J.C. Penney's Fair and Square Pricing

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Case Study #5 J.C Penney’s Group #2-Lee Cunningham, Sara Gardone, Jared Gilmore BACKGROUND J.C. Penny was at one time considered as one of the best department stores in America. It was once among a group of the largest in the country with over 2,000 stores and a very successful 110 year old reputation. James Cash Penny founded J.C. Penny in 1902 with the simple philosophy of treating others the way he wanted to be treated. The company had many years of tremendous growth and success selling everything from clothing to hardware but eventually started to fall on hard times as many new price-oriented mass merchandisers came into the market such as Wal-Mart and Target. This downward spiral continued during the recession of 2008 thru 2011 with many stores old, disorganized and dated which left a feeling of a dated brand. Ron Johnson, CEO of J.C. Penney knew a change was necessary after the second quarter earnings were reported to Wall Street in August 2012 after several years of changes within J.C. Penny to survive in the retail department store market. It was clear that the performance of the company did not meet the expectations of the stockholders, therefore demanding immediate action and change to the existing business strategy. This was very disappointing as a recent change to the business model was done six months earlier by Johnson and his management team. The major “repositioning” was a change in the existing price strategy of high-low pricing to a new “Fair and Square” pricing commonly used by department stores. This new pricing strategy was a change to the frequent sales offering large discounts off higher list prices to a more straightforward pricing approach offering fewer promotions and more everyday low prices. Another new look for J.C. Penny was a new logo that was designed with an American flag and letters “jcp” to represent the new pricing strategy.

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