Mendoza School of Business

J.C.Penney: Was Ron Johnson’s Strategy Wrong?

Published: April 9, 2013 / Author: Steve Contributor

The following is an excerpt from a Forbes article that quotes Marketing Professor Carol Phillips on JC Penney’s marketing strategy. To read the entire article visit: J.C.Penney: Was Ron Johnson’s Strategy Wrong?

J.C. Penney Co. [JCP] has ousted its CEO, Ron Johnson, the chief executive who reinvented retail at Apple Inc. [AAPL] and who arrived JCPenney just 17 months ago. Mr. Johnson had a bold vision for the JCPenney. On joining the firm, he said, “In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement. It will be a period of true innovation for this company.”

Mr. Johnson abruptly scrapped JCPenney’s dubious pricing policies of marking up prices and then offering discounts, with heavy promotions, and coupons. He proposed to offer more interesting products, from lines like Martha Stewart and Joe Fresh, at reasonable prices all the time.

Shopping as cheap fun?

One possible strategic option would be to transform JCPenney into an organization where shopping is cheap and fun: For instance, Carol B. Phillips, marketing instructor at the University of Notre Dame’s Mendoza College of Business, says:

“JCP’s CEO Ron Johnson was … clueless about what makes shopping fun for women. It’s the thrill of the hunt, not the buying. If it was just about buying, we’d all go to Amazon and take what was offered… women love to shop and deals are what make the game worth playing. Customer insights don’t have to be deep and mysterious to be powerful. Sometimes they are as obvious as ‘shopping is fun.’ It took billions of dollars of lost sales, lost market cap and over a year of embarrassing performance for Johnson to realize this truth… there is an element to consumer buying behavior now that is qualitatively different. Bargain hunting is now like playing a game – and finding deep discounted goods on sale is part of the game.”


Topics: Mendoza