Marketing Planning and Promotion at Jcpenney Assignment/Case Study Solution
Marketing planning and promotion at Jcpenney assignment/case study solution.JC Penney was established in 1902 by James Cash Penney with the vision to provide the customers with a high quality service that stands apart from the competitors. The company has seen its share of success and failure both during it’s more than a century of existence. Currently the company operates 1100 outlets where customers can find products ranging from home related items to personal care products. The company has a rich history embedded in the many years of experience of operating in the US market. It has made efforts to venture into the US market with the intention to become a brand name that was representative of the local community in the market. The company operates its outlets in various locations all over the US (J.C. Penney Annual Report, 2010).
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Marketing Planning & Promotion at Jcpenney
Overview of the company:
JC Penney was established in 1902 by James Cash Penney with the vision to provide the customers with a high quality service that stands apart from the competitors. The company has seen its share of success and failure both during it’s more than a century of existence. Currently the company operates 1100 outlets where customers can find products ranging from home related items to personal care products. The company has a rich history embedded in the many years of experience of operating in the US market. It has made efforts to venture into the US market with the intention to become a brand name that was representative of the local community in the market. The company operates its outlets in various locations all over the US (J.C. Penney Annual Report, 2010).
Currently the company is revamping everything ranging from its logo, to the interior of its stores. The name J.C Penney has been changed into jcpenney, considering it to be more effective as compared to the previous one (Schilling, 2012). The decision to take this complete makeover of the department store was taken after the falling sales propelled the management to consider the consequences of following the same traditional marketing tactics in future as well. The report aims to suggest a marketing and promotion plan which can be adopted by jcpenney for women’s clothing department. Along with that, the report will also highlight the influence this plan can have on the company. The report will also outline the feasibility and the positive influence such a strategy can bring for the company.
Porter (1980) has presented an overview of the major industry forces, which is commonly referred to as the five forces model. In case of jcpenney, the industry analysis will focus on the five forces model, consisting of new entrants, substitutes, customers, suppliers and rival companies. Each of these factors has an influence on the external market of the company, which in turn has an impact on the marketing approach adopted by an organization (Grant, 2005).
Porter’s Five Forces Model:
Threat of New Entrants:
New entrants can be regarded as those organizations that may become a part of the industry, if they consider the business environment to be feasible and profitable. There are two factors that play a significant role in reaching this conclusion; ease of entry and ease of exit (Hill & Jones, 2010). The US retail market has seen a rise in the number of independent and chain of retail stores and outlets. With the passage of time the trend has shifted towards establishing chain of stores rather than separate ones. The retail market is characterized by moderate threat of new entrants.
The barriers to entry are high as the capital investment needed to set up a store is quite significant. The starters need to have a location, contacts with the supplies and hire staff to run the processes. On the other hand, ease of exit makes it a viable business for the new companies planning to establish a store on a small scale. Considering these factors the threat of new entrants is at a moderate level, allowing the new comers to establish themselves in the market. However they may opt to limit themselves to one store, instead of moving on to the concept of chain of stores posing no significant threat to the retail giants such as jcpenney.
Threat of Substitute:
Substitute products or services pose a threat for the organizations operating in an industry as the consumers may choose to shift from their products or service to the substitute ones (Hill & Jones, 2010). From the perspective of products that the retail stores sale, they have a wide array of products which makes it difficult to use these items as a point of differentiation from other rivals. The items available in a chain of stores are available on the shelves of other independent retail stores as well. The major area where substitute can become a source of threat is the service, discount and promotional offers that these stores have. A customer can shift from one retailer to another if he feels that the other outlet has better price structure and has more attractive offers. The quality of service of the substitute retailers may also facilitate the customers from moving one store to the other one in search of competitive process and improved service.
jcpenney is providing the customers with a wide range of products in its outlets. It has also made efforts to improve the physical outlook of the stores and the quality of service. As far as the price structure is concerned, the management at jcpenney has decided to offer prices that are stable across the year, with sales and discounts as well. It’s a strategy that is making it stand apart from other retailers. But the company is still facing a strong degree of threat from other large scale retail outlets.
Bargaining Power of Customers:
Henry (2008) has noted that buyers can have a considerable degree of influence on the dynamics of an industry, as the companies can be pressurized into altering the price structure, features and quality of the product or service to align it with the customer’s demand. On an individual basis the people visiting the retail stores are not likely to have much power over the decision making of the management. However if the majority of customers feel or behave in the similar manner, the management is forced to take some relevant measures to handle the situation (Hill & Jones, 2010).
The retail industry is propelled to offer prices that customers find attractive to maintain a larger market share, and to retain a large number of customers. It is also important to provide the customers with the quality service as the customers have considerable degree of power over these stores. Considering this situation, it can be stated that jcpenney is operating in an industry that has a high bargaining power of customers. In case of international market as well, the customers seek lower prices and high quality of service and products. Therefore jcpenney will also have to adjust the price structure according to the taste and preference of the customers.
Bargaining Power of Suppliers:
In the same manner as customer, the suppliers can also influence the dynamics of an industry by changing the price structure of the product or material they supply to other organizations (Henry, 2008). The independent retail stores may not have a great degree of leverage on the suppliers, but in case of large scale retail entities, the suppliers are dependent on them for their sales and profitability. Therefore they have no significant power over the price structure or quality standards set up by the retail organizations. Along with that, the suppliers need to maintain functional relationship with these companies. Therefore it can be stated that suppliers have low bargaining power in the retail segment of the market.
In case of jcpenney, the suppliers who are working in collaboration with the firm aim to maintain functional and long term relationship with the management. In order to achieve this target, they are likely to follow the guidelines and requirements provided by the retail stores. jcpenney is one of the leading stores and the suppliers can’t afford to lose the contract with such a large scale organization. In fact, the suppliers might be facing high level of competition among each other to obtain a long term contract with the retail giant. jcpenney has recently been able to form a contract with Liz Claiborne that will supply high quality clothing to the firm (J.C. Penney Annual Report, 2010).
Threat of Competitors:
The rival companies determine the level of competition an organization will face in the market. Henry (2008) has stated that in case if the firms present in an industry have high degree of competition, it will have a negative impact on the sales and revenue generated by a company. In case of the retail industry there is a high level of competition. Considering the number of firms operating in the market, every retailer is aiming to gain a greater market share. To achieve this goal, the management needs to devise a plan of action that supports their business processes in achieving this target. As far as jcpenney is concerned, the company is dealing with some major rival companies such as Wal-Mart, Kohl, Macy’s etc (JCP, 2012). The price structure, discount rates, customer facilitation, quality of service and the sales offered throughout the year are a few of the tactics that jcpenney had been using to manage the competitive rivalry in the market. The management also needs to ensure that the customers remain loyal to their brand, thus making the level of competition more sever in the industry.
The marketing objectives for jcpenney’s women clothing can be outlined as follows:
· To increase the market share
· To become the retail store of choice for the international customers as well.
· To attract and retain the customers through fair and square pricing strategy
· To position jcpenney as the leading store that offers the customers clothing for different occasions.
· To enhance customer loyalty
· To use various tools of direct and indirect marketing to expand the customer base around the world
Justification for the launch of modified product line:
The marketing strategy for the clothing brands available in the store had been following the same strategy as that of other stores with emphasis on offering low prices, providing the customers with discounts and sales and offering a wide array of designer clothing (J.C. Penney Annual Report, 2010). Recently the strategy had to be altered focusing on the stability of prices. jcpenney also needs to adopt a marketing strategy that focuses on introducing wider range of women clothing styles for different occasions. The clothing segment of the organization is still in need of some alterations concerning the price structure, products and the marketing tactics used for the promotion of such items. The following section of the report outlines the recommended marketing strategy that can be used to achieve the marketing objectives.
Recommended Marketing Strategy:
The marketing strategy currently adopted by the company is using a variety of sources, including the electronic sources, print sources and even social media. The marketing strategy for female clothing is focusing on women belonging to different age groups, targeting the individual and families with people belonging to different walks of life. The recommended marketing strategy has been provided as follows.
The clothing line available at jcpenney ranges from casual wear to bridal wear. For this area of the store, the following
Age & Gender:
The age range which is considered by the management at jcpenney is from 18 to 50. It is assumed that most of the buyers in this age category make independent decisions of making purchases. Therefore it has been identified as the age range which should be focused upon in the marketing activities. As previously identified, the clothing line is focusing on items for females.
The promotion mix will allow the management to understand the pattern in which the various tools of promotion can be used to obtain maximum benefit. The promotion strategy for jcpenney will consist of the following four components of the promotion mix.
Main source of promotion for jcpenney will be advertising which can be done through television, radio, print ads, billboards and social media. Mobile advertising can also be used as a part of the promotion mix for the company.
jcpenney has been operating in the market for many years, and has recently introduced a lot of changes in its marketing and business strategy. The women’s clothing line offered by the store has seen addition of brands such as Liz Claiborne recently.
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