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Just a couple of quotes from the article below..
"Many shoppers may need to see the markdowns to believe they're getting a good deal, said Barbara Kahn, a professor of marketing at the Wharton School."
BULLSHIT! The key word in the sentence above is "BELIEVE" as in (be fooled, be played for a sucker by misleading ads). Most consumers are well aware of the fact that they are being screwed by retailers, always! ONE OF the main problems is "professors of marketing" who believe that they have properly educated themselves as far as how to "manipulate consumer behavior". <-- This is my own comment..
"Johnson said future ads will do more to explain the new pricing scheme"
Perhaps consumers are sick and tired of having "new pricing schemes" properly explained to them by "marketing wizards" precisely because everyone realizes they are nothing but SCHEMES! Designed for no other purpose than to grab as much of our worthless imaginary fiat as humanly possible, as quickly as possible.
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J.C. Penney CEO Ron Johnson gets lesson in pricing <-- source
Susan Berfield,Sapna Maheshwari
Sunday, May 27, 2012
Here's a riddle: How do bargain hunters know they're getting a bargain if there's no hunt? The answer is, they don't.
That's one of the lessons Ron Johnson has learned in his six months as chief executive officer of J.C. Penney. Johnson developed Target's "cheap chic" persona before moving to Apple, where he created the world's most profitable stores. Now he wants to wean Penney's middle-market customers from a steady diet of coupons and almost constant discounting.
So far, they're not buying.
"The transition has been tougher than we anticipated," Johnson said during a May 15 presentation to investors.
Johnson's strategy was deceptively simple: replace Penney's relatively high list prices - which it aggressively discounted - with lower everyday "fair and square prices."
The early results have been dismal. The department store chain, with 1,100 U.S. stores, had overall revenue of $3.2 billion in the first quarter, and lost $163 million during that time. Sales at stores open more than a year fell an average 19 percent. The number of people coming into Penney stores dropped by 10 percent, and the number of those who bought something fell, too, by 5 percent.
Before Johnson's arrival, a pair of sandals at Penney might have been priced at $39.99 and, after all the coupons and discounts, sold for $29.99. Now the shoes are available for an everyday price of $30 from the start. Johnson's setup allows special monthlong values for some items; in May, for example, the sandals could go for $22. And if some are still in stock, they would later be marked down to the so-called best price of $15 on the first or third Friday of the month (when most shoppers get their paychecks).
Couldn't figure it out
"I went into a store a couple of weeks ago, and I couldn't figure out what was what," said Jay Margolis, a former executive at Limited Brands.
Johnson was recruited to Penney by Bill Ackman, whose hedge fund, Pershing Square Capital Management, owns 18 percent of the 110-year-old retailer.
In January, Johnson unveiled his four-year plan to transform Penney into America's favorite store. In a presentation to investors and suppliers, he described a department store built around a so-called town square, with up to 100 boutiques carrying items made by well-known brands specifically for Penney. The first store-within-a-store will sell home goods by Martha Stewart.
But Johnson said first he had to fix the pricing. "We wouldn't have had access to many of our new brands and design partners without implementing a new pricing model," he said by e-mail.
Less than 1 percent of all Penney merchandise was sold at full price prior to his arrival. The company offered 590 promotions a year, yet the average customer made only four visits during that time.
"That means the customer ignored us 99 percent of the time," Johnson said in January. "Steve (Jobs) would have called this insanity. J.C. Penney spent $1 billion (on promotions), and the customer ignored us. It's like in junior high school, if you keep calling a girl and she doesn't call back, you seem desperate."
Although Johnson said future ads will do more to explain the new pricing scheme, that may not help as much as he hopes.
Many shoppers may need to see the markdowns to believe they're getting a good deal, said Barbara Kahn, a professor of marketing at the Wharton School. That's especially true when it comes to the basic items - from underwear to dinner plates - that Penney mostly sells.
He got it backward
Johnson said at the January presentation that shoppers distrusted the store because it offered so many discounts it was impossible to know the real price. Yet he may have gotten it backward.
"Underneath the bargain craziness is a lack of trust in business," said Kit Yarrow, a consumer psychologist and professor at Golden Gate University. "But now J.C. Penney has made it look like its customers were buying cheap stuff. People are looking at it the opposite way J.C. Penney had hoped."
Susan Berfield is an associate editor at Bloomberg Businessweek. Sapna Maheshwari is a Bloomberg writer. E-mail: sberfield@bloomberg.net, sapnam@bloomberg.net
This article appeared on page D - 2 of the San Francisco Chronicle
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/05/26/BU9I1ONEKH.DTL#ixzz1wGm41cc4
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