JCPenneyMarketingPlan TableofContents(PleaseDONOTwriteintheTableofContents!Thankyou.) ASAGROUP,WEAREFOCUSINGOURARGUMENTONTHEFAIR&SQUAREPRICING CAMPAIGN. ExecutiveSummary.AshliEdwards CompanyDescription.AshliEdwards StrategicFocusandPlanKathrynCollier SituationAnalysis.ToriGlover a. SWOTAnalysis..ToriGlover b. CompanyAnalysis..ToriGlover c. CustomerAnalysisToriGlover d. CompetitorAnalysisToriGlover e. AnalysisMarket..ToriGlover. i. Economic..AshliEdwards ii.

ii. TechnologicalAshliEdwards iii. Political.AshliEdwards iv. Cultural..AshliEdwards v. PortersFiveForces.AshliEdwards MarketProductFocus.MarwaSalem a. Marketing&ProductObjectives.MarwaSalem b. Target.MarwaSalem c. PointsofDifference..MarwaSalem d. PositioningMarwaSalem MarketStrategyProgram...HaolinGuo a. 4Ps..HaolinGuo FinancialData&Projections.SarahFlynn a. PastSalesRevenue.SarahFlynn b. 5YearProject..SarahFlynn Organization....AshliEdwards ImplementationPlan....KathrynCollier Evaluation.KathrynCollier CreativeBrief(?)............................................................................................ Appendix..

ExecutiveSummary
J.C. Penney Corporation has undergone a transition to set the department store apart from its competition. Within the retail industry, it is difficult for a company to disband all former designs, marketing plans, and store atmosphere to start afresh. However, this is exactly the case for J.C. Penney. J.C. Penney, also known as JCP, has started afresh with a new CEO Ron Johnson, who came from a successful innovative company and now uses that success at the forefront of the retail department industry. The company has experienced massive changes which took effect in February 2012 and revolutionized, store environment, organizational configuration and the pricing and promotion structure of the store. These rapid changes have not proved beneficial for JCPs success over the last couple of years. Previously, J.C. Penney has offered to customers sales promotion in-stores and online. Sales and discounts are more streamlined manageable set of monthly specials, instead of the weekly promotions the department store offered in the past. Low prices have replaced sales and coupons which consumers are not familiar with. The marketing plan focuses on how J.C. Penney proceeds to reposition the organization against Macys, Kohls, Target, and Walmart by re-correcting the pricing strategies introduced as a part of the Fair and Square campaign. This marketing plan examines potential risks and challenges of re-correcting the new pricing strategy as well as suggested implementation.

CompanyDescription
J.C. Penney was founded in 1902 by James Cash Penney. From the beginning of the companys inception, the department store has grown into a major retailer, with 1,104 stores and approximately 116,000 employees as of February 2013. The company specializes in selling merchandise and service through its department stores and online website, www.jcp.com. J.C.

Penney Corporation is on the New York Stock Exchange as JCP. The stores product mix includes a wide variety of merchandise and services including apparel and footwear, home furnishings, jewelry, accessories, and beauty products through Sephora. The company also offers in-store services such as optician, photography portraits, custom decorating, wedding and baby registry. The retail store operates through a network of 1,104 department stores and direct channels in United States and Puerto Rico as of February 2, 2013. The companys direct channels include internet (www.jcp.com) and catalog format. Both department stores and online website serves the same type of customers and offers the same merchandise mix. The department stores also accept returns from sales made from department stores, internet and catalogs. During the fiscal year ending in 2012, Womens apparel accounted for 23% of the companys total net sales, followed by Mens apparel and accessories (21%); Home (12%); Womens accessories, including Sephora (13%); Childrens apparel (12%); Family footwear (7%); Fine jewelry (7%); and Services and Other (5%). The following table (Exhibit 1) lists the total sales over the past three years: Exhibit 1: Total Sales from 2010-2012
2012 2011 2010

Women's apparel

23%

25%

24%

Men's apparel and accessories

21%

20%

20%

Home

12%

15%

18%

Women's accessories, including Sephora

13%

12%

12%

Children's apparel

12%

12%

11%

Family footwear

7%

7%

7%

Fine jewelry

7%

4%

4%

Services and other

5%

5%

4%

Total

100%

100%

100%

Through these integrated channels, the company offers a wide collection of national, private and exclusive brands. J.C. Penney operates 13 merchandises distribution centers, 5 regional warehouses and 4 jcp.com fulfillment centers. The regular retail department stores and outlet stores operate within 49 states of United States and Puerto Rico. A square footage of all locations totaling approximately 111.6 million square feet represented in Exhibit 2.

Lately, J.C. Penney has suffered due to the recession which plummeted sales and profits for

the retailer. In order to regain market share and revamp the company, J.C. Penney Board of Directors hired Ron Johnson, former head of Apples retail stores and former Target executive, as CEO. Ron Johnson set out to rebrand the 111-year old company by making it more strategically competitive against J.C. Penney rivals who include Kohls and Macys. In early-2012, Ron Johnson introduced a new business plan to transform and reinvent J.C. Penney into a modern retail firm. Johnsons five-year plan aimed for new pricing strategies, promotions, store renovations, logo reimagining and more intimate boutique stores within J.C. Penney. These strategies set forth by Johnson was designed to attract new and existing customers as well as being more competitive in the retail department industry. Johnsons plan envisioned a better shopping experience for customers by remodeling a majority of the stores, eliminating coupons, and introducing everyday low prices for consumers. Johnson attempted to rebuild the J.C. Penney brand by reconstructing from pricing to store layout and design. The Fair and Square campaign suggested the principle the original creator James Cash Penney believed in which was treating customers the way he wanted to be treated

himself: fair and square. By reinventing the retail departments image, J.C. Penney is staking their claim as Americas favorite store. Johnson wanted to bring back JC Penney to the golden age of department stores, when retailers offered truly special experiences that customers loved. However, J.C. Penney transformation is bleak, causing unprecedented droppings in profits as well as poor expectations for investors. After the arrival of Ron Johnson, J.C. Penney was kicked off the S&P 500. J.C. Penneys stock price has dropped to $10.19 as November 26, 2013 from $30.26, $29.44 and $15.69 in 2010 through 2012, respectively. Currently, J.C. Penney is still struggling after firing Ron Johnson for 17 months as CEO. The company is having a difficult time differentiating the organization from existing competition and attracting new and existing customers to the store. At the beginning of 2012, J.C. Penney created a specialty department store experience. During the first year of transformation focused on reinventing all aspects of its business which included product, presentation, pricing and promotion. J.C. Penneys transformation made innovative changes to their merchandise while continuing to edit and add more global brands into our merchandise assortment. During the first year of transformation, the retail department store opened shops such as Levis, Liz Claiborne and The Original Arizona Jean Company. The retail firm implemented unique specialty stores known as The Shops. The Shops are organized around a pathway through the stores known as The StreetTM which includes places to relax, refresh, engage and check out that provides engaging experiences for customers. J.C. Penney concentrated on its pricing strategy while continuing to embrace its foundation on providing merchandise at low everyday prices and delivering even more exciting value through sales, promotions and rewards.

StrategicFocusandPlan
Mission The mission of JCPenney is to drive sales and profit growth by ensuring our customers and our associates always know theyre first in our stores by what we do. Additionally, JCPenney was

founded on the Golden Rule, do unto others as you would have done unto you. Goals In the spring of 2013, Mike Ullman, the newly reappointed CEO of JCPenney, spelled out the companys immediate goals: Reconnecting with the customer via promotional marketing Rebuilding private brands fixing the Internet business with merchandise that matches and extends what is in stores focusing on customer service

Core Competency and Sustainable Competitive Advantage JCPenney is seeking to become Americas preferred retail destination for unmatched style, quality and value. Additionally, JCPenney wants to create a shopping environment that features sought after collections of varied brands. JCPenney wants to sustain these goals by stocking the store with items that customers expect to find as well as having promotional events. Recently, the Company has been putting efforts into improving their home store within each store. JCPenney is also achieving these goals by reconfiguring their website, jcpenney.com. In October 2013, JCPenneys website saw an increase in sales of 37.6% over the same month last year.

SituationAnalysis
SWOT Analysis J.C. Penney offers a widespread collection of family apparel, jewelry, shoes, home furnishings and accessories. The companys strengths are its brand equity, strong presence in the United States and its efficient supply chain. Further, opportunities for the company in international markets will set the retail giant apart from national competition, as well as increasing e-retailing features and developing a better market of private labels. Despite J.C. Penneys many strengths and opportunities, the merchandising firm must worry about high competitive market risk that could

affect the companys growth.

Strengths:

Retail Locations: Within the 50 U.S. states and Puerto Rico J.C. Penney has

1,107 retail locations.

Brand Recognition: Loyal consumers can easily identify with and recognize the

J.C. Penney brand due to the companys great diversified branding and advertising strategy.

Come Back to See Us Campaign: The Come Back to See Us campaign shows

consumers that even when the company realizes it has gone down the wrong route, it is dependent on discovering and catering to the needs of its target consumers to succeed.

Sales Associates: There are always numerous sales people within the

departments in J.C. Penney looking to help every customer they may come in

contact with exemplifying high quality customer service. Check Out Experience: There is always a person to person connection when customers go through the checkout process. There is never the frustration of waiting for a machine to calculate your purchase at a self-serve check out station.
Weaknesses:

Legal Proceedings: J.C. Penney has two on going lawsuits. One with Macys over its launch of Martha Stewart products and a second with Hudson & Broad over the model design of J.C. Penneys Fair and Square campaign.

Chief Executive Officer: J.C. Penney has switch between two different CEOs

within the past two years. The company fired Mike Ullman to gain Ron Johnson. When the company realized that Johnson was causing a down fall in sales and customer satisfaction, Mike Ullman was hired back to help J.C. Penney get back up on its feet.

Pricing Strategy: Under the management of Ron Johnson, J.C. Penney launched its fair and square pricing strategy where there were no discounts or sales need because everything was factored into the given price. There were no more price tags that showed the offered price versus the initial price. Everything was rounded to a whole number and too confusing for consumers to understand enough to become comfortable with.

Opportunities:

Growth: The strategies J.C. Penney implements to achieve its vision for growth

need to change continuously to reflect the shopping culture and trends of the era. Todays consumer population is looking to increasingly for quality shopping experiences at affordable prices, a growth in online retail offerings, and customizable products so as to maintain their sense of individuality within popular fashion trends. Quality Shopping Experience: J.C. Penneys quality customer service sets the retail business apart from competitors and they are known for their fair pricing strategies, which are considerably lower than upscale retailers offering similar quality experiences.

E-Retailing: In the e-retailing sphere, there is growing demand for companies that serve both national and international markets. With the overwhelming popularity of social media, people around the world are learning about quality, affordable brands that might not be available to them in stores near where they live.

Website Enhancements: Though many of popular items are offered at J.C. Penney, allowing users to customize these products to reflect their own personal styles will set them apart from other department stores. Though suppliers offer this resource J.C. Penney can offer the service at a more affordable price. Threats:
Lost of Customer Loyalty: Due to the issues with its pricing strategy some of the companys loyal consumers have went elsewhere to buy products they usually purchased at J.C. Penney. Strong Competition: J.C. Penney has strong competitors such as Macys and Kohls

that are continuing to do well without the challenge of repositioning themselves in the minds of consumers due to a corporate failure. Competitor Analysis The department store market represents over $104 billion dollars in sales. The products offered fall primarily into the categories of mens clothing, womens clothing, home appliances, toys, and much more. The two largest competitors for JCPenney are Kohls Corporation and Macys. Last year, Kohls generated $19.27 billion dollars in sales revenue and Macys generated $20.08 billion dollars in sales revenue, both larger than that of the 11.96 billion dollars generated by JCPenney last year. Kohls is more like JCPenney where they market at a lower income demographic than Macys. However all three stores offer similar varieties of merchandise. Both Kohls and Macys show that not only are they masters in the retail field but they are able to be socially responsible and give back to their communities while doing so. These companies created programs such as My Macys District Grants and Kohls Cares where money and time is donated to different organizations within communities in need to help them reach their long term goals. One can find all this information and more on the corporate websites of these two companies which are simple to maneuver through. However, when one goes on the J.C. Penney corporate site, the experience is not as relaxing. The site is bland and not as user friendly. Company Analysis In the past few years, J.C. Penney has been working on redeveloping its pricing strategy to meet the needs of its target consumer market. Not only was the previous pricing changes implement confusing, it became a threat to the business when consumers were choosing to turn to other department stores other than J.C. Penney causing its sales to drop. The former CEO Ron Johnson, also known as the former head of the retail division at Apple, stepped down after numerous issues arrived within the company including but not limited to the fair and square pricing strategy

implemented during his time. The current CEO of J.C. Penney is again Mike Ullman who is working hard to bring J.C. Penney back to where he left it, if not in a better place than that. Consumer Analysis The ideal consumer for J.C. Penney is someone who wants to purchase quality products at a bargain price. This person can be anyone from your modern day soccer mom trying to save money on new clothes for school or your average grandparent looking for the perfect gift to give for the holidays. The average income for this consumer is between $35,000-$55,000. This consumer is usually someone who has many responsibilities, a busy lifestyle, and goes shopping on occasion to get exactly what is needed. Coupons and sales are huge benefits for the consumer. The express the value of the consumer to J.C. Penney which helps with getting the ideal consumer into these department stores, without the coupons and deals, there is not much the consumer seeks from this establishment that would not be available elsewhere. Sales, coupons and discounts are a huge component of the company that allows the consumer to connect with whats being offered.

AnalysisMarket
Retail structure is continually changing dramatically due to the diversified retail formats, increased size of retail stores, new technological developments, and the changes in consumer behaviors.

Economical
There are many economic forces in the retail sector which plays a key role in the United States economy. It is no surprise that J.C. Penney is greatly affected by consumer spending. For J.C. Penney, retail sales are highly sensitive to liquidity and preservation of capital. Due to the recent U.S. governmental shutdown consumers have restrained spending as a result and while causing lingering impacts in incoming holiday spending (Little). The recent recession, tight credit lines and general market uncertainty are causing a slowdown of consumer driven economic growth. Consumer

spending is the driving force of U.S. economic growth and consequently of the retail sector. Consumers willingness to afford and spend determines the J.C. Penneys profitability and the viability of economy. Exhibit 3 depicts how governmental shutdown has caused consumers of different discretionary incomes to scale back on spending. The factors that affect consumer spending in the context of retail sector are numerous. Some are related to long-term changes in consumer habits and some are a confluence of an economy in recession and depressed consumer confidence. Despite growing economic uncertainty, the struggling department-store chain proposed a stock offering of 92.6 million shares to raise as much as $ 1 billion in capital in an effort to appease worried investors about J.C. Penneys cash liquidity and sales after a gloomy report by a Goldman Sachs analyst (The Associated Press). The stock issuance is supposedly aimed to help the company recover and revives the retail stores fortunes.

Technological

The retail sector is a very competitive and fast-moving industry and greatly influenced by consumer trends and demands for fast and prompt services. Many changes in the technology have affected the way how J.C. Penney and their consumers transact business. These changes include e-commerce, smartphone applications and social media such as Facebook and Twitter. New and improved technological innovations enable many of J.C. Penneys customers to access retail goods and services faster. With the ever-increasing use of smartphones, tablets, and other connected devices as a primary gateway to the Internet, it is important for J.C. Penney to leverage new technology to create a diverse multi-channel strategy in order to provide an optimal customer experience and increase sales. J.C. Penney uses Usablenet, a B2N, global technology company which allows brands to create a multi-channel experience for social savvy modern-day shoppers. Through Usablenet, J.C. Penney has launched a Facebook store to target technological savvy customers. Political Regulatory forces are outcomes of changes in laws which affect the way how J.C. Penney conducts business within the United States and Puerto Rico. Legislature shapes and constrains the actions of J.C. Penney and of managing directors while creating opportunities and potential threats. Deregulation and privatization are examples of legal forces that create challenges for the struggling department store. J.C. Penney can take advantage of the opportunities and counterattack threats enforced by governmental laws. In addition to governmental laws, J.C. Penney must adhere to laws set forth by local municipal governments by every state the company operates in regarding taxes, salary compensation and consumer rights. Cultural Social forces affecting J.C. Penney are diverse. Some of JCPenneys first challenges and social forces are the companys target demographics. In recent years the company has geared its target market toward older adults over the age of 55, according to a February survey conducted by Prosper

Business Development, a market research company in Ohio, who illustrate clearly two things about Penneys shoppers: 1) They are relatively price sensitive; 2) they are probably more set in their shopping ways than customers at discount stores or competing department stores, (Stock). J.C. Penneys Fair and Square pricing campaign alienated customers from this specific age group. J.C. Penney failed to realize the shopping habits and behaviors, needs and wants of consumers who valued price while shopping at the department store. Consumer behavior is based on anthropology, sociology, economics and psychology and by using the purchase decision. J.C. Penney needs to concentrate on families, which means parents of millennials and pay greater attention to the countrys demographics as a whole. It is extremely evident that there is a growing Latin American population. Kmart has marketed to this segment by featuring a line of clothing by Sofia Vergara, a famous Latin American actress. Culturally, the younger population values self-expression and therefore is looking for clothing that can either be created into something individualistic or can be combined to create unique outfit. J.C. Penney needs to create relationships through value. Poters Five Forces Porters Five Forces framework is an analysis which identifies and characterizes the competition within an industry (Porter 2008). A business has to understand the dynamics of its industry and market in order to compete effectively in the marketplace (Porter 2008). As Porters Five Forces analysis deals with internal and external factors within the industry that influence the nature and structure of competition a company faces. According to Porters Five Forces, J.C. Penney has to deal with rivalry among existing competitors, as well as threat of substitute products or services. There are also the forces of supplier bargaining power and bargaining power of buyers. J.C. Penney needs to grasp Porters Five Forces to formulate appropriate strategies to be successful in the industry. Porters Fives Forces helps J.C. Penney understand the structural forces that drive the

departmental retail industry. Industry analysis is the key in identifying how the industry is changing and what the market structure is for a firm (Porter 2008). J.C. Penney must assess Porters Five Forces to be successful within the departmental retail industry. J.C. Penneys rivals are most likely a high area of concern for the company. This is usually the most important determination of competitive forces for the company to gauge the level of competition to directly compete on prices and quality. J.C. Penney persistently is fighting off its competitors such as Macys, Dillards, and Kohls for its share in the market. The availability of substitutes is dangerous for J.C. Penney because it increases the chance that a business will lose customers and profits. For any consumer, substitutes are interchangeable. The price of a substitute causes a consumer to buy less or more of a good or product. There are many substitutes in the market for consumers and J.C. Penney is forced to compete with those powers on a daily basis. Substitution of goods and services is moderate to high worry for J.C. Penney. The retail giant must deliberate about the bargaining power of suppliers. By offering exclusive brands and collections, this is how J.C. Penney distinguishes the company to consumers and other department stores. Exclusive signature lines are influential in bargaining power of suppliers because department chains are competing with each to be the only one to sell the high-end brand. Recently, J.C. Penney is confronted with massive lawsuits from its competitor, Macys, over right to sell the Martha Stewart collection. According to Macy's, the company has exclusive rights to Martha Stewart cookware, bedding and bath products under a partnership first signed in 2006. Last year, it sued Martha Stewart Living and rival department store chain Penney over a deal announced in 2011 to open shops within Penney stores carrying Stewart-designed goods (Will 2013). JCPenney needs to establish to customers not only different prices, but value that is characterized by the suppliers ability to carry exclusive brands. Lastly, J.C. Penney needs to contend with the bargaining power of their buyers. The

bargaining power for J.C. Penney is moderate to high because presence of powerful buyers reduces the profit potential for the firm. Customer behavior can depend on socio-economic factors. Consumers are always seeking better quality and lower price. By looking for better value, consumers are increasingly driving the level of competition in the industry and causing low profits for J.C. Penney. Since consumers are fickle and unpredictable, J.C. Penney must think strategically to retain its patrons.

MarketingProductFocus
This section describes the marketing and product objectives for J.C. Penneys Fair and Square campaign.

Marketing and Product Objectives

J.C. Penneys main objectives in the Fair and Square campaign are: Bring old customers which the company has lost in the previous years Attract new customers who will not question the quality of the product because of the year round sales Create a new clear system for the consumer that will not be confusing.

Target
The primary target market for J.C. Penney Fair and Square are low income family households. These consumers do not like the coupons and sales tactic and are looking for the market sale price.

Points of Difference
The points of difference characteristics that make J.C. Penney different from its retail competitors such as Macys or Kohls are: One of the largest retailers is apparel and home furnishings

Has over 1,000 stores in the US. Provides a no game plan using one set low price for low income consumers.

Positioning
In the past, J.C.Penney positioned itself as offering multiple opportunities for the family target market to save. In the Fair and Square campaign, the company positions itself to change that to no coupons and no sales. The company is positioning as authentic and honest to the consumer with no games being played.

Market Strategy Program - 4Ps J.C. Penney is aiming to recapture existing consumers, who are 55 and older and also target consumers from the ages of 18-35 as well. The first market are the older customers who left the department store. The retail department will therefore be look at ways to bring them back to shopping with the firm. The next line of target market is to maintain the existing current customer base. A). Target Market J.C. Penney needs to focus on bringing the older population of 55 and over back to the department store because those customers left due to the pricing campaign.The market tactics J.C. Penney should use are: Price-Payment terms Promotion-Public relations

Price-Payment terms J.C. Penney will also adjust its payment terms to suit the old customers needs, such as set certain price as Every Day low price sale. At the same time that J.C. Penney is still able

to obtain profit. This can encourage old customers who left due to high pricing Promotion-Public relations J.C. Penney will aim at improving its public relations through positive media coverage and production of articles in newspapers that improve its image as a company aimed at customers welfare. B). Target Market: Existing Customers The second target market is the existing customers. The company will aim at maintaining their existing customer base and if possible adding more. The strategies put in place for this to become a success include: Price-Discounts, bundled pricing Product-warranty, quality, product line expansion Promotion-Promotional programs

Pricing FUN program Pricing Fun Program will be the new pricing strategy for J.C. Penney targets its current existing consumers. The program will offer customers discounts or bundle once a week, as called the Fun day. In order to get involved in the program, consumers would need to register membership. The Fun days are different in every week. Consumers have to go to the official website or check emails in order to know the exactly day. By doing so, J.C. Penney will be more appealable and have more chance to communicate with its target customers. Also, consumers will be pumped up with enthusiasm. Further more, consumers who buy in bulk and trade discounts will pay promptly. Product-Warranty

J.C. Penney will provide warranties in form of repairs to the products, transportation to the buyers premises and offer advice on the correct use of the product. Product line expansion J.C. Penney will expand product especially for seasonal interest, such as Christmas and New Year. Elegant packaging of the product as well as using the companys name on the product to enhance its marketability. Promotion-Promotional Event J.C. Penney will undertake promotional programs such as organizing fun days for kids, health clinics and also sponsorship of sports events. Sales promotion J.C. Penney can take on sales promotion by introducing awards to customers, providing credit facilities, birthday promotion etc. C). Target market 3 - Attracting new customers who are generation Y & Z This is the final market targeted by the company. This is where the company aims at attracting any young generation member of the public to buy its products. J.C. Penney will expand the trendy product line and build store in store, B2B relationship. The company will also adopt to the trend of technology, such as eliminating the cash register instead use self or mobile check out. The different strategies put in place to achieve this include: Pricing - Penetration pricing, psychological pricing, premium pricing Product-Branding, packaging Promotion-Advertising, trade shows, events, brochures Pricing-Penetration pricing

J.C. Penney will reduce its prices in order to attract new customers in order to increase its market share after which the prices can be raised. Psychological pricing J.C. Penney will tend to price its products in a manner that they look cheaper yet in real sense they are expensive. Premium pricing J.C. Penney will set the prices of some of its products to show that they are of high quality and exclusive, but they can always get them at a cheaper price if they enter the membership program. Once the customer is attracted in to store, employees will explain the Fun day program to retain and develop brand loyalty. Product-Branding J.C. Penney developed new design that distinguishes its product from those of other companies in the retail department industry. According to J.C. Penneys press release, the new JCPenney logo, which combines the elements that have made J.C. Penney an enduring American brand, by evoking the nations flag and JCPenneys commitment to treating customers fair and square. Promotion-Advertising J.C. Penney needs to continue advertising its products through print media televisions, radios, and the internet.

Financial Data & Projections

The past financial data from J.C. Penney Company Inc. provides valuable information

about the companys sales revenues, expenses, and net income or net loss and can be used to project future financial goals that would result from implementing the new pricing strategy. Financial Statement Analysis J.C. Penney Company Inc. reported worse overall liquidity, solvency, efficiency, and profitability compared to industry standards for fiscal 2011, 2012, and 2013 (See Exhibit 8, Appendix A). The companys only cross-sectional successes were its Operating Expense to Sales ratios for those years, which were lower and therefore better than the industry standards. This signifies that J.C. Penney worked hard to minimize operating expenses in response to decreased sales, though the company has nonetheless been operating at a loss for the past two fiscal years. Additionally, J.C. Penney Companys own liquidity, solvency, efficiency, and profitability have been worsening over the past three fiscal years. (See Exhibits 9-12, Appendix A). Past Sales Revenues Net sales for J.C. Penney Company have been steadily decreasing every year for the past five years, with the exception of a slight increase of 1.2% between 2010 and 2011. Comparing 2008 to 2013, J.C. Penney has recorded a 34.62% decrease in sales revenues. (See Exhibit 3).

Five-Year Projections Five-year financial projections for J.C. Penney Company Inc. appear below. These projections reflect the financial effect of the proposed pricing realignment and rewards program launch. It is expected that the pricing realignment will increase 2013 sales by 10% in the first year, and once the market has adjusted to the new pricing strategy in the first 12-18months, J.C. Penney Company will introduce a loyalty program. It is expected that the loyalty program will increase 2014 sales by 15% because customers who utilize loyalty programs typically buy more items and in turn spend more money. After this initial spike in sales revenues, net sales will continue to increase but at a slower rate. (See Exhibit 4, Appendix A).
*In Millions ($000000s)

Actual Financial Element Net sales* Gross profit* Operating profit/loss* 2013 $12,985 $4,066 -$1,310

Year 1 2014 $14,284 $4,473 -$1,179

Year 2 2015 $16,426 $5,143 -$1,002

Year 3 2016 $18,561 $5,812 -$872

Year 4 2017 $20,603 $6,451 -$776

Year 5 2018 $22,457 $7,032 -$706

Organization
J.C. Penneys executive leadership board appears consists of 15 officers who run the daily operations of the company are: Myron E. Ullman, III Chairman of the Board and Chief Executive Officer Jeffery J. Allison, Executive Vice President, General Merchandise Manager, Home and Custom Decoration Robert B. Cavanaugh, Executive Vice President and Chief Financial Officer Janet L. Dhillon, Executive Vice President, General Counsel and Secretary Steve Lawrence, Executive Vice President, General Merchandise Manager, Mens Division Thomas A. Clerkin, Senior Vice President, Director of Finance for Stores, Catalog and Internet Elizabeth H. Sweney, Executive Vice President, General Merchandise Manager, Women's Apparel Michael P. Dastugue, Senior Vice President, Director of Property Development Clarence L. Kelley, Executive Vice President, Director of Planning and Allocation Peter M. McGrath, Executive Vice President, Director of Product Development and Sourcing Marie Lacertosa, Senior Vice President and Director of Supply Chain Management

Ruby Anik, Senior Vice President and Director, Brand Marketing Michael T. Theilmann, Executive Vice President, Chief Human Resources and Administration Officer

Implementation Plan
In order to turn around JCPenney, the recommendation is that they abandon the Fair and Square pricing campaign and return to pricing strategies practiced more extensively in the retail industry. The pricing strategy for JCPenney will include pricing items to reach profit margins at a discounted price. First, when JCPenney has selected its product line and moves on to setting retail price, discounts must be built into their strategy. This means that sales, discounts, coupons, and other pricing variables must be planned in advance, and the lifespan of the product must also be determined. For example, shorts can be sold from April to September in some regions, but may only be popular from May to August in others. Additionally, there are many other variables to consider when selecting the retail price:

Will this item be sold at a lower cost to move more product or will the markup for this product be

higher and sell less frequently? Where will this product be situated in the store? Is this product on trend for the coming season?

These questions will give JCPenney an idea of what percentage of that product will sell before it moves to clearance. This is the information needed to assess the product, but JCPenney must also assess other factors like anticipated traffic and conversion, and the amount of dollars per sale (ADS) versus units per sale (UPT). Now JCPenney will look at its sales goal for each store and come up with an idea of

how many transactions need to occur at its anticipated ADS. Then the store will consider the anticipated UPT versus the number of transaction to get an idea of about how many items at different cost levels need to be sold. For example: A particular JCPenney has a store whose sales goals is $10,000 for one month. Its anticipated ADS is $75 with an anticipated UPT of 3. This means that for the store to reach its goal at its anticipated ADS, the store needs to complete around 133 transactions. Realistically, some of these purchases will be above and below ADS, but they should average to this projection. When you multiple the number of transactions by the UPT, the number of items that need to be sold at an average price of $25 is 400 items. For this store that means that their average product should cost around $25 dollars with a variable range to account for products that were more or less expensive for the company to acquire. All in all, JCPenney will take this information to consideration when selecting prices. Note that these equations find the average cost of a product, but not its average price. This is where preplanning sales events helps JCPenney anticipated the discount customers would receive. With these considerations, JCPenney can select a profitable price for each item that will ensure profit even with discounts.

Evaluation Plan
When JCPenney moves forward with this new pricing strategy, at first, a test region should be established. This region should be selected based on its stability; a region with an erratic sales pattern will not provide trustworthy information. This test period should last a complete season of somewhere around three to six months based on when JCPenney turns over their product. During this test period, JCPenney should pay particularly close attention to the ADS, UPT, traffic, conversion, and sales. This new numbers should be compared against projections as well as sales for the same

time frame in the past five years. If numbers have improved, the new strategy can then be implemented in all JCPenney stores while still paying close attention to improvement in the specified areas. Another step JCPenney should take is to step up a rewards program. While rewards programs create value for customers, they also create value for JCPenney in the information that it could collect. There are all the usually benefits like geographical information of consumers in order to create direct advertising, but JCPenney can also measure how their repeat customers behave. For example, JCPenney can determine what promotions are popular, what items customers keep coming back for, and if return customers are spending more money in JCPenney than customers without the rewards card.

References

Campos, Andrian. How J.C. Penney Can Avoid Bankrupcy. 20 October 2013. Web. 25 October 2013. http:// www.dailyfinance.com/2013/10/20/how-jc-penney-can-avoid-bankruptcy/. Luther, W. M. (2001). The marketing plan: How to prepare and implement it. New York: aAMACOM. Lutz, Ashley. Heres Whats At Stake In The Huge Trial Between Martha Stewart, JCPenney, And Macys. 03 March 2013. Web 28 October 2013. http://www.businessinsider.com/martha-stewart-is-headed-to-court-again-2013-3 McDonald, M. (2011). Marketing plans: How to prepare them, how to use them. Chichester: Wiley. Westwood, J., & Institute Of Directors. IOD. (2002). The marketing plan: A step-by-step guide. London: Kogan Page. Rule, Stephanie. J.C. Penney Posts Slower Sales Slide as Bass bets on Revi. 20 August 2013. Web 25 October 2013 http://www.bloomberg.com/news/2013-08-20/j-c-penney-posts-slower-sales-decline-on-ull man-plan.html Spencer, Naomi. US Retailer J.C. Penney Cut 43,000 Jobs Last Year. World Socialist Web Site. 23 Mar 2013: n. page. Web. 28 October. 2013. http://wsws.org/en/articles/2013/03/23/penn-m23 .html Vinjamuri, David Fair and Square JC Penney Sued for $40 Million by Vendor for Stealing Design: The Risks of an Ethical Brand 09 May 2012. Web. 25 October 2013 http://www.forbes.com/fdc/welcome_mjx.shtml.

Appendices
Appendix A: Financial Data & Projections