THE J.C. PENNEY CASE
Recall the example of J.C. Penney described in Week 1. In August 2012, Ron Johnson, the J.C. Penney chief operating officer, was reviewing the changes he had made to the company’s business model and brand. Specifically, he introduced a new pricing model known as “fair and square,” which was a change from the former high cash flow pricing approach where frequent sales resulted in discounted pricing off the day-to-day list prices. The fair-and-square model attempted to simplify pricing to resemble everyday low pricing. In addition, the new strategy involved a new store layout, the introduction of well-known brand names, and the creation of J.C. Penney-specific clothing lines by well-known designers (Ofek & Avery, 2012).
For this Discussion, you need only consider the information in the case to respond to the following questions. If you research and find more recent information, do not assume that what J.C. Penney has done is necessarily correct. Be certain to defend your recommendations.
Post by Day 3 your response to the following questions:
Describe the components of the J.C. Penney new business model.
Then, evaluate the business model’s overall effectiveness in the following ways:
How did all of the components work together?
What components, if any, are missing?
Explain the relationship between J.C. Penney’s marketing/business model and its pricing strategy. Offer lessons learned about the relationship between marketing/business models and an organization’s pricing strategy.
Explain whether J.C. Penney’s brand is similar to other retail brands (e.g., Target and Apple) where Johnson has had success in terms of its marketing/business model and its pricing strategy. Explain why or why not.