1.The new strategy entailed a remake of the JCPenny retail stores to create shops focused on specific brands and types of goods within each store. It brought a new pricing system. The old approach of offering special discounts all through the year was eliminated and a new customer value pricing approach that reduced prices on all the goods across the board to upto 40%. The aim was to provide the customers a better price deal on all products instead of special discounts on specific products. It focused on building JCPenny to a higher end retailer and providing good prices on branded merchandise.
2. The result of change in the strategy implemented was that the current customers were overlooked and hence with the new pricing policy the old customers were lost and the strategy turned to be a failure. The sales decreased than the previous year declining the stock price. The company faced a net loss.
3. The strategy was a failure because only 1/3 of the stores had been converted to the new approach when the company began to heavily promote the concept. Due to this its new stores sales increased but the sales in old stores declined. JCPenny was not attracting customers from its rivals but from its old stores itself. The strategy focused on capital markets and not on how to satisfy customers to gain advantange in the competition.
4. The two generic strategies according to Micheal Porter were being the lowest cost operator and providing a product or service which is differentiated. Many times compaies are “stuck in the middle” in applying these two strategies. Neither they provide lower prices than the cost leader not a distinctive product from the differentiated business. This happens when the leader doesnt understand that he has to choose any one of them and cannot follow both to succeed in business. The result of such a strategy lets the customer confused of what they can get from you and what they should expect from you, a reasonable price or a distinctive product.
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