Pricing strategy at JCPenney Question 1 essay

Pricingstrategy at JCPenney


Ofthe major pricing strategies that exist in marketing, the one thatbest describes JCPenney’s “Fair and Square” pricing strategy isthe customer value based pricing strategy. The new pricing strategyis centered on customer’s perception of value. Fair and Squarepricing strategy involves tagging different commodities using thered, white and blue tags depending on the themed sales. However, thered tag represented regular prices that are seen to be lower on allmerchandize in the store. According to the newly adopted pricingstrategy most customers are very well educated on the price that thatgets the value for their money. This is achieved when customers areable to place particular benefit that they get from certain productsand setting a price that gets back that value.


PreviousJCPenney’s pricing strategy was being used was competition basedstrategy that involved numerous discounts as well as coupons. Thisform of pricing strategy is usually based on strategies, costs,market offerings of fellow competitors on the same market prices.This form of strategy is sometimes perceived to be ideal as itattracts demands, pushing up sales. However it fails to comparecustomer’s perceptions to value as it may be higher or lower thanwhat is actually being offered. The new customer strategy isperceived to be beneficial to both the business as well as to thecustomers as it matches up product value and customer’sexpectations. However, it is important to understand that customersmay be forced to make purchases from other companies if there arediscrepancies in price fixing.


Productplays the central role in Fair and Square pricing as it the goodsthat are offered by JCPenney’s stores. They are critical as theirvalue in the customer’s mind is determined and a complimentarypricing strategy is then adopted. Place plays a critical role inpricing strategy especially during limited sales when themed saleshappens at JCPenney’s stores. This is achieved by tagging certaincommodities using the white and blue tags. This form of strategy isimportant in attracting particular sales during certain periods overlimited sales. Promotion is yet another marketing mix that is adoptedby these stores to effectively communicate and eventually persuadecustomers to make purchases. This particular activity is achievedthrough making certain promotional services to the customers such asthe free hair cut offered in JCPenney’s stores.


Fairand square pricing strategy fairly failed in the end as it was ableto get back customers who were previously lost. However, thisstrategy was failed to increase revenue and profit to the company,which is a critical objective to any business. This strategy was seento be successful in that it effectively captured the consumer’sexpectation on the costs of products in regard to the perceivedvalue. As a result, it attracted sales as consumers were fullyintegrated in the pricing strategy that captured their personalresearch as well as the past information that they relied on.


Theexit of Johnson in addition to the reappoint of Mike Ullman as thenew C.E.O is likely not going to make any significant change atJCPenney. The main reason for this is that the business’sstrategies are fully centered on customer expectations andsatisfactions. Most of the consumers of JCPenney are fully integratedin the newly limited sales that the business offers them as well asthe everyday low sales. In this regard, customers are likely to exitin case of any abrupt changes in pricing strategies that does notfully integrate them.