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  • cartorman cartorman Nov 9, 2012 6:37 PM Flag

    Ackman loosing big on JC Penney

    Ron Johnson's strategy of building small stores within the Penny's Store was a solid idea and would appear to be gaining some traction for certain of the mini in-store stores and for some of the locations that have made the transition. This said, taking promotions and coupons out of their promotional program was (and continues to be) a bad idea. First, for this to work, Penny's would need to have a store chain branding and equity that is not easily replicated elsewhere and have a product line that is in reasonably high demand. This is not the case. Additionally, it would not appear he did his homework on promotions and couponing. P&G tried to discontinue couponing some time ago and learned it was not acceptable to consumers, as they provide not only a promotional reminder, but provide an incentive to purchase on the basis of perceived value. Although the vast quantity of coupons go unused, the practice of using them yields results.
    The P&G test was done in a period of relative prosperity. In the current environment, the real/perceived value equation is even more persuasive for consumers.

    I have never owned or intend to own, anytime soon, Penny's stock.

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    • "P&G tried to discontinue couponing some time ago and learned it was not acceptable to consumers, as they provide not only a promotional reminder, but provide an incentive to purchase on the basis of perceived value."

      ...actually, the state of New York sued PG for discontinuing couponing...PG lost, and was required to continue the practice...the % of coupons redeemed is miniscule compared to the costs involved to print and redeem...PG was trying to reduce its costs with the idea of passing those savings to the consumer through promotional sales...the New York Attorney General didn't see it that way...

 
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