J.C.

Penney’s “Fair and Square” Pricing Strategy

Group-7

Ayush Singla PGP10076

Benison PGP10091

Manavi Singh PGP10092

Shema Kanak Lakra PGP10110

Swarnajit Saha PGP10100

Siddharth Kashyap PGP10120

 Introduction and 5C’ Analysis
Company:
• Founded in 1902 by James Cash Penney
• It has largest departmental store chain
(over 1100 stores) as of 2012
• Around 400 stores were located in small
towns and remaining 700 in major cities
• They offer wide range of products and
service
• Offer services through online medium as
well as physical stores.
Customer: Collaborators
• Existing customers are very • The upstream suppliers to
price sensitive and well JC Penny.
adopted the idea of
promotions, discounts and
offers.
• Over the past 10 years, the
average discount to customer
to buy went from 38% to 60%
• The customers were not able
to accept the positioning of
“Fair and Square” pricing.
Competitors
• High competition from lower-end
stores like Walmart and Target and
higher-end competitors like Macy’s
and Nordstrom.
• Emerging international retailers in US
market such as H&M and ZARA
• Price war from fast-fashion
merchandising and speciality stores
like Gap
• Marking the original price and
discounted price of the product to
show saving of the customer- Kohl’s
Context
• High competition in the retail
segment therefore each company
has its own strategy to attract
customers specially by offering
lower prices and discounts.
• The emerging competition evolve
other channels like e-commerce
and omnichannel to reach its
customers.
• Customer are deep rooted with
the idea of promotions and
discounts.
 Decision Problem

We have found two primary Decision Problems in the case-

• To regain customer loyalty and

increase revenue to rebuild the
investor’s trust
• Should Johnson stay on the
current course of his
repositioning efforts at JC Penny
 Alternatives

We have two alternatives for the decision problem-

• Discontinue the Fair and Square method of pricing and move

back to old high low-price strategy
• Continue the Fair and Square method of Pricing and see the
results in future and than take further step
 Evaluation of Alternatives
Move back to old high low-price strategy
Pros
• Customers were already familiar with this
strategy
• Allows JCP to use price discrimination to
maximize the average price paid by customers
who differ in their willingness to pay.
• Allows J.C. Penney to retain its traditional
customers.
Cons
• The company was increasingly losing its
capability of withstanding competition from its
competitors
• Even less price-sensitive consumers have
become savvy about waiting for sales or
comparing prices across retailers
• JCP spent over $1 billion on price promotion, and
the customer didn’t even pay attention.
Continue the Fair and Square method of Pricing
Pros
• 69% of shoppers feel that the best prices are
difficult to compare with non sale prices
• 71% have notices positive changes
• Simplify JCP’s pricing structure and make it
more straightforward for customers to shop
• Saves budget on promotions which can be
used to offer more benefits to the customer.
Cons
• There was a communication gap
• Customers were not clear about the pricing
strategy
• If competitors drop prices on comparable
products, JCP’s can’t respond
 Recommandations

The EDLP program should be apply with some additional features like:

o Handing out coupons

o Bringing back commissions for salespersons

o Increasing online presence

Before taking any decision on increasing and renovating stores they ought to first mapped out
the pricing strategy. As, postponing the renovation will give them opportunity to judge and
analyze the market to form better plans in the short term.
Thank You