JCPenney's Marketing Strategy (Research Paper Sample)

Student Name
Professor Name
Subject
Date
JCPenney's Marketing Strategy
In 2012, JCPenney launched a new brand strategy in the economy, which made its competitors worried of their success intentions. The expectations from investors and customers were high, but it is close to a year now and the majority of people have termed the strategy as a failure. The situation worsened when the company reported a decline in quarterly sales, and its financial reports were unfavourable. Confidence has started deteriorating among the staff in the departmental store. This proves a disaster to the managerial team. Historically, JCPenney is involved in sales of clothing and consumers often relie on the place to be provided with enough clothing for their operations.
The store is a comprehensive destination compared to shopping mall across the globe. With dynamism in the economy, reinvention of its activities has been the norm with the management striving to meet the needs of the consumers. Technological advancement, economic recess, and demographics have been the main aspects that facilitate change in strategies for the departmental store. The rival organizations have embraced fashion as their core strategy, and such entities include H&M and Zara. This has diverted the customer’s needs from a traditional perspective to modernity. In this analysis, the focus will be on the SWOT analysis of JCPenney, pricing strategy, distribution strategies, customer service, and competitiveness in the economy.
SWOT Analysis
SWOT analysis is the key tool in assessing the forces in the market environment (Herzog 22). Assessing the external and internal environment of an organization enhances utilization of company’s resources in achieving strategic goals and objectives. Basically, SWOT means strengths, weaknesses, opportunities and threats.
Internal Environment
Strengths
Cost Advantage: Though it may be perceived to be a small scale business entity as compared to other rivals, JCPenney boasts a remarkable cost advantage over its competitors. Its raw materials for the clothing sector are accessed at a cheaper cost than its rival companies. The processes involved in producing and marketing its product is efficient. Consumers appreciate organizations having a skilled workforce as they are assured of quality product, and JCPenney has attracted this skilled workforce.
Strong Management Team: The managerial team of the entity focuses on the development strategies, and aims at realizing high revenue outlay in the long run. Having a team that is destined to success, implementation of new strategies and undertaking adept research and development on the needs of the consumers proves vital for the success of the company. The management has realized the significance of having a dedicated team in the entity as it will increase their competitive advantage.
Sales Growth is Modest: the company’s revenue growth was hampered by the new measures initiated by the management including extensive Research and Development. The entity, in 2012, had spearheaded the modernization of the brand strategy to include changes in technology. Though in the last quarter, the sales revenue decreased, it was attributed to the lack of understanding and knowhow of the existence of the product brand in the economy. Like many other years, technology affected the sales revenue, but in a short run. It is predicted that, in this financial year, the company may not increase its sales revenue to the desired value—this is based on the results of the first quarter.
Established Brand: The success of the organization is attributed to the company’s established brand name. Customers look for business entities that have established and reputable brand name. This is gauged through assessing their comfortability, durability of the product, efficiency in operation, and treatment of customers. Having an established brand name, such as Arizona jeans, JCPenney is assured of competitive advantage.
Pricing: The pricing strategy of the company puts into consideration the demographic characteristics and income level of the individuals. Less developed economies have different pricing strategies as compared to developed economies. Such a system has ensured that the products are affordable across the globe. Consumers are willing to use the product because of its affordability. Pricing strategy has been based on market segmentation, and it has realized the desired success in the economy.
Weaknesses
Operating cost is high: JCPenney’s operating expenses is increasing and it has been facilitated by changes in the consumer trend. With new technological advancement and the fashion aspect, consumers appreciate products that are modern and meet their needs. Consumers are in constant demand of added services when they purchase the commodities offered, and this increases the cost outlay.
High Debt: With the new brand strategy that the company formulated, the operations were debt-financed. It was speculated that the debt will be offset with the increase in the sales revenues realized from the sale of the modern brand. However, this was miscalculated as the revenue outlay declined following the implementation of the product. In addition, the economic resurgence has facilitated the company to increase its debts in order to finance the operations of the company. In 2012, the debt increased magnificently, and these affected the profitability level of the entity.
Comparable store sales declined: As compared to the 2012 financial year, the sales revenue has declined considerably. The management believes that the sales growth is modest, and it will increase in the near future when its operations are stable. The rival companies are increasing their operations, and this has enabled them to increase their sales revenue. However, such a scenario is short-term, and management’s operations are going to increase in the near future.
External Environment
Opportunities
Business Expansion: The Company is currently increasing its operations beyond the domestic market and as a fashion-sensitive entity it has a strong global presence that aids in expansion of its operations. Increase in expansion would necessitate an increase in profit outlay for the entity. Innovation and technological knowhow would enable the company to market its products to the international market through the use of online services (Fifield 38). There is a probability for the company to embrace expansion strategies with an aim of increasing its operations in the long run. Business expansion is a key avenue for global success for any organization.
Market Share: In the recent past, the media has focused on the significance of fashion clothing, and how the society should embrace fashions and trends in the economy. Though the company had been slow in implementing the innovativeness of its operations, they have focused entirely on the quality of the brand that they offer. Consumers’ loyalty is based on the quality of products offered, and with strategies to attract and attract consumers being in place, the company will increase its market share in the economy. Having a strong brand strategy will pave the way for JCPenney Company to gain market share as customers would rely on the services of the company.
Acquisitions: The current economy requires an entity to increase its market share. This can be done through mergers or acquisition. Most of the successful organizations have reported an increase in their operations through acquiring small firms. JCPenney Company has a chance of increasing its operations through acquisition of small companies across the globe. This will necessitate an increase in profit outlay, making it competitive in the economy.
Threats
Intensified Competition: The industry is competitive and realizing consumer’s loyalty is quite a challenge and may lead to contraction in profit margin as experienced in the first quarter of 2013.
Rise in labor cost: With the economic instability, the wage rate of employees has increased and it has failed to incorporate the massive changes in the economy. Where the cost of labor is high, the management is faced with a scenario of either passing the cost increase to customers or ruining its profit margins. The former is the best the company can undertake, which will lead to lose of customers.
Economic recession: Following the 2007 global economic recess and financial crisis, organizations are implemented strategies that would enable them to acclimatize to such an economic climate. The income level of consumers is still at the lowest level, and organizations aim at prioritizing on the resurgent needs of consumers in order to increase profitability—through lowering the prices of commodities.
Summary of SWOT analysis
Strengths
Cost Advantage
Strong Management Team
Sales Growth is Modest
Pricing
Established BrandWeaknesses
Operating cost is high<...