Read the case study and answer above questions

2) Examine the challenges faced and opportunities explored by JC Penny in integrated marketing mix activities to build its brand equity CASE DOCUMENT and JC Penny's Fair and Square Strategy: J.C. Penney CEO Ron Johnson recently unveiled ambitious plans to transform the 110-year-old department store chain into a 21st century retail powerhouse. Leveraging his experience at Target and Apple, Johnson aims to create 80 to 100 highly-branded stores within a store (e.g. a Martha Stewart boutique). Channeling the spirit of Apple's Genius Bar, every J.C. Penney will also have a Town Square" offering complimentary services to customers as well as promotions such as free hot dogs and ice cream in July. "Do Unto Others as You Would Have Other do Onto You" This is the JC Penney's "Golden Rule" JC Penney History 1902 Founded by James Cash Penney in Kemmerer, Wyoming 1973 Its highest peak with 2,053 stores 2011 Hired Ron Johnson as CEO, he created the Square and Fair pricing strategy 2016 1924 Became JC Penny Incorporated 1998 Launched an internet store Only 1,100 Stores 11 Distribution Centers 5 region al warehouses 4 JCO.com fulfillment centers 4 furniture distribution centers Retail Industry JC Penney and the retail landscape was experiencing lower sales Lower sales due to: . The change in store formats like: Free Standing Supercenters o Walmart & Target had garnered the lower end of the market o Macy's & Nordstrom's catering to the upwardly mobile middle class. Small Specialized Merchandise (Gap & J.Crew) Large International Qothing retailers (ZARA) . Increasing competition from online retailing JC Penney's Radical Makeover Forbes: "C Penney the most interesting retail story of the year" November 2011, on Johnson nnounced a radical epositioning of JC enney's business nd brand. "It's the most exciting thing I've seen in retail since Apple opened stores" Johnson declared it a reclamation of the company's heritage: "we need to treat customers fair and square" New Brand Spokesperson The announcement of comedian Ellen DeGeneres as the new brand spokespersor "One of the most fun and vibrant people in entertainment today" oo DeGeneres homosexuality could be affecting the brand's image. * Firestorm erupted on J.C. Penney's Facebook page. New Pricing Strategy Implemented EDLP similar Walmart ild strategy of high/low pricing ecoming too expensive and addictive Average discounts to get customers to buy went from 38% to 60% Too expensive for JC Penny's to sustain EVERY DAY MONTH VALUE BEST PRICE ew Strategy to implement Every Day w Pricing "Fair and Square" pricing rategy h New Pricing Strategy Id strategy of high/low pricing ecoming too expensive and addictive Implemented EDLP simi Walmart EVERY DAY MONTH VALUE BEST PRICE ?W Strategy to implement Every Day w Pricing "Fair and Square" pricing 'ategy Stop high/low pricing a Stop coupon offerings Stop daily/weekly/monthly sales Ban the word sale from selling vocabulary of the store Allows for customers to be free from waiting for specials and retailer from printing coupons New Pricing Strategy Id strategy of high/Low pricing scoming too expensive and addictive Implemented EDLP similar to Walmart EVERY DAY MONTH VALUE Consumers are sawy shoppers and i able to instantaneously compare pri . Will see benefits having the low pric "all the time" compared to competit Regain selling integrity of the Department Retail Store Wanted to regain brand value or perceived value Expected one year roll out to fully integrate EDLP BEST PRICE w Strategy to implement Every Day w Pricing "Fair and Square" pricing ategy 1 Fair and Square Results JCP decided not to run a market research to test the appeal of the new strategies with consumers. Launched new pricing plan on February 1st 2012 Ellen DeGeneres was featured in a new advertising campaign Consumers were confused and disappointed) with ne pricing scheme W Fair and Square Results First 3 months following the launch 67% of sales were at the "Fair and square" price. bo March - mothers, a critical market for department stores started downgrading their opinion on whether J.C. Penney offered good value for their money. Research firm reported negativity among adults 18+ for whether JCP advertising campaign was Hot or Not? Hot or Not? IC Penney's "Fair and Square" Ad Campaign Adults 18+ 65 GO 55 50 45 40 35 30 25 20 15 10 5 0 "Hot" "Not Hot "Hot" "Not Hot" Mar-12 Jun-12 Fair and Square Results Consumer surveys results revealed that shoppers think that the old JCP offered bette value than the Fair and Square JCP 09 Only 16% of shoppers associated "Best Prices" with JCP. Loyal costumers were moving away from the Brand because they were used to receiving coupons. Costumers felt that JCP was catering young shoppers and that in reality the younger shopper wasn't the one buying at JCP. Fair and Square in Numbers DOM $163 million loss on JCP first earnings report Sales revenue fell 19% E-commerce decreased 28% Gross margin from 40.5% to 37.6% Stock price plunged 20% Net Income margin was negative: -5.2: tibit1 J.C. Penney's Stock Price under Ron Johnson (November 1, 2011-April 8, 2013) 11) Compare Mov. Avgs USD 11/01/2011 10 30 11 04/08/2013 Last Price Line 6H YID 1Y SY Max Daily No Lower Chart . Security/Study Event Exhibit 2 J.C. Penney's Financial Results Fiscal Year Income Statement (FY 2008-2012) Results ($ millions) 2008 2009 2010 2011 2012 Revenue Gross Profit % Margin Operating Income % Margin Net Incomea % Margin 18,486 6,915 37.4% 1,146 6.2% 572 3.1% 17,556 6.910 39.4% 680 3.9% 251 1.4% 17,759 6,960 39.2% 847 4.8% 389 2.2% 17,260 6,218 36.0% (2) 0% (152) (0.88%) 12,985 4,066 31.3% (1,310) (10.1%) (985) (7.6%) Exhibit 3 J.C. Penney's Operating Statistics Five-Year Operations Summary 2008 2009 2010 2011 2012 1,102 Number of Stores Gross selling space (square feet in millions) Sales per gross square foot 1,067 109.9 $160 1,093 111.7 $149 1,108 111.6 $153 1,106 111.2 $154 111.6 $116 Capital Expenditures (in millions) Store renewals and updates (in millions) New and relocated stores in millions) Other capital expenditures ( in millions) Total capital expenditures (in millions) SG&A as a percent of sales $322 $460 $187 $969 $195 $163 $242 $600 $257 $25 $217 $499 $410 $33 $191 $634 $617 $63 $130 $810 29.2% 30.7% 30.2% 29.6% 34.7% xhibit 4 Home Goods/Housewares as a Percentage of Total Sales 2007 2008 2009 2010 2011 2012 21 19 18 12 'ercent of Sales 1.C. Penney Macy's Cohl's Target 15 20 15 18 16 15 16 15 15 19 18 18 18 19 18 22 21 19 19 18 INSTRUCTIONS Before attempting the assessment have a clear understanding of the concepts like the New Product Development, Product LifeCycle and Brand Management before attempting the assignment, have a clear understanding of the concepts like brand equity, strategic implications of Branding, significance of branding and brand management process, business analysis and branding and positioning and Integrated marketing mix activities to build brand equity. MARKS ALLOCATION