JCPENNEY BRAND
AUDIT
Mindy Tiu
Company
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Location: Corporate headquarters are in Plano, Texas. There are 1,107 operating stores in all 50
US States and Puerto Rico. Most of the stores are located in suburban shopping malls.
Organizations and major activities: JCPenney is a chain of American mid-range department
stores. JCPenney sells all kinds of clothes and brands including Levi’s, Liz Claiborne, Fiesta, and
Sephora.
Subsidiaries: JCPenney has some subsidiary corporations in the United States and in other
countries. Each subsidiary corporation has its own distinctive legal name that should be used,
without modification in its business dealings. Some of the subsidiaries include(d) Eckerd
Drugstores, Jean Coutu Group (PJC) Inc. (Coutu) and VCS Corporation and CVS Pharmacy, Inc.
Brand History: JCPenney & Co. was founded in 1902 by James Cash Penney and William Henry
McManus. Penny moved to Kemmerer in 1902 from Evanston to open dry goods stores in the
booming mining town. By 1912 there were 34 Golden Rule stores, but the following year it was
changed to JC Penney when Penney accepted a majority ownership of the chain. From 19151917, the company grew from 83 stores to 175. The chain expanded rapidly because store
managers were allowed to open new stores, keeping one quarter of the profits as soon as they
were successful. This concept led to the store massive expansion and making it the secondbiggest retailer in the country by 1970. Today most stores are located in suburban shopping
malls. However, today the chain stores have been following a retailing trend in opening some
standalone stores. The company is an internet retailer and has changed many things
institutionally to dovetail the dynamic retail environment. JCPenney operates the nation’s
largest general catalog business, as well as jcpenney.com, one of the largest apparel and home
furnishings sites in the internet, with over $1 billion in annual sales. Increased competition from
big box retailers like Wal-Mart and Target have forced JCPenney to focus on private brands such
as St. John’s Bay, Worthington, and Arizona Jeans Company.
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Financial Data:
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JCPenney Annual Report: This report can be seen here:
http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-reportsannual
Key Personnel:
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Ron Johnson-Chairman Executive Officer, Ken Hannah-Chief Financial Officer, Kristen Blum-EVP,
Chief Technology Officer, Janet Dhillon-EVP, General Counsel and Secretary, Benjamin Fay-EVP,
Real Estate, Store Design and Development, Mike Kramer-Chief Operating Officer, Ken
Mangone-EVP, Product Development, Design and Sourcing, Laurie Beja Miller-EVP, The Square,
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Tim Nichols-EVP, jcpenney Stores, John Singleton-EVP, Supply Chain, Liz Sweney- EVP, Chief
Merchant, Dan Walker-Chief Talent Officer
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Recent News: JCPenney stock loses 13% and drops to the lowest price since March 2009. It’s the
latest sign that Wall Street isn’t any happier with Penney’s pricing than Main Street is. The CEO
that took over a year ago, Ron Johnson, got rid of the nearly 600 sales Penney offered at various
times throughout the year for a three-tiered strategy that permanently lowered prices on all
items in the store by 40%. But as the sales disappeared, so did the customers.
Category
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Category definition: JCPenney is in the retail business and is one of the biggest in the industry.
Retail is the sale of goods and services from individuals or businesses to the end-user. JCPenney
is a chain of department stores that sell low to mid range prices of various products.
Size of Category:
Major Players: Dillard’s, Macy’s Kohl’s, Nordstrom, Sears
Category history and growth projection: While the national average of retailer demand
remained stable at a ranking of seven-indicating levels of retailer demand that are slightly above
average, we did see a number of cracks in the façade that our brokers at the local level reported
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to us. First off, one almost unanimous response was that deals were taking longer to get done.
Retailers have responded to big picture economic uncertainty with caution. Secondly, urban
levels of demand were immensely higher than those that we are seeing in suburban
marketplaces. We expect the retail industry to have a drop in the effect of Black Friday sales.
Methods of Distribution: JCP has 13 merchandise distribution centers located across the nation.
The statistics are shown below.
Seasonal Factors: JCPenney’s business has many seasonal factors. The annual earnings and cash
flows depend to a great extent on the results of operations for the last quarter of the fiscal year,
which includes the holiday season. The fiscal fourth-quarter results may fluctuate significantly,
based on many factors, including holiday spending patterns and weather conditions. The
seasonality causes the operating results to vary considerably from quarter to quarter.
Regional Factors: The retail industry is highly competitive, with few barriers to entry. JCPenney
competes with many other local, regional, and national retailers for customers, associates,
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locations, merchandise, services, and other important aspects of their business. The competitors
include other department stores, discounters, home furnishing stores, specialty retailers,
wholesale clubs, direct-to-consumer businesses, and other forms of retail commerce.
Legal Considerations: Examples of possible legislative changes impacting the relationship with
associates includes changes to an employer’s obligation to recognize collective bargaining units,
the process by which collective bargaining agreements are negotiated or imposed, minimum
wage requirements, and health care mandates. Also, JCP must comply with applicable laws and
regulations that could be subject to legal risk, including government enforcement action and
class action civil litigation. Changes in regulatory environment regarding privacy and information
security, product safety or environmental protection, including regulations in response to
concerns regarding climate change.
Major Trade Publications: JCPenney, Every Day Matters, Okie Dokie, Worthington, east5th,
a.n.a., St. John’s Bay, she said, The Original Arizona Jean Company, Ambrielle, Decree, Linden
Street, Article 365, Stafford, J. Ferrar, JCPenney Home Collection and Studio by JCPenney Home
Collection trademarks, as well as certain other trademarks have been registered with the US
PTO.
Products Within Category
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Share of category by product: N/A
Product-from description: JCP sells family apparel and footwear, accessories, fine and fashion
jewelry, beauty products, and home furnishings.
New product introductions: JCPenney announced the launch of Olsenboye, an exclusive new
juniors brand created by Dualstar Entertainment Group founders and designers Mary-Kate
Olsen and Ashley Olsen. They also announced the plan to launch MNG by Mango, a “fast
fashion” brand that will bring European runway design at affordable prices to the stores. Also,
Cindy Crawford’s newest collaboration with JCPenney, One Kiss by Cindy Crawford, has been
introduced. This is a new brand that reflects how JCPenney is answering the growing demand
for fashionable fine jewelry that can be worn every day.
Benefits and appeals of new product: Shown in above paragraph under ‘New product
introductions.’
Innovations: JCPenney has come up with an innovative new business model which embraces
three simple pricing models. This new business model eliminates all sales in favor of everyday
low pricing. This is much like Walmarts pricing strategy. Other innovations include new shops
being rolled out to the stores to make it a unique experience divided by brand.
Recent news about product category: Recent news about JCP is that it is not doing well and
sales are plummeting. Though JCP has rolled out new shops recently and added some new
brands, the sales do not rise. JCP has spent quite a bit of money on marketing but it has not
served them well.
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New Packages: Since JCP has been transforming its ways with Ron Johnson as the new CEO,
there have been many changes to packaging and branding. First of all, the logo changed
completely. It is a symbol of a revitalized brand and projected new personality that honors the
century-old legacy. It is a key element of that personality and it’s fresh, iconic, and evocative of
everything JCP stands for: Fair and Square. This new branding and logo have changed the image
of the store. There was also a point where they had new paper bags every month to celebrate
that month long deal. However, the recently got rid of the month long deals and are sticking
with a different branding technique. In this way, the packaging is changing constantly as the
company follows suit.
Brand Analysis
 Top brands by dollar or unit sales in retail department store industry:
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Growth trends of top brands: The growth trends are seen above.
Category share by country and by region: JCPenney has a market cap of $3.93 billion and is part
of the services sector. Shares are down 50.6% year to date as of the close of trading.
Pricing trends: JCPenney started out being a very coupon and sale based pricing strategy. With
the newly appointed CEO, Ron Johnson, came the elimination of sales. The idea was a simple
three-tiered pricing strategy. The original strategy included month-long values, everyday low
prices and best prices. In the revamp, the month-long values have been eliminated. Now JCP has
a two-tiered pricing strategy because sales fell dramatically with the three-tiered pricing system.
Johnson says “Instead of putting items on sale for an hour or a day or a week, we’re going to
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give the customer an entire month to come in and shop on her terms.” The idea is that every
day is a low price.
JCP in the news: In recent news, JCPenney is getting much bad publicity because its stock prices
are now the worst they have been since March 2009. Many articles are focused on the customer
confusion due to the continuous changes JCPenney keeps undergoing. There is much
uncertainty on what direction this company is going.
Consumer Profile
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Demographics of Users: JCPenney caters to all kinds of demographics because it has products
for males and females of all ages and sizes. The main segmentation is to the low to mid price
range that attracts middle class individuals. However, the main sales come from the older
demographic of women and young children. The store has been viewed more as a family store.
Frequency of purchase/usage: Frequency of purchase differs greatly among what type of
shopper. Heavy shoppers may go a few times a year and some shoppers may rarely buy from
JCPenney. For clothing, the frequency of purchase is much higher
Place of purchase: Online or in stores
Heavy user profile: Mostly older aged women with families.
Awareness and attitude towards brand: Overall, awareness of the brand is very good. However,
the loyalty of the brand has been shaken greatly. With the new changes in management and
pricing, customers are confused and currently have a negative view of the brand as a whole.
JCPenney also recently created a new logo and is reestablishing itself and its brand. Though
brand awareness is high, attitudes are not good.
Decision markers vs. purchaser: On average for clothing, the decision maker is the woman and
the purchaser is the woman. For other items such as furniture and appliances the decision
maker is usually the man.
Normal purchase cycle: Purchase cycles spike around holidays and back to school times. Since
there are no more sales and coupons, those do not affect the normal purchase cycle. Heavy
shoppers may go a few times a month.
Brand loyalty/switching: Those who are very loyal to the JCPenney brand have been shopping
there for decades and it has become more of a family store. The only reason to switch recently
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has been due to the confusing changes with the pricing and leadership model for the company
as a whole.
Advertising/Marketing Communications
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Creative strategies of top brands: Macy’s marketing campaign is more focused on the “magic of
Macy’s”, meaning that the products are special and cannot be found anywhere else. The overall
branding is seen in a better, clearer light. JCPenney commercials on the otherhand are confusing
and just have actors and actresses dressed in clothes with little to no verbal action. The creative
strategy should be geared more to their low prices and two-tiered pricing model to lessen the
confusion with the customers. Kohl’s commercials focus on the sales and prices of their
products. Also, Nordstrom commercials tend to give the clean, high end feel of products.
Specific promises, appeals, claims, special effects: JCPenney is focused on becoming ‘America’s
favorite store” by treating everyone “fair and square.” Other trademarks JCPenney has are
included earlier in the report such as “Every Day Matters.” Instead of focusing on sales,
JCPenney wants to serve its customers with honest pricing, the lowest they can get. There is also
one happy return policy: taking back any item, anytime, anywhere with no hassle.
Examples of past and current executions: The following is an example of an old JCPenney ad
that was executed in 1977:
An example of a current ad is as follows:
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Media
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Category and brand spending: This information can be looked at in the financial report found in
the annual report.
Seasonality: All seasons
Regionality: N/A at present
Media employed by top brands: Billboards, TV commercials, magazines, social media, blogs
Spending patterns: Continuous
Spending compared with market share: In the recent year, JCPenney has had a marketing push
to advertise its new pricing model as well as the new changes happening to JCPenney such as
the new brands and shops within the stores. This has taken a large amount of money to push
through, especially compared to the competition.
Success rates of promotions: It has been a year since Ron Johnson’s tenure as CEO of JCPenney,
and the results of the JCP promotions aren’t promising. Its share price has fallen more than 10%.
BIGinsight, a consumer research firm, released the latest iteration of its Consumer Equity Index,
which identifies how different retailers are viewed by various market segments. In this case,
they polled more than 9,000 women for their opinions about which stores they prefer when it
comes to clothes shopping. The number of women identifying JCPenney as their favorite
clothing store dropped more than 13%. It is believed that taking away the deals and coupons
hurt the company because shoppers have been educated to expect those gimmicks and promos
for motivation to shop.
Promotions
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Promotions used in category: JCPenney has many promotions such as free haircuts for kids all
of August. They also had month long deals on special items. They also participate in good causes
like rounding the change to donate to a nonprofit organization. These brands help amplify the
brand loyalty of consumers to JCPenney.
Major brand promotion types and examples: Some examples are mentioned above such as free
haircuts for kids all of August, rounding your change to help a good cause, and month long
deals.
Success rates of promotions: Promotions have been successful with PR and consumers are
happy with the way JCPenney treats them. However, the pricing model still remains to confuse
the customers because they are so used to a retail environment driven by coupons and special
deals that JCPenney has eliminated. JCPenney’s ads are slowly adapting to clarify the confusion.
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Internet and New Media
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Website & purpose of site: JCPenney has an excellent website, jcpenney.com, that the entire
world can easily access. At the JCPenney website, customers are able to place online orders and
search for the merchandise they want. They are also able to be informed of any changes in the
company and other information they post on the website. It is used to promote the JCPenney
products and help drive sales.
Ecommerce activities: On JCPenney’s website consumers actually can have free shipping for
orders greater than a certain amount. Consumers can order almost any item they want and can
choose to pick it up in any store at any cash register.
Social media activities: JCPenney utilizes social media portal such as facebook and twitter to
update consumers about new products and news releases that are currently happening around
JCPenney. It is used to promote the sharing of ideas and any other customer wants and
grievances in a quick, free, and easy way. It is effective in promoting the brand.
Interview with JCP Store Manager
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Interview with JCP Store Manager, James Jackson
Mindy: “What do you feel is the main struggle with the JCP brand?
James Jackson: “I think there is definitely struggle with the customers acclimating to the numerous
changes that have happened to JCP in the last year. There have been changes in management, pricing,
and overall structure of the company. Transitions are hard to go through but I believe in Ron Johnson’s
vision of JCP being America’s Favorite Store.
Mindy: “What do you like or dislike about JCP advertisements?”
James Jackson: “In the recent past, the commercials have been confusing because they do not focus on
explaining the new pricing strategy. However, they do seem to fit a good theme. We used to have a
color of the month but now we moved on from the month long values to a two-tiered pricing system. I
like that we moved on from it because it was a big hassle changing the entire layout of the store every
month.”
Mindy: “Where do you see JCP in a few years?”
James Jackson: “Now that we are rolling out new shops within JCPenney, it’s becoming a unique
shopping experience that the customers are happy with. If we continue to give outstanding
customerFIRST service, then we should do well in the future. JCP has spent quite a bit of money
marketing itself and its involvement in good causes such as donating money to a nonprofit organization.
I also see JCP marketing a lot more to the younger teenage generation, so it’s great to have all ages
come in and shop at the store.”
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Brand Value
The JCP brand value has decreased over the years. As seen in the graph above, the brand value has
decreased by $2.652 million. The reason is because the CEO, Ron Johnson had a good idea in trying to
shake up JCPenney’s image in the mind of consumers, but they attempted to change too much at once
and are now paying the price. Instead of fixing JCP’s problems, the changes have had a disastrous impact
on the company’s first quarter performance. This led to a loss of 5% of its preference share among
female shoppers from April 2011 through April 2012, while Macy’s increased its share by 43% and Kohl’s
by 14%. However, there is still confidence that the turnaround may prove successful. Timing is
everything.
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Brand Exploratory
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Brand Collage
The images for the brand collage were chosen because they embody what JCPenney is known for: being
fair and square and treating their customers with great care.
 Personal Interview: (Refer to the interview with JCP store manager, James Jackson)
 Focus Group: A focus group of eight respondents was conducted to get a better understanding
of how JCPenney is perceived among college students. All of the respondents said they have
been to JCPenney at least once. Of all the respondents, all say they do not go there regularly.
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Three said their parents go there sometimes but they themselves don’t particularly enjoy going
there. Most of the respondents agreed that they would rather go to Macy’s than go to
JCPenney’s. Many of the respondents also said that they do like the prices at JCPenney but they
are a little confused with why there are no more coupons or sales. Most also agreed that they
would rather go to a store that offers coupons because it gives you more incentive to walk in
and use it, even if it is the same price as JCPenney offers.
Recommendations
From my exploratory research, it seems like the majority of people perceive JCP as not one of their top
choices for shopping. In reality, this store should be making lots of sales and have loyal customers due to
its honest pricing. However, since consumers are used to playing the ‘retail game’ of discounts and
coupons, there has been less incentive for customers to shop at JCP, diminishing customer loyalty. JCP
has a long history of being a great family department store to shop for everyone in the family. With this
in mind, JCP should continue focusing on marketing to the family but also expand to the teenagers and
preteens to break the tradition of it only being a store for very young kids and elderly customers.
Consumers are also confused about all the changes that JCP is undergoing. However, once the newly
established brand is well received by the customers, JCP can do very well with its innovative new take on
retail. Brand awareness needs to be gained and the pricing strategy and the direction JCP is going needs
to be more clearly communicated to the consumers. The idea I get from secondary and primary research
is that the commercials are confusing and recall is very low.
In order to beat their main competitors that include Nordstrom, Dillard’s, Macy’s, and Sear’s, they must
rekindle the relationship with their loyal customers they have had for decades. There needs to be wiser
allocation of money spent on marketing. Though there is quite a bit, more needs to be done with the
ads to be more informative than entertaining. In terms of pricing, I would recommend going back to
having deals and coupons to drive customer traffic in stores. For now, they have no incentive to shop at
JCPenney other than the low prices, which are comparable to Macy’s. By doing these tasks, brand
awareness and brand image will be much more positive and ultimately JCP may attain its goal of
becoming America’s favorite store.
Works Cited
http://www.fundinguniverse.com/company-histories/j-c-penney-company-inc-history/
http://historyofbusiness.blogspot.com/2007/03/history-of-jc-penny.html
http://quote.morningstar.com/stock-filing/AnnualReport/2010/1/30/t.aspx?t=XNYS:JCP&ft=&d=de11e7d1befbb6e54e070e58b064cdea
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http://www.ctbt.com/Web/Download-Research-File.aspx?id=8EDC4BFE-22DE-4B89-918ECFD2C20E571A
http://www.interbrand.com/en/BestRetailBrands/2012-Best-Retail-Brands.aspx#page-wrap
http://adage.com/article/news/jc-penney-abandons-tier-pricing-strategy/236341/
http://www.dailyfinance.com/2012/10/18/women-are-fleeing-coupon-free-j-c-penney-new-pollreveals/
http://www.thestreet.com/story/11783651/1/jc-penney-co-inc-jcp-todays-featured-retail-winner.html
http://brandirectory.com/profile/jc-penney
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