J C Penney Case "Fair and Square" Pricing Strategy

The J.C. Penney Case (New business model)

Due to the lack of customers shopping, J. C. Penney experienced a loss in sales. The “Fair and Square” Pricing Strategy was Johnson’s idea to simplify the pricing structure for customers. “Fair and Square” pricing were meant to simplify J.C. Penney’s pricing structure and make it more straightforward for customers to shop. Ofek, and Avery, (2012). The components of the J.C. Penney new business model consisted of greater and cheaper prices more frequently with less hassle and promotions. In addition, there was a business model, a pricing strategy, new sales structure, a new logo, new spokesperson, and new store design.

The business model was not what I considered original, Johnson used examples from Walmart, Target and Apple to build the model, not realizing that those companies market different merchandise and serve different customers. Sales and clearance items were discontinued, which was the main reason for customers shopping at JC Penney. In addition, employee’s sales commission was eliminated. Commission and sale go hand in hand; therefore eliminating the commission was devastating to the employees.

“Johnson explained his rationale for the change, “A lot of great retailers don’t use commission. We never used them at Apple.. and I think it’s a better thing to do to pay people in advance for what you want them to do and let them look in the customers’ hearts and try to help them.” (Ofek, et al, 2012)

Except for controversial regarding the new spokesperson, the components worked together in incorporating the new price strategy. There were strong opinions from observers regarding the move; some were shocked while others were skeptical. Competitors drop their prices on comparable products, but that still did not deter Johnson. According to Harbin, and Humphrey, (2015). "The one thing that Ron Johnson needs to realize is that Apple and J. C. Penney are two completely different beasts".

The component that was missing...