A good bargain has always been enough of a reason to grab wallets and run for the mall. Discovering something you love for a whopping 50% off is nothing short of exhilarating. What else could explain why some people skip out early on Thanksgiving evening to participate in Black Friday festivities? Coupons and discounts are essential to these experiences, and JC Penny realized this last fall when they rebranded their stores for the third time in… wait for it… three years.
Marketing professionals believed consumers would respond positively to “fair and square” pricing – a strategy that eliminated sales and promotions by offering overall lower prices all day, every day. Unfortunately, only 16% of JCP customers associated “best prices” with the department store after the first quarter.
Ron Johnson, known for turning mediocre brands into success stories, headed the campaign. Both Target and Apple flourished under his thumb. But this time around, Johnson made a few mistakes.
Every marketer knows that the most important person in any business – above investors and competitors – is the consumer. Needless to say, Johnson knew this well but must have forgotten to listen to what JCP shoppers actually wanted. He cut out the couponing game mothers tend to enjoy playing. Without the urgency of those marked-down stickers and expiring coupons, it became too easy for shoppers to put JC Penny at the end of their to-do list.
Johnson could have prevented this overlook if he had first put his ideas to test. He would have figured out pretty quickly that JC Penny shoppers love bargain hunting. Instead, he admitted to the press he hadn’t conducted a test-run for Apple or Target campaigns – so, why would he start now? He violated the number one rule of marketing: market to the consumer.
Because of this strategy, JC Penny ended up estranging loyal shoppers. They didn’t want the “store of boutiques” Johnson was attempting to create. They weren’t looking to hang around, drinking coffee and maybe getting in a bit of shopping. They simply wanted to see big numbers under the“How Much You Saved” section on their receipts.
Moral of the story: When rebranding a business, figure out what the customers think is wrong. Find out why customers are unhappy and change it. Johnson’s tactics might have worked for Apple and Target but not all businesses are the same. If other CEOs follow Johnson’s example, they too might find themselves on the clearance rack.