Marketing Plan

Steven Yu □ Taryn Keim □ Vinh Ta □ Christina Najera

BACKGROUND

The JC Penney brand was established by James Cash Penney as a single store in 1902; over a

hundred years have passed since then, and the brand has flourished into a chain of more than 1,000

department stores across the country. JC Penney carries everything from men and women’s

clothing to family footwear, fine jewelry, kids’ apparel, and home furnishings. Unfortunately, the

once thriving, memorable brand has faded into the background while its competitors, Macy’s,

Kohl’s, Sears, and Target, have shined.

SITUATION ANALYSIS

WHAT IS THE PROBLEM?

The “New Look, New Day, Who Knew!” campaign, launched early in 2010, was supposed to

bring shoppers to JC Penney, and the campaign succeeded. However consumers were disappointed

when they arrived at the store and experienced the same tired, apathetic JC Penney. Our big idea,

riding the coat tails of an incredible store overhaul and transformation from the current “JC

Penney” to a new “JCP,” refocused the store as a place where women would not only want to shop

for affordable styles, but a brand to incorporate into their lives. According to our survey people

responded very unlikely to shop at JC Penney in the future, not only for clothing, but for all products

JC Penney has to offer. Therefore it is apparent that JC Penney needs to reinvent their image.

During the financial year ending in January 2010 (FY2010), revenues stood at $17,556

million, which was a decrease of 5% compared to 2009. The company had employed a strategy to

lower the amount of clearance selling and other unprofitable discounting which may have led to the

decrease in revenue when combined with current weak consumer spending in the market. In

FY2010, operating profit was $663 million, a 41.6% decrease compared to 2009. Net profit stood

$251 million, a 56.1% decrease compared to 2009.

In the U.S retail industry, most multi-store chains, like department stores are often publicly

traded. The major industry leaders include Sears Roebuck & Co., JC Penney Company, Macy’s Inc.,

and Kohl’s Corporation. Other considerable industry players are Cost Plus Inc, Dillard’s Inc,

Gottschalks Inc, Mark and Spencer Group PLC, Saks Incorporated, The Bon-Ton Stores Inc, and The

TJX Companies Inc.

In the beginning of 2005, department stores began to see a heavy decline in sales. NPD, a

market research group reported that 2.5 billion dollars in sales were lost due to the recent growth

of discount stores and specialty retailers.

Our qualitative research suggests that our target actively seeks bargains when shopping,

regardless of what specific items they’re shopping for. Our survey data supports this notion. When

asked how the respondents feel over several factors regarding all clothing stores, the “price” and

“quality” factors ranked as the most important.

The key to fully understanding any industry is to know what the competition is doing in

terms of marketing, positioning, and their competitive advantages. By discovering these insights,

one can find a niche where no other brand is living. Although JC Penney has many competitors we

chose to focus on the ones we felt were primary competition to them, Kohl’s, Macy’s. Target, and

Sears. According to our survey, people were most likely to shop at Target, with 31% responding

“Quite often” when asked how likely they were to shop at different stores. This is followed by 36%

replying “Sometimes” to Macy’s. JC Penney and Kohl’s tied for the least likely to shop at with 35%

responding they would “Never” shop at these stores.

PRIMARY COMPETITION

KOHL’S: EXPECT GREAT THINGS

Kohl’s operates 817 stores in 47 states. In 2007, Kohl’s began to remodel more than half of

their stores to increase customer appeal and to encourage a better shopping atmosphere. Kohl’s is

constantly looking to improve their stores and to keep up with fashion trends, all while keeping low

prices (Kohl’s Careers). Kohl’s bases their strategy on affordability and value. Because of this, many

services that higher-end department stores might offer are absent from Kohl’s. They do, however,

offer a gifting service that can include gift wrapping and/or delivery (Product Page). When asked to

rate different factors of shopping we felt were most important on our survey, most respondents

rated Kohl’s to be “Neither Good nor Bad” or “Good.”

MACY’S: THE MAGIC OF MACY’S

Currently, Macy’s operates over 800 stores in the United States (Macy’s: A History). Macy’s

considers itself to be on the higher-end of retail than JC Penney, Kohl’s, or Sears and, thus, offers

more high fashion labels such as Polo Ralph Lauren, Lacoste, Perry Ellis, and other lines of similar

stature. As a full-scale department store, Macy’s offers full lines of apparel, furniture, cosmetics,

bed and bath, and electronics. Additionally, most stores have a café and dining area to enhance the

shopping experience. In our survey, Macy’s got the most responses of “Good” and “Very Good”

when asked about the important factors of the store.

TARGET: EXPECT MORE PAY LESS

Target got its name because it was to hit the bulls-eye of retail goods, quality, price, and

overall shopping experience. Over the next 40 years, Target becomes one of the more innovative

department stores. It experimented with “pop-up shops”, Target stores that opened for a limited

time on venues such as large cruise ships. They continued to grow and expand their offerings and

now include a partial grocery store within their stores. Target has done a beautiful job of offering a

low price on all of their products while still maintaining a high level of quality (Target: Company:

Our History). In our survey, most respondents are very pleased with Target and was rated “Good”

on almost every factor.

SEARS: SHOP AT SEARS AND SAVE

Through the 20th Century, Sears flourished as they began offering their previously mail-

order only products in-store, becoming a large scale department store. Sears expanded throughout

the country and into Europe, Canada, and South America. Currently, Sears operates over 860 mall-

based stores as well over 1,000 smaller, specialty stores (Sears History). According to our survey,

people are indifferent on how they feel about Sears and the majority of responses on the factors

were “Neither bad nor Good.”

SEGMENT, TARGETING, AND POSITION

WHERE DOES THE PROBLEM FALL?

The image problem that JC Penney faces is relevant to all age segments, including current JC Penney

shoppers, and non-JC Penney shoppers. Our primary focus is to solve this problem for a target of

men and women age 18-24. Secondary targets include 25-34 year old men and women. Women

play a primary role in the retail industry by shopping for all members of the family, including

themselves.

SWOT ANALYSIS

STRENGTHS

Price, clothing at an affordable charge: JC Penney strives to be America’s first stop for shopping by

selling stylish, yet affordable clothing. Due to the company’s size, it is able to promote unique

designers, exclusive to JC Penney, allowing prices to maintain a lower average compared to other

retailers.

History: Being an older company, JC Penney has a trusting brand. Customers can feel comfortable

shopping at a well-known department store. With the original name “The Golden Rule,” this

company has been able to maintain a loyal customer over the years.

Location: With over 1,000 stores spread across the United States and an online store, JC Penney is

within a reasonable distance to a majority of American’s. By being in the best locations they are

able to get high in-store traffic.

Variety of Products: This department store offers a convenient “one-stop-shop” for its customers.

Every member of the family, and not to mention every room in the house, is easily shopped for at JC

Penney.

Constant Promotions: Each JC Penney (depending on location) offers coupons, sales, additional

percentages off, and special deals regularly to promote the great prices JC Penney offers. Constant

sales keep the company ahead of its competitors.

WEAKNESSES

Inside Appearance: Many locations are old, and need an overall good cleaning up. From the old

tile floors to the consistently dirty fitting rooms, many stores need everyday attention. The layers

and layers of walls within each department make the layout confusing for the customers. The

inside decorations (i.e. tile, glass, walls, carpet, etc) is unwelcoming and outdated.

Lack of Organization: As previously stated, fitting rooms are always left unattended and uncared

for. Within each department, there is an overload of racks, which are completely filled to the

maximum amount. Many items get scattered throughout the store and never return to their

original department.

Overwhelming current target focus: When asked about JC Penney, many of our surveyors noted

that JC Penney sells children and “old people” clothes. This is primarily due to the target JC

Penney’s has for a majority of their commercials and ads. A great amount of the company’s focus is

to the middle age group, family-minded, consumer-which dilutes opportunities for new customer.

Confusing store layout: The home furnishings department is usually at the top level and

unapparent to customers on lower levels. Poor layout construction throughout the store makes it

hard for the customers to jump from one department to the next.

OPPORTUNITIES

Recession outlook: Due to the economy’s recession, JC Penney’s has the opportunity to convert

other stores customers to their own due to low prices. The prices allow the customers to keep

shopping with JC Penney as they would with other high-brand department stores.

New Technology: In the year 2010, JC Penney launched their mobile commerce site m.jcp.com.

This allows the on-the-go customer to always be close to shopping. With a huge inventory, JC

Penney is a prospect for keeping the best up-to-date system of customer records, and each stores

stock.

New Focus: By bringing in different and more exclusive brands, the company will draw in new,

more stylish customers.

Social Media: With millions of users on facebook, twitter, and other social networking sites, the

current marketing strategies are endless. Both Facebook and Twitter allow a low-cost but high-

profit opportunities if executed properly.

THREATS

Competition: Other companies are taking the recession as a starting point to do what JC Penny’s

has done all along- sell affordable fashion. Target stores have brought in several new designers to

update their young clothing departments. Kohls have done the same thing with high –end

designers such as Vera Wang. Macy’s is a huge threat due to their numerous locations, and

dominance within the retail world.

Hard Economy: People are overall cutting back, spending less on the unnecessary “extras” starting

with new clothes, shoes, accessories, and home furnishings.

Small Stores: JC Penney has a non-personal shopping experience. If a customer wants a one-on-

one shopping stylist, JC Penney will not be the store of choice. Although the company employs over

150,000 people, it is hard to find attention within the departments. Small boutique stores will have

the client-professional relationship with each individual.

4 P’S: PRODUCT, PRICE, PROMOTION, PLACE

PRODUCT

JC Penney is in the business of offering services and selling retail goods to its customers through its

catalog, department store locations, and the online website jcp.com. They provide affordable

jewelry, clothing, footwear, home furnishings, and accessories, as well as an in store Sephora, salon,

portrait photography, custom decorating services, and optical services for eye exams and eyewear.

PRICE

The company wants to serve its customers with style, quality, and great value with affordable prices

for both their fashion and home accessories. JC Penney strives to be known for providing

fashionable clothing at affordable prices.

PROMOTION

JC Penney runs weekly newspaper catalogs of the up-to-date styles and sales within local stores.

They run various television commercials advertised on multiple networks. JC Penney currently has

accounts on both Facebook and Twitter which allow them to easily reach their followers to keep

them up to date on all promotions. Daily emails are sent to customers on their emailing list, and

cardholders informing and offering the current sales promotions available. JC Penney offers “cash-

off” incentives, when you spend certain amounts.

PLACE

The company is currently one of America’s leading retailers, operating over 1,100 department

stores across the United States and Puerto Rico. A majority of the locations are within malls,

however some are free-standing locations. Spring 2011, JC Penney stores will open in Daly City,

California and Glenarden, Maryland. In the fall of 2011, another Store will also be opening close to

the company Headquarters, in Dallas, TX. JC Penney also plans on opening several more stores by

2014 to overall increase sales revenue. Here is a current map pointing out store locations:

IMPROVEMENTS AND SOLUTIONS

In order to make JC Penney a top-of-mind brand to shoppers in the target, age 18-34, we need to

move past the barrier that has already been created by our previous campaign of “New Look. New

Day. Who Knew?” Currently, consumers are aware that JC Penney exists, but they do not consider

JC Penney to be a desirable place to shop, even though prices are low.

It is important to start re-inventing the store as a place that has stylish, fashionable products at

compelling prices, and that is overall a resource that these shoppers can relate to. It is imperative

that as our target becomes re-familiarized with the brand. Our advertising addresses the

discrepancy between our previous advertising’s promise and what was actually delivered to

customers in the store.

We need to regain consumers’ trust. Consumers feel that the store is old, outdated, and that the

clothes are either frumpy and for older generations, or geared toward tweens and teens. The older

generation of consumers are loyal customers, and have been shopping at JC Penney for years and

feels they can satisfy their shopping needs in the store. The younger generation is starting to

believe JC Penney is a store for them because some of our more current campaigns have been

successful at effectively targeting them. We now need shoppers age 18-34 to find truth in our new

marketing plan, which showcases in-store changes as well as new shopping-related technology and

a plethora of appealing clothing and home options.

We want the marketing plan to increase brand equity so that our target consumers will have

positive feelings about the JC Penney brand. We hope that once the target has changed their

perception of the brand, we can maintain our advertising efforts, and in turn drive traffic to both

the stores and the website to generate ever-increasing sales. We want to advertise to ensure that

consumers keep returning to shop at JC Penney so that JC Penney can continue to provide great

service, value, products and style to the target.

Ultimately, the goal is to increase customer loyalty. Once we get consumers into the newly

improved JC Penney stores we believe we will hook them with all the major store changes and

improvements, and we will be able to get them to keep coming back to build and maintain their

relationship with the store. Once we have created an influx of new customers coming in due to our

new advertising campaign, working on customer retention is the next task because loyal customers

will bring repetitive business and provide positive word-of-mouth advertising in the community.

Overall, the main goal of the entire campaign is, of course, to increase our market share and rise

above our competition. Once we have changed the current negative perceptions associated with JC

Penney, we want to constantly improve and maintain a favorable image in the public eye so that we

can continue to capture more and more of our competitors consumers and increase our market

share.

By increasing brand awareness, and reinventing JC Penney as JCP with a fresh image, we hope to

convince the target that JC Penney has changed, and is the place for them to find style at an

affordable price. Through both traditional and non-traditional media, we will reach the target and

create awareness for the new brand image.

ADVERTISEMENT

ONLINE MARKETING AND SOCIAL MEDIA

JC Penney has to recognize, and take advantage of the means of marketing for the target market is

paying attention to. For non-paid social media advertising efforts, we plan to have a greater

presence on Facebook and Twitter. As of now, JC Penney competitors including Target, Kohl’s, and

Wal-Mart all have a stronger presence on Facebook. On Twitter, Target, Macy’s, and Old Navy also

outrank the JC Penney following. The above charts show many improvements available for JC

Penney on its online media advertisement. JC Penney needs to expose the positive company image

better to its target to win the popularity and market share. Online social media is one big part of

most youths’ daily lives today.

An important finding regarding media consumption is that 18-24 year-olds are two times more

likely to watch online streaming video than 35 year-olds or older. Facebook users are twice as likely

as the average American adult to shop at H&M. Twitter visitors are 3.7 times more likely to shop at

Nordstrom” (Simmons Social Media Report). These women are not interactively involved with JC

Penney, but they are involved with competing stores. JC Penney must recognize this and up their

social presence.

We want to reach the consumer to introduce our technological additions to JCP while they are

already browsing the Internet, and therefore more receptive to exploring other online innovations.

Other online sources our primary and secondary age groups visit such as Pandora.com (Online

streaming radio) can also be JC Penney’s advertising partners. Through using these already existing

advertising outlets it will direct more traffic to jcp.com to increase online interest and sales.

SMART PHONE APPLICATIONS

Cell phone devices are also the hits among the youth. JC Penney can design the company smart

phone application to help the consumer easier to find the style they need. A few touches on the

smart phone screen helps a customer to select and match the outfit he or she wants and avoids to

visit a store just to spend time in the dressing room matching the clothing.

STORE ATMOSPHERE AND LAYOUT

The overall atmosphere of JC Penney completely disconnects the store from its shoppers. JC

Penney must change its image if they want consumers to choose them as a place to even consider

shopping. Due to the current condition of the store, consumers do not feel comfortable and often

will not even stop to look around, and the most contact they have with the store is passing through

to go elsewhere in the mall. JC Penney needs to focus on the primary and secondary age groups of

18-34, and appeal to the younger age groups with fresher and braver taste.

How comfortable of an environment determines how long the customers will want to stay.

Improvements in this category include cleanliness, lightening, couches, or even a living room like

lounge among the clothing and displays. Uniqueness of the store design will embrace the tastes

that appeal to all different age groups, including our primary and secondary target markets.

STYLE

When we are able to drastically improve the style of the store in ways like updating interior

decoration, re-structuring store layouts, or implementing serious employee training the impression

will be made on these shoppers that the store has changed for the better, and that impression will

last. Once the store is redesigned, it will create a better atmosphere and experience for the shopper

to find stylish clothing for less. The most important benefit of spending less on their clothes is that it

allows them to get the most out of what they wear and create several great-looking outfits for less

than they would spend at other stores.

CONCLUSION

We plan to improve every level of the brand, finally giving customers a chance to truly interact and

connect with it. To evaluate our overall effectiveness, increases in online and in-store sales, as well

as store traffic. Looking past raw sales percentages, the goal of this was to change the image of the

JCP brand. If this goal is accomplished, sales numbers will follow suit. We will monitor brand

perception through measurable statistics specific to each media execution.

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