J.C Penney Store Pricing Strategy

Business organizations engage in various strategic ways to increase their profitability margins. One major and integral way involves the use of marketing or promotion strategies where a company employ plans and decisions to come up with tools or models that can be used to increase the sale of their product to potential customers. There are various marketing strategies which includes among others, lowering of prices, offering free gifts and discounts, advertisements and market penetration.
Among these marketing strategies, most companies have continually and successfully used pricing strategies to retain the existing customer and to also attract new customers. Product pricing is a major area where marketers use to help boost their profitability. They set prices that are competitive enough to persuade customers to choose their products over their competitors. This can be done by permanently offering slightly lower costs than those of the competitor or offering products through sales offer where prices are cut by large percentages for a short period of time.
Example of a company that has undertaken a pricing strategy recently is J.S Pennel store where the company’s CEO Ron Johnson announced the impending plans to their potential and new customers. Johnson said that the company had decided to change their pricing approach by coming up with promotional prices that aimed to attract their customers to buy their products throughout the year different than the way they had to wait for a sales or promotional season in order to buy the item in the store.
He said that this followed after they noticed that contrast to the many customers frequenting their store during the period when there were promotional or sales offer which are accompanied by low prices, they attracted very few daily basis customers coming to the store to buy their products.
The CEO added that having done a thorough research to find out their customer demand behaviors, they noted that many of this customers had adopted a fluctuating demand where they reluctantly fail to enter the store during any other days and put their mind set on the sale offer period and they and which greatly affected their overall profitability at the end of the financial year. The store’s management had also noted that this was a trend in many other departmental stores and they wanted to adopt a different marketing strategy that would also serve to meet the customers satisfaction at all times.
The J.C Penney pricing strategy involved a combination of strategies that included a sale offer for all the items in the store offered two times a month on two specific days which was aimed to attract the customer throughout the twelve month in a year. in addition, the strategy also involved a permanent price reduction for specific items which would be marked in red which was aimed to attract customers on a daily basis to ensure that they did not only wait for the two days in a month to get into the stores and lastly, a 40 percent price reduction offer for items that were on high demand to retain customers and to satisfy their needs.
Mr. Johnson added that even though the new pricing strategy would first implicate a financial constraint to the company due to sudden reduction of prices, it would successfully help to boost the overall sales in the long run since the potential customers would be persuaded to frequent the store many times to look for the items on offer and this would create a golden opportunity for them to see and probably buy the company’s new products.

Work Cited
Rafi, Mohammed. J.C. Penney’s Risky New Pricing Strategy. Businessweek, January 30th 2012. Web



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