The document discusses JC Penney's new fair and square pricing initiative implemented by CEO Ron Johnson. The new plan aimed to offer everyday low prices without sales and coupons, but it resulted in unexpected losses and decreased sales. Customers were confused by the new pricing and felt they weren't getting good deals. As a result, JC Penney saw its shares drop and doesn't expect to meet earnings targets. The company is now considering bringing back coupons and sales to better meet customer needs.

1. JC Penney
Fair and Square Pricing Initiative
Crisis

2. History
Originally named Golden Rule and
was a small goods store
Opened by James CAsh Penney in
Kemmerer, Wyoming in 1902
Sold blue jeans and other work
clothes, shoes, fabrics and sewing
needs
At its height, there were over
1,200 stores in all 50 states and
Puerto Rico, Mexico and Chile

3. Change Is Good Right?

4. CEO Ron Johnson
Former Target executive and creator of the Apple
Store
Plans to bring in better merchandise and create
strategic partnerships
Rolled out a new pricing plan for J.C. Penney

5. New Pricing Plan
The plan stemmed from Johnson’s realization that 75% of
everything sold at J.C. Penney was normally sold at a discount
of 50%. Also, there was a $143 million dollars loss reported
before the change.
Mailers and coupons are no longer used. Instead, in-store
bargains are offered year round.
Prices will now end in "0" instead of "99" and price tags will
list just one price. This means that price tags no longer
include "previously sold at a higher price".
The makeover is expected to save the company over $900 million
dollars over the next two years.

6. New Pricing Plan (continued)
Meant to meet shoppers needs on a regular basis
More merchandising changes in the store
The new pricing initiative has three levels:
Red tag items - indicate the everyday price
Blue tag items - will be the best price for as long as the item is in
stock.
Month long values

7. New Pricing Plan (continued)
Will begin to house affiliate brands and partners
Will develop Town Squares to offer constant customer support
and complimentary services
Completed a 10-year agreement with Martha Stewart Living
Omnimedia
Used Ellen DeGeneres as a celebrity spokesperson
The makeover is expected to save the company over $900
million

8. Survey Says?

9. Results of New Pricing Plan
Reported a unexpected loss and decreased sales for the second quarter
Customers are confused about new pricing plan
Shares decreased more than 8% in premarket trading
There was a lost of $147 million or 67 cents per share
Gross profit margin fell to 33.2% from 38.3% a year ago
The sales decline accelerated to ~22% in the second quarter
A lot of negative press about the change
As a result, Penney’s does not expect to meet its anticipated earnings for
2012. Originally, the expectation was a profit of $2.16 per share. However,
recent results decrease the expectation to $1.26 per share for the year.

10. Customer Sentiment

11. What Are Customers Saying?

12. What Are Customers Saying?

13. Reoccurring Themes
Customers like coupons
Customers do not believe they are getting deals
Poor customer service
Quality is perceived as deteriorating
Customers are moving over to competitors such as
Target and Kohl’s
Online store is continuously out of stock

14. Action Plan

15. JcPenney Customer Apreciation:
Back-To-Values Days
The JcPenney
BLACK FRIDAY WEEKEND EVENT!!!
At JcPenney, we care about our customers needs and we
listened!!!
Coupons for All! Daily, Weekly, and Monthly Coupons are
back and then some...JcPenney will Now Partner with
Online Coupon Giant...GROUPONS for an even Greater
Shopping Experience and added $avings!!!
To perk up interest in store shopping visits, JcPenney
will open new Cyber-Cafes in all of its stores complete
with a ‘Fashion History’ theme, including props,
photos, art work and various media depicting the
history of American Fashion.