J.C. Penney slashing prices on all merchandise essay
JC Penny is one of the largest retailers in the US but at the moment the company is facing the tight competition from the part of such behemoths of the industry as Target, Wal-Mart and others. In such a situation, the effective marketing strategy, accurate and adequate positioning of the company in the market and successful pricing policies are essential for the overall marketing success of JC Penny in the contemporary highly competitive environment. At the moment, the company has shifted to the traditional daily low pricing strategy that the company traditionally used in the past. This decision is apparently successful since it allows the company to clearly position itself as a low cost retailer, where customers can always find products at low price without any coupons or special discounts that will also contribute to the formation of the positive brand image to enhance the competitive position of the company in the global business environment.
Background of the company and industry
JC Penny is one of the largest retailers in the US. The company operated successfully focusing on the low cost segment of the market. However, rivals of the company grew stronger, especially Wal-Mart, which had started to challenge the position of the company in the market. In response to the growing pressure of competitors, JC Penny attempted to change its pricing policy offering customers coupons that allowed them to obtain discounts and buy products from JC Penny’s stores at lower price. In such a way, the company attempted to breed the customer loyalty since coupons triggered the customer loyalty as customers were willing to save money and used coupons to buy products from JC Penny. In this regard, the company faced the problem of the steady deterioration of its marketing performance.
However, the deterioration of the marketing performance of JC Penny was also the result of the downturn in the retail industry caused by the economic recession in the US in 2008. The economic recession has had the negative impact on the US economy, buying power of customers and their behavior. Customers preferred saving to spending. As a result, the competition between JC Penny and its major rivals has grown stronger. At the moment, the company is looking for options to enhance its competitive position as the retail industry starts to recover.
Current pricing strategy of JC Penny
Economy
Shift from coupons to traditional low cost daily price is the key strategy used by the company to enhance its marketing position because the economic situation is unfavorable and the company has to attract customers (Mattioli, 2012). JC Penny has decided to offer low prices instead of coupons to reach this goal.
Competition
At the same time, the focus on low pricing strategy is determined by the policy of its rivals, which also use low pricing strategy to take the competitive advantage (D’Innocenzio, 2012). Hence, the return of JC Penny to its traditional pricing strategy is effective today.
Changing consumer behavior
Today, customers are looking for low price products because often they cannot afford buying expensive products. As a result, customers buy products from retailers offering the lower price. Hence, the quality often becomes secondary to the price of products and retailers that are capable to decrease the price more turn out to be in an advantageous position attracting customers.
JC Penny’s segmentation, positioning, and branding
JC Penny’s segmentation
The company focuses on the low-cost segment of the retail market. In such a way, the company attempts to attract mass customers, who are looking for low price products. The current economic situation forces customers to buy products at possibly lower price.
JC Penny’s positioning
The company positions its products as available, low price products that aim at mass customers. Such positioning of the company contributes to the enhancement of its marketing position due to the higher opportunities to attract more customers. On the other hand, this strategy shifts the company to the highly competitive business environment and segment of the market (Reingold, 2012). In this regard, the company needs to back up the low pricing strategy with the focus on the quality control to ensure that its products are of a good quality that will attract more customers and increase the customer satisfaction.
JC Penny’s branding
The company’s branding strategy needs consistent enhancement since the company needs a stable and solid brand. Its policies should be predictable and attractive for consumers. For instance, the company should not shift from daily discounts to coupons and back. Instead, the company should conduct clear and comprehensible policy. In fact, the brand of JC Penny should evoke strong associations with low price and discounts customers can count on, while attending company’s stores.
Forecast of the future pricing strategy and marketing performance of the company
Future pricing policy of JC Penny
The company is likely to stick to its traditional everyday low pricing strategy which allows the company to conduct flexible pricing policies decreasing the price of some products to accelerate their sales, when customers cannot afford buying those products at higher price, and increasing prices of products, customers are looking for and which have the high demand.
JC Penny’s marketing performance in the future
The company can enhance its marketing performance in the future but the company needs to conduct the aggressive promotional campaign to enhance its brand image and evoke strong associations between low pricing strategy of the company and the customers’ high satisfaction.
At the same time, expanding business internationally will enhance the competitive position of JC Penny, even though the company will have to confront the tight competition from the part of new rivals, such as Carrefour, Tesco and others. In such a way, the company can expand its business and enhance its competitive position through entering new markets, where JC Penny can take a leading position. For instance, the company may focus on markets of emerging economies, where the company can count on the stable growth and where the competition is not as tight as in the US or the EU, for example.
Conclusion
Thus, JC Penny has good marketing prospects as it maintains its position as a low cost retailer operating not only in the US but also internationally. In this regard, the company should stick to its daily low pricing strategy but, at the same time, the company needs to enhance its brand image in the public eye. The enhancement of the brand of the company will contribute to the development of the customer loyalty and, thus, enhance the competitive position of JC Penny in the market.
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