Attention shoppers, a JCPenney sale will be coming to a store near you soon!
That's right, nearly one year after announcing it was phasing out its traditional sales promotion strategy, JCPenney has done an about-face and will now significantly increase its pricing discounting strategy. This step is aimed at increasing traffic by making the chain appear more price competitive to its peer set.
By killing traditional promotions, JCP severely damaged its value perception. In an effort to further battle negative consumer value perceptions, JCP will also introducing price tags that include also show what competitors are charging for the same merchandise. The big question is it too little, too late given JCP same store sales declined over 25% in 2012?
JCP's major mistake was thinking they could retrain consumer behavior - that is train consumers to move from shopping a high/low strategy to an everyday low price mindset - consumers love a value treasure hunt. Needless to say this would be an extremely difficult task for even the strongest brand to take on (e.g., Apple), but it proved to be an impossible for a merely average brand with limited equity and loyalty. Sorry CEO Ron Johnson, you cannot turn a JCP into Apple overnight.
The sad thing is that much of Ron Johnson's transformation turnaround plan is right on - building a portfolio of exclusive brands, dramatically revolutionizing the JCP shopping experience and re-staging the brand image. If he had only been more patient and executed these strategic elements prior to changing the promotion strategy as opposed to trying to move simultaneously, he may have successfully increased consumer traction, loyalty and advocacy. This would have then given him more permission to then cut back the level of promotion.
Showing posts with label Promotions. Show all posts
Showing posts with label Promotions. Show all posts
Tuesday, January 29, 2013
Monday, December 17, 2012
McDonald's McRib . . . It's back!
That's right, it's back . . . McDonald's McRib sandwich returned to restaurants nationwide today.
Historically, it was up to the local franchises to decide if/when they wanted to sell the McRib – except in Germany where interestingly enough it's nearly always available. However, the last few years McDonald's began running the McRib as a national promotion to great success and has decided to duplicate the event again this year.
Given its cult-like following and the amount of consumer excitement generated every time the McRib is re-released, some people might wonder why McDonald's doesn't just make it available on an everyday basis.
Despite its fanfare, the reality is that the sandwich does not actually sell at a fast enough velocity to justify everyday distribution. In fact, this year's release date was originally targeted to be October 22, but McDonald's decided to delay the release due to unseasonably warm weather earlier in the fall. That's right, McRib lovers can blame global warming for the delay. As it turns out, McDonald's research indicates the McRib sandwich performs best in colder weather and specifically around the holidays, when evidently the appetite for pork is at its highest.
To it's credit, McDonald's has smartly realized it can use the McRib as a limited time only offer to drive traffic. What began as a small promotion has actually turned into a brilliant marketing strategy where McDonald's effectively creates scarcity to drum up consumer demand and play to consumers' obsession for the sandwich.
And it works! The proof is in the sandwich as well as in McRib's strong social media following on Facebook, Twitter, and even a consumer created unofficial McRib Locator website, which attempts to identify "possible" sightings of the McRib at McDonald's.
Historically, it was up to the local franchises to decide if/when they wanted to sell the McRib – except in Germany where interestingly enough it's nearly always available. However, the last few years McDonald's began running the McRib as a national promotion to great success and has decided to duplicate the event again this year.
Despite its fanfare, the reality is that the sandwich does not actually sell at a fast enough velocity to justify everyday distribution. In fact, this year's release date was originally targeted to be October 22, but McDonald's decided to delay the release due to unseasonably warm weather earlier in the fall. That's right, McRib lovers can blame global warming for the delay. As it turns out, McDonald's research indicates the McRib sandwich performs best in colder weather and specifically around the holidays, when evidently the appetite for pork is at its highest.
To it's credit, McDonald's has smartly realized it can use the McRib as a limited time only offer to drive traffic. What began as a small promotion has actually turned into a brilliant marketing strategy where McDonald's effectively creates scarcity to drum up consumer demand and play to consumers' obsession for the sandwich.
And it works! The proof is in the sandwich as well as in McRib's strong social media following on Facebook, Twitter, and even a consumer created unofficial McRib Locator website, which attempts to identify "possible" sightings of the McRib at McDonald's.
Wednesday, June 20, 2012
JC Penney Changing Course?
After only 8 months on the job and in the midst of JC Penney's rebranding/turnaround efforts, Michael Francis, president, responsible for merchandising, marketing, planning and allocation, product development and sourcing has "resigned". Francis who was handpicked by CEO Ron Johnson based on their experience working together at Target had been Target's Chief Marketing officer prior to moving to JC Penney.
As President at JC Penney, Francis was technically responsible for the marketing of a controversial new pricing plan that aims to get rid of hundreds of sales events, as well as, merchandising and product development. However, many outsiders claim it was actually CEO Ron Johnson who was the architect of the new pricing plan. With the turnaround under performing expectations and JCP backtracking on a portion of their strategy, the resignation appears to be a way to buy time with investors - although shares did drop 6% after the news of the resignation became public. In the same press release, Johnson announced he will take direct responsibility and oversight of the company’s marketing and merchandising.
Three things pop to mind with this latest twist in the JCP saga:
(1) Turnarounds/brand restages are never quick and easy, business results usually get worse as a company invests in the future and consumers adjust their habits/practices. Being a public company sometimes creates a barrier to delivering long-term sustainable change because of this short-term pain. JCP should expect at least 3-4 quarters of pain at minimum assuming they're doing everything right, and a lot longer if they are mis-firing on their strategy.
(2) Turnarounds must be based on significant consumer insights and must pivot off of a solid brand foundation as opposed to try to leap to a totally new brand equity - in other words the best brand restages are evolutionary not revolutionary. Additionally, the relaunch need to be communicated in a manner that consumers understand and in a fashion that's consistent with the consumer insights its based on. It appears to me that JCP is trying to leap too far too quickly and would be better served making a series of pivots.
(3) The CEO is not usually the best person to lead a consumer driven marketing strategy because they are usually the person in the organization farthest removed from the actual consumer. Here's to hoping that Johnson relies on people closer to the consumer to help guide the strategy and commercialization.
The JCP turnaround efforts will be a fascinating story to continue to follow as its likely to be a long/winding rode for the near future
As President at JC Penney, Francis was technically responsible for the marketing of a controversial new pricing plan that aims to get rid of hundreds of sales events, as well as, merchandising and product development. However, many outsiders claim it was actually CEO Ron Johnson who was the architect of the new pricing plan. With the turnaround under performing expectations and JCP backtracking on a portion of their strategy, the resignation appears to be a way to buy time with investors - although shares did drop 6% after the news of the resignation became public. In the same press release, Johnson announced he will take direct responsibility and oversight of the company’s marketing and merchandising.
Three things pop to mind with this latest twist in the JCP saga:
(1) Turnarounds/brand restages are never quick and easy, business results usually get worse as a company invests in the future and consumers adjust their habits/practices. Being a public company sometimes creates a barrier to delivering long-term sustainable change because of this short-term pain. JCP should expect at least 3-4 quarters of pain at minimum assuming they're doing everything right, and a lot longer if they are mis-firing on their strategy.
(2) Turnarounds must be based on significant consumer insights and must pivot off of a solid brand foundation as opposed to try to leap to a totally new brand equity - in other words the best brand restages are evolutionary not revolutionary. Additionally, the relaunch need to be communicated in a manner that consumers understand and in a fashion that's consistent with the consumer insights its based on. It appears to me that JCP is trying to leap too far too quickly and would be better served making a series of pivots.
(3) The CEO is not usually the best person to lead a consumer driven marketing strategy because they are usually the person in the organization farthest removed from the actual consumer. Here's to hoping that Johnson relies on people closer to the consumer to help guide the strategy and commercialization.
The JCP turnaround efforts will be a fascinating story to continue to follow as its likely to be a long/winding rode for the near future
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