Retail icon JC Penney (make that JCP) is under scrutiny by investors and the retail industry as it attempts to pull off a radical makeover. CEO Ron Johnson's vision for JCP is to create a totally new shopping experience in stores. A major element in his marketing strategy was to introduce "fair and square" pricing. The plan called for substantial reductions in promotional pricing and accompanying newspaper advertising. Instead, shoppers would be able to buy products at everyday low prices. The response has been less than enthusiastic as evidenced by same-store sales declining 22% and Internet sales plunging 33% in the second quarter. Ouch!
JCP's actions are curious in that management seems to have taken an either-or approach to marketing. The first months of Mr. Johnson's tenure as CEO saw a pronounced shift toward brand building. The emphasis was on shaping perceptions and image of JCP. This emphasis occurred at the expense of tactics that were effective for generating store traffic. The result was a redefined brand but fewer shoppers in JCP stores. Now, the pendulum is swinging back the other way as business building is pushed to the forefront.
Now to address the question in the headline - should marketers focus on building their business? Yes. Should they focus on building their brands? Yes. It is unnecessary to choose one emphasis over the other. Such an approach will prove to be disastrous long-term. Different people in your target market are at different points in their relationship with you. Brand building is needed for customer acquisition, attracting new buyers to your products or services. Business building is important for retaining customers. JCP assumed its existing customers would stay with them after implementing the new pricing program, but many of them failed to see adequate value compared to the previous promotion-oriented pricing model. Thus, a dual focus is needed for marketing to concurrently build business and the brand.
Advertising Age - "JC Penney Looks to Newspapers in Revamped Marketing Push"
Labels: Brand Management, JC Penney, Pricing