.C.Penny
(no differentiator)

13. Intense competition within
department stores

14. Competing also with other
retail format

15. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

16. JCP customers are older
and poorer
JCP’s customer income
distribution
Others
< 35,000
29%
> 100,000
> 100,000 < 35,000
Others
JCP'
> 55
35-55
< 35

17. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

18. JCP is near death and needs a
rebirth
1900’s Up to 1950’s 1960’s – 1980’s 1990 – 2010 Post 2010

19. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

20. Four P’s
◆Products - Apparel, Home
products, Fine jewelry,
Footwear, Accessories
◆Services: Salon, Optician
◆ Fair & Square pricing
strategy
◆ High Low pricing strategy
◆Extensive network of
physical stores
◆Online store & catalog order
◆Advertising (TV, Radio,
Print, Online)
◆Sell promotions (free service)
◆Direct marketing (Catalog)
◆Internet (website, social
media)
Product Promotion
Place Price

21. HL – Occasional high discounts;
FS – Low prices everyday

22. ● Background
● Objective
● Situation Analysis
● Nature of demand
● Extent of demand
● Nature of competition
● Environmental Climate
● Stage of Brand Life Cycle
● Marketing Mix Structure
● SWOT Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

23. •110 yr old departmental store,
when thinking about departmental
store people think of J.C.Penny
•Owns vast real estate of $11B
•Owns 400 retail stores, pays low
rent $5/sqft for remaining 700
stores
•Dissatisfaction among sales team
for eliminating commission
•Low younger shopper customer
base
•Loyal customer not happy with
makeover, no sign of new customer
interest
•Attract Younger gen – currently
low in customer base.
•E-commerce – potential to grow
substantially
•Target niche segment of LGBT –
already supported by J.C.Penny
•Hyper competitive retail
industry - Losing business from
high end and low end.
•Consumer becoming increasing
frugal, after 2008 economic
recession
•Losing core customers with new
radical makeover
SWOT Analysis

24. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Alternative I
● Alternative II
● Recommendation
● Plan of Action

25. Go back to High Low Price
Strategy (HL)

26. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Alternative I
● Alternative II
● Recommendation
● Plan of Action

27. Continue with Fair and Square
Price Strategy (FS)

28. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

29. Several things to consider
◆ High-low: Declining Market share
◆ Fair and Square: Failed
● Who is the target market?
● What is consumers’ need?

30. Recommendation - I
◆ Improving Fair and Square Strategy
◆ Categorize products by Price sensitivity

31. $1,895
Recommendation - I
A. Fair and Square
$1,600 everyday
B. High-low
$950 (50% off)
on Black Friday
Sensitive

32. $144
Recommendation - I
A. Fair and Square
$120 everyday
B. High-low
$87 (40% off)
on Christmas
(wait for 3 months)
Insensitive

33. Recommendation - II
Focus on private brands
● “Brands are becoming retailers, and
now retailers are becoming brands.”
● Long history with in-house brand
● Reduce cost, and provide more discount

34. Recommendation - III
◆Integrated brand experience
• Unified products from different channels
• Understand and provide customers’ needs
• Bring back the trust and create loyalty customer

35. Limitations
◆Hard to change customers behavior-
shop at Macy’s and kohl’s
◆Complex market research

36. ● Background
● Objective
● Situation Analysis
● Evaluation of Alternatives
● Recommendation
● Plan of Action

37. Plan of action
Aug Sep Oct Nov Dec
Conduct Mkt
Research
Mkt sentiment, customer
perception, needs
Change CEO
Fire current CEO
Johnson and rehire
Myron Ulllman
Online Offline
Integration
Mobile APP, TV
commercial,
Bring back Private
Brand
repositioning, rebranding
stores
2012

38. Conduct Market Research

39. Replace CEO

40. Bring Back Private Brands
(1902) The Golden Rule (1971) J.C. Penney “Wining Together”
“Every Day Matters”

41. Online Offline Integration

42. Contingency Planning
◆If we meet the expected criteria, we’ll continue with
the current strategy.
◆If the sales fall continuously, even after making these
changes, then it’s safe to assume that department
stores and in particular JCP are nearing death
◆Exit gracefully without going bankrupt
◆Look for a suitable buyer who can make use of the
valuable real estate of JCP.

43. Thank You
Q&A

44. 2015