Lessons Learned from the JCP Re-Branding Bust · Lessons Learned from the JCP Re-Branding Bust Speakers: Sandi Carangi Rick Grady. Josh McAfee

Lessons Learnedfrom the JCP

Re-Branding Bust

Speakers: Sandi CarangiRick GradyJosh McAfee

Sandi Carangi• Director, Credit Union Marketing

Services, Pennsylvania Credit Union Association

• Provides marketing analysis and consulting services to credit unions throughout western Pennsylvania.

• MBD Council Education Committee member.

June 14, 2011 – J.C. Penney names new CEO – Ron Johnson, former SVP at Apple

Inc. and former executive at Target (he also joins company BOD effective 8/1/11)

October 4, 2011 – J.C. Penney announces new president, Michael Francis, former

CMO at Target (will be responsible for all merchandising, marketing, product

development, etc. and report directly to Ron Johnson, CEO)

*Source: jcpenney.net

Transforming the JC Penney Brand

February 1, 2012 –JCP unveils new logo, new pricing,

new promotional strategy. *Source: adage.com

• Fair and Square pricing – no more “sales” or coupons– “Everyday” low prices– “Month-Long” value prices for select items– “Best Price” closeout prices on the first

and third Fridays of the month*Source: adage.com

• JCP is spending $80 million a month to advertise new pricing, new spokesperson (Ellen DeGeneres), new budget collections, and new mini-boutiques within each store

Resulting in a “low-price, high-style, tech-chic, customer-centered, all-boutiques-to-all-niches identity.”*

* Susan J. Aluise, InvestorPlace

JCP New Strategy• JCP promotions – 12 per year (vs. 590

previously)• New whole figure prices – no more 99 cent

add-ons• Cut prices by 40% and eliminate clearance

sales• “Enough. Is. Enough.” No more coupons

Failure in Numbers• 1st quarter profits 2011 +$64 million• 1st quarter loss 2012 -$163 million loss

April 6, 2012 – JCP lays off 600 of its home office staff in Plano, TX.June 19, 2012 – JCP announces Michael Francis has left the company after only 8 monthsJuly 10, 2012 – JCP announces laying off another 350 workers

Best quote from JCP CEO Ron Johnson…

The strategy was “kind of confusing” to consumers so JCP will be “moving away from the word ‘month-long value’ because no one really understood that” and instead JCP will go back to calling it a ‘sale.’

From Forbes.com - Stated at investor conference in New York 6/12

Richard (Rick) Grady• Vice President for Research, Texas

Credit Union League• Leads all primary and secondary

research activities for the League, as well as special projects.

• MBD Council Education Committee member.

A brand is:A network of associations with a name

in the brain of a person

Brands are pieces of information, meanings, experiences, emotions,

images, intentions, etc. interconnected by mental links of varying strength.

• Grabs their hearts• Creates the image• Must be clear, consistent, and

constantly visible• Must be authentic, relevant, fitting

perception, and understood• Creates difference

Josh McAfee• VP/Marketing, Leaders Credit Union • Responsible for the brand appeal of a

financial institution that is 26,000 members strong and $168 Million in assets.

• MBD Council Education Committee member.

JCP Brand Failure: humorous or foreboding?

• Surface-level rebrand: no meaningful change• Failure to modernize retail spaces and

policies• Disconnect between promise and payoff• Many credit unions have the same problem

CUs = JCP: we can relate• The “shotgun” approach to promotions• Even “cross-selling” credit unions

promote in silos• We don’t tie our product/service mix

back to brand

What suffers?• Our branches become collateral-heavy• Frontline-staff is overloaded with off

rate-sheet promos• Website homepages look like a mess• Everything being promoted = NOTHING

being promoted• We become JCP.

How do we fix it? Brand-based marketing

• “Transitioning from Product-Based Marketing to Brand-Based Marketing” –Mark Arnold (May 2012)– Time to move away from silo-based promotion– Stop “guessing” at what members want…– …or worse, putting them in products they don’t need.

• Put down the fire-extinguisher and walk away• Start accomplishing something meaningful for your

members

Holistic vs. Product-based Value• What does product-based promo look like?

– JCP: facelift ≠ adding value– “Recycling” campaigns with different rates/fees,

colors, signage• Holistic brand-based promo looks at

individual need– Frontline staff members become consultants– Calls to action become more open-ended

The Brand-Based Advantage• Much easier to manage• Shift to a promotions schedule that ties

everything to mission/vision• Worry less about benchmarks, more

about creating value– CUs that execute well on this model see

strong balance sheet benefits

QUESTIONS AND

DISCUSSION

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