In 2011, J.C. Penney implemented a new strategy for pricing that cut sales events and instituted an “Every Day Low Price (EDLP)”. J.C. Penney customers were used to promotional events where products went from high price to low, involved the use of coupons, and enabled customers to get a deal on the products they were purchasing. This pricing strategy backfired as customers did not see the value in the EDLP strategy over the deep discounts that they previously received. Revenues for J.C. Penney plummeted, and the company took a significant financial hit from the change. Because of this, the corporation closed a significant portion of stores (roughly 14%), and enacted a new pricing strategy. Instead of the EDLP, they have new “Everyday Prices” which are discounted but not as far as the EDLP strategy. Customers are still able to use coupons to save additional money on these products. The new strategy has kept them afloat but has not grown the business significantly. What are the main advantages and disadvantages associated with an “every day low prices” approach? Why did J.C. Penney fail with this strategy? In your opinion, what pricing strategy would work best for the J.C. Penney customer base? Why? What marketing tactics could J.C. Penney have used to communicate the change to customers so that they understood the value proposition of EDLP? What other similar retailers are considered “best-in-class” for pricing? Why? What methods do they use?
