Marketing 101: JC Penney Re-Branding | A Move To Masstige MyÜberLife Consulting Group
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Marketing 101: JC Penney Re-Branding | A Move To Masstige

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                JC Penney Re-Branding | A Move To Masstige 

On Wednesday January 25th, J.C. Penney (JCP) announced what is to be one of the most exciting retail transformations of this year, and maybe even this decade.  The 110 year old department store brand, with the help of new CEO, Ron Johnson, and President, Mike Francis, revealed a forward-thinking business strategy that could not only reclaim ‘top-of-mind’ presence with American shoppers, but also make the department store shopping experience fun again - an activity which has lost much of its luster since the rise of fast-fashion stores like H&M and Zara.

But with this announcement also comes a stir in the market; bringing with it a cacophony of opinions from business writers and bloggers, many of whom, in addition to praise, are raising doubts on the potential of JCP’s bold new strategy.  

Many business critics are asserting that the strategy might be too bold, citing JCP’s new “fair and square” pricing structure as one of the main causes for concern.  Rafi Mohammed, a pricing strategy consultant and author of the 1% Windfall:  How Successful Companies Use Price to Profit and Grow, for example, states that “J.C. Penney lacks the differentiation to make this pricing strategy successful.  J.C. Penney’s products are fairly homogeneous.  When selling a relatively undifferentiated product, the only lever to generate higher sales is discounts.”  While this point has merit, it still seems like Rafi and many other JCP critics are missing the overall strategic point:  Masstige.  

Masstige & The Intangibles

To me, it appears JCP, through a masstige strategy, is attempting to alter the perception of its brand, which, in some cases, can defy conventional business wisdom - as in the case of the hotly-contested pricing structure.  JCP seems more focused on their market sentiment, zeroing in on the ‘intangibles,’ the off-core psychological benefits, or emotions, that people derive from buying things they don’t necessarily need, but, rather, want.  To me, the change in pricing seems more like an image-focused tactic, as appose to a cash-conscious one; a way to change the perception of the JCP brand by reinforcing the ‘less-confusing-easier-to-understand’ sentiment the brand is currently touting.   

Of course, this is not to say JCP’s ‘bottomline’ has not received attention.  I’m sure increasing sales is part of JCP’s overall strategy [how could it not?], but these goals seem more long-term at this point.  I believe if, and when, JCP reaches their sales objectives, in the long run, the revenue JCP will derive from those sales will be more sustainable - having took the time to focus on increasing their brand equity and loyalty now.  Because as we know, brand equity and loyalty are two factors that can insulate your brand from pricing wars and ensure pricing stability.  And insulation against pricing wars is no more important than in a market where deep discounting is the norm; a market where JCP currently resides.

This is why I think JCP, like many other brands today, is using a masstige strategy to regain market share.  The masstige strategy places more emphasis on the “intangibles” that influence the irrational part of a consumer’s purchasing decision.

To better understand JCP’s masstige approach, it helps, first, to understand what masstige is:

Masstige:  is a semantic blending of the words mass and prestige.  The word is a concept meant to describe a business strategy or approach that makes use of certain business principles, or marketing and branding techniques, typically associated with luxury products - all in an effort to increase the appeal of specific mass market goods.

With the democratization and reinterpretation of “luxury” today (read Luxury_(RE) Defined), brands like Target, Kmart, and even Duane Reade, once thought of as utilitarian in nature, selling mostly comodified products, have used this new definition in luxury to revamp the way they sell their products and alter their overall perception in the market - becoming some of the first pioneers of masstige.  These brands, among many others, have used the masstige strategy to modernize their businesses and reclaim market relevance.   

But with the preliminary details of JCP’s plan revealed, how is JCP demonstrating their masstige strategy?  What are some of the specific “intangibles” that JCP is focusing on in an effort to change their market sentiment?

New Pricing Structure

As I mentioned earlier, JCP’s new pricing structure has been the focus of much debate.  Instead of the deep-discounting of the past, JCP will employ the following:

Every Day Pricing - which is a flat daily discount at, or below, the previous sale price of the product.  Reportedly, this discount will average out to be around 40% across the board.

Month-long Value - are month-long, themed, sales events that will occur 12 times a year.

Best Price Fridays - which is a bi-monthly clearance sale on the first and third Friday of each month.  JCP hopes this sale calendar will coincide with the payment schedule of their customers.

Prices ending in “0” instead of “99” - a forward-thinking, more transparent, move to acknowledge the smarter, more knowledgeable, customer of today - doing away with an old tactic which was thought to subliminally trick a customer into thinking the price of a product was actually cheaper than it really was.  Plus, it is widely held that prices ending in “0,” or an even number, connote value.  This concept is similar to the “0” ending price tags sometimes seen in high-end clothing boutiques - places where the emphasis on price is played down.  Whereas, the “99” at the end of a price implies discount - evoking images of the “99” cent store or infomercials splashing “Just $19.99 now!” across a television screen.

Removal of the “previously sold” price tag - JCP price tags will only list one price, as appose to showing multiple prices on one tag.  Previously, the tactic was used to show the drastic difference in price; all with the hopes of making the customer feel like they were getting a tremendous amount of value.  But this type of value is short-term, unsustainable, and does not lead to loyalty, as its pegged largely on the ability to substantially lower prices (i.e. price wars).  Besides, with their new masstige approach, JCP seems to be betting that their customers will find value in their products, not just for the inherent discount, but also for the positive psychological benefit the customer may derive from JCP’s more ‘intangible-focused’ strategy.

That being said, as stated earlier in my analysis, many critics, like Mr. Mohammed, still believe the aforementioned tactics are premature since JCP has yet to effectively differentiate its fairly “comodified” product lines; thereby, opening the brand up to potential pricing attacks from competitors such as Walmart, Kohls, Sears, and Kmart, even though Kmart has begun moving toward a more masstige approach as well (read Kmart Conceirge | Kmart’s attempt at masstige during NYFW SS12).  While this could prove to be an obstacle for JCP, I believe the real purpose of these new pricing tactics is, in fact, to create differentiation and distinction.  If JCP competitors were to engage in pricing and discount wars, what better way to differentiate the brand than by taking the proverbial ‘high road’ and staying out of the ‘low road’ skirmish.  By taking an honest and transparent approach to pricing, embodied in their “fair and square” tag line, JCP is subtly reinforcing its “less-confusing-easier-to-understand” brand ideal and communicating that its core value no longer lies in deep discounting - a message that is further buttressed by the overwhelming focus on the “intangibles” in the overall in-store shopping experience.  JCP understands pricing is still important to their core customers.   But much like a luxury business, JCP is focusing on the intangible experiential details that can often enhance the perceived value of a brand’s product(s).  JCP is addressing the difference between bargain cheap and value; and in doing so, it seems the brand hopes to increase the perceived value of their products against the products’ new, less discounted, but “less-confusing-easier-to-understand,” costs.  Again, this is in comparison to the previous deep-discounting strategy JCP was locked into, where the cheapest price would be offered in an attempt to win-over a bargain-hunting consumer.  As mentioned earlier, I believe focusing on brand loyalty is the best way to insulate a brand against pricing wars; JCP’s new value-focused strategy is the best approach to do this - as appose to their old strategy which resulted in “bargain-hunting” customers, typically not loyal to any particular brand.

Name  

Opting to promote the acronym JCP over J.C. Penney was a smart move.  The “Penney” in the brand’s name bares a close similarity to the word “Penny,” which could evoke counter-strategy thoughts of ‘thriftiness’ or ‘bargain-hunting’ for the brand.  Much like the Kentucky Fried Chicken to KFC conversion, the more “lean” moniker of KFC removed the unhealthy psychological implication of the word “Fried,” which evoked an unhealthy connotation during a time when healthy food choices were beginning to emerge as a dominant trend.

Ad Campaign

The JCP campaigns moved from core benefit, more utility-focused, ads of the past, to ones rich in emotions and off-core benefits.  The campaigns, through a theatrical display of comedy, further underpin the “less-confusing-easier-to-understand” off-core psychological benefit JCP customers could potentially receive by shopping at JCP stores.  To compare the old campaigns against the new, see the respective links below.

Old Campaign - to watch click here

New Campaign - to watch click here

New Logo Design

The new JCP logo draws from the spirit of America, baring a striking similarity to the elements of the American flag.  Like a luxury brand that draws inspiration from its rich heritage, JCP’s new logo evokes 3 visual elements that reinforce the traditional idea of the consummate American retailer:

1. The red, white and blue color story - colors of the American flag.

2. The specific layout of the colors and the JCP name - mirrors the layout of the American flag.

3. The square shape - the square shape of the logo reinforces JCP’s new pricing mantra, “fair and square,” an American idiom which implies fairness and honesty.

In-store Shopping Experience

Like the new logo design, JCP’s new in-store shopping experience also draws from a traditional American shopping heritage.  Instead of endless rows of racks filled with clothes, often haphazardly displayed, JCP will divide each store into individual brand boutiques called Main Street.  This “Main Street” moniker is meant to draw from the traditional “main street Americana’ shopping experience where small towns would have a main road that would provide familiar stores and hangouts people could shop at and congregate around.  This boutique tactic also evokes a more niche or curated shopping experience, ideals of which are consistent with a more luxurious or prestigious brand.  Also, at the center of this boutique experience, JCP will have a service center entitled Town Square, whose specific services are still under-wraps.  In addition to these drastic in-store changes, JCP is employing a few smaller visual adjustment such as the following:

Wider aisles with less fixtures - evoking a more minimalist ‘gallery-esq’ space that showcases product.

Changing theme & color story - each month JCP’s “value and savings” in-store themes will change.  At the beginning of each month the JCP savings theme and color scheme will be revamped, providing a fresh aesthetic and a type of ‘cleansing’ from month to month.

These adjustments demonstrate JCP’s attention to sensory detail, which is undoubtedly a core tenet of a luxurious shopping experience.

Return Policy

Like many luxury brands, JCP is also putting enhanced customer service at the heart of their strategy; again, reinforcing their “less-confusing-easier-to-understand” brand ideal.  With their new return policy, similar to Nordstrom and other competitors like Kohls, JCP will use what is being called a “happy return” policy.  This new policy has no restrictions; it essentially removes the previous 90-day return clause that was once in effect.  Instead, JCP now has an open and unlimited policy that disregards time limits or the need for receipts in a customer return.  As David Woods, manager of J.C. Penney’s of Bradly Square Mall in Cleveland Ohio, states, “We’ll take back any item, anytime, anywhere […] [customers] can have the merchandise two or three years and they can bring it back with a receipt or without a receipt.  If they don’t have a receipt, they’ll get it at the lowest price we sold it for in the last 30 days.  If they have a receipt, they’ll get the price they paid for it.”

Hiring Masstige Gurus

When JCP hired retail veterans, Ron Johnson of Apple and Mark Francis of Target, to lead the JCP brand into the future, it was a clear sign that JCP was ready for drastic change.  Johnson, former Chief of Stores for Apple, and Francis, former Chief of Marketing for Target, are well acquainted with the masstige approach, having been some of the first retail executives to bring elements of luxury to mass market business.  Johnson, with the help of Steve Jobs' vision, arguably re-invented the mass market consumer electronic shopping experience - putting minimalist design and customer service at the helm of the Apple in-store strategy.  And in Francis' case, he helped to popularize the trend in diffusion lines with high profile luxury brand collaborations.  Much like when Gap hired fashion designer Patrick Robinson, of Armani and Anne Klein fame, to signify a change in aesthetic standards and design, I believe JCP, in addition to their experience and expertise, also hired Johnson and Francis, gurus of the masstige approach, to signfiy that a drastic shift was slated to come - albeit, a shift to masstige.  While the Robinson and Gap connection didn’t pan out, it seemed like the initial announcement of the partnership began to alter the perception of Gap, and re-ignite some market interest in the flailing brand.  Hopefully the placement of JCP’s new leaders will fare better in the brand’s long term strategy.  With Johnson and Francis’ impressive track records, it would seem like JCP’s chances of success are better than average - but alas, only time will tell.  

With all that said, the question still remains whether the successful articulation of all these “intangibles” will guarantee JCP’s overall success?  In my opinion the answer to that question depends on two success factors:  

1. How JCP defines success - my guess is it will still boil down to the “bottom line” sales, but as I mentioned earlier, I don’t believe they are expecting drastic results immediately.  I think JCP is hoping that the new value-focused strategy will increase brand loyalty and equity over time, which, in turn, will increase, or stabilize, sales and revenue in the long run.   

2. Customer Adoption - will JCP’s existing, and target, customer base buy into JCP’s re-branding efforts and reward the brand with the aforementioned increase in brand loyalty and equity over time? I believe the answer to this question also depends on how well customers understand JCP’s new masstige approach and whether those customers feel the new JCP shopping experience successfully addresses the off-core psychological needs they derive from shopping.  

Whether JCP is successful or not, I think if they articulate even half of their masstige approach over the next 3 years, the results of their efforts should create some type of measurable effect on JCP’s overall market perception.  However, whether the “effect” is positive or negative still depends on those two previous “success factors.”

posted by Kwasi Gyasi of MyUberLife

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