External Factors Penny's Proposed New Pricing Strategy Essay

Excerpt from Essay :

External Factors

Penny's proposed new pricing strategy

The new Penny's proposed strategy is a revitalization strategy that is directed at the pricing procedures within the company. According to Penny, there should be a "Fair and Squire Every Day" pricing strategy. This new pricing strategy was not there initially. The transformations, which are also done by JC Penny's CEO Ron Johnson, are ambitious plans, which are geared at changing the phase of the company completely. According to Johnson, the 110-year-old store is to be transformed into a retail powerhouse, which resembles those of the twenty first century. He wants to create 80 to 100 stores within one store. These stores are perceived to be of high brands. There will be a "Town Square," where customers will be able to access a number of facilities and offerings as free ice cream and hot dogs (Mattioli, 2012).

The new pricing strategy is an exemplification of Johnson's realization that for every three-quarter of all the sales in JC Penny, the total sales are made at a cost 50% lower than the list price. According to Johnson, there is no need to make use of deep discounts sales in order to get attraction from customers. For instance, starting that week, the company is to offer only three prices as that of, "Every Day," "Long Value," and "Month." There will be theme sales like those of, "Back to school," which will be offered in august together with other three "Best Prices" which are specifically meant for clearance. The prices for all products will end with zero and not the initial 99. With the price tags, there will only be one price. This means that the "de rigueur" tags which existent initially will be discarded. The new tag will then be, "Previously sold at a higher price."

Parts of the other changes to be revealed by Penny through Johnson are that the management teams will all be reshuffled. There will be many stores within a single store. The company will appear to be modernized. The company will infuse a number of technology applications. For instance, mobile checkout devices will replace the old-fashioned cash registers. These are just similar to those used within Apple Company. There will be an introduction of kiosks with self-checkouts. This will enable a quicker entry and exit of stores with no problem and in a short period. Payments will be done electronically. There will be no cash purchases. Within the bars, the company is planning to replace the tags with RFIP tags that will enable customers to checkout without physical scanning of each item. Apart from pleasing present customers, these changes are directed at attracting new customers to the company. The initial strategy of "fair pricing" was confusing to the customers. This necessitated the changes, which were introduced then by Penny through Johnson.

Possibilities of JC Penny's strategy to work

JC Penney's new pricing strategy will not work. Taking an example of the Orson Well's Paul Masson wine commercials, the timing of this strategy has not come effectively. This is not the right time to do this when the changes of prices and other facets of the company are in place. Johnson would have taken the time to reflect on the speed at which the customers will have to respond to the new pricing strategy. No differentiation can be used to make this strategy a success. It looks like it has been instantly fixed. For instance, if the competitor markets or companies decided to lower their prices to those affixed at the new pricing strategies, the JC Penney's new pricing strategy will have no way of integrating itself. The products have to be differentiated in the market. The products are homogeneous. Therefore, the selling strategy, which can be involved in such a case, is to have advantages in the offering of discounts to the customers. With the drop of prices in the competitor market, Penny will have nothing to do essentially.

There are several product and services being offered at J. C Penny. Penny should have implemented differentiation of the products, being the only strategy to avoid large discounts. Every price set should have to be assumed at all times. The day-to-day change of pricing will affect on the differentiation capabilities in the market. Therefore, the environment in which the JC Penney's new pricing strategy has been introduced might not favor its evolution and expanse.

The growth and development of JC Penny has not reached a stage where he can be assured of the present customers at all times. It is not a guarantee that the customers who have been taking products and accessing the company's services will return with the change in pricing strategies. Consumer behaviors keep changing day after day. When new customers come for the product with fewer prices, they will not have the same notion tomorrow and remember to come. There are often changes in the consumer behavior, part of which might even discourage JC Penny's current customers. The company has not attained to the "Loyalty-Inspiring" level of development in the normalized market. Evidently, the company cannot be pronounced as well immunized when the marketing situations in the marketing environment change.

For instance, an intense of competition in the market will leave JC Penny with no immediate ideas to consider. With consideration of the fact that Penny himself has perceived and labeled the company as "tired," it does not make sense to make masquerading changes, which will not bring any foreseeable and resilient results in the market (Mattioli, 2012). Moreover, when compared to the Apple that it is becoming an emulating agent, JC Penny has no segments. Apple is well equipped with retail differentiation sector as well as the product. Besides, Apple can engage in price change in the market due to its capability to differentiate. The differentiation can pass it to a success if it incorporates the "Fair and Square Every Day strategy."

How Penny's strategy complement Penny proposed new merchandising and promotion strategies

The JC Penney's new pricing strategy complements with Penny's new merchandising and promotion strategies. With the JC Penney's new pricing strategy, Penny had intended to have a day-to-day pricing, something that will cut costs and discounts, which were offered initially by the company. With the new merchandising and promotion strategy, Penny is marking down its prices with products going out with prices as low as 40% cut. With this, shoppers will not have to be in wait for a long time in order to have the prices of commodities dropped. The plan to have the discounts eradicated from the stores and replaced with a fixed price, which is lower than the discounted one, is taking shape under Penny's new merchandising and promotion strategies. Besides this, Penny is getting rid of many sales amounting to hundreds. These are the sales, which are put in offer every year in order to embrace a simpler approach to pricing. Within the JC Penney's new pricing strategy, the pricing strategies were to adapt a day-to-day change, which favors customers irrespective of the quality or status of the product and the initial price. Penny's new merchandising and promotion pricing achieves this strategy.

The new merchandising and promotion strategy is a simple implementation of the JC Penney's new pricing strategy. The "Every Day" low pricing daily is taking shape in the market. The "Monthly Value" has been integrated with the offer of discounts and merchandise every month. There are also clearance deals, which were initially called, "Best Price" in the JC Penney's new pricing strategy. The "Best Price" technique is often present on Fridays every month when many customers have just been paid. This is another strategy, which had been implanted, in the JC Penney's new pricing strategy (Mattioli, 2012).

With the introduction of the JC Penney's new pricing…

Cite This Essay:

"External Factors Penny's Proposed New Pricing Strategy" (2012, December 16) Retrieved August 23, 2017, from

"External Factors Penny's Proposed New Pricing Strategy" 16 December 2012. Web.23 August. 2017. <

"External Factors Penny's Proposed New Pricing Strategy", 16 December 2012, Accessed.23 August. 2017,