3 Marketing Lessons from the Rise and Fall of Ron Johnson
I am a big believer that marketing is a spectator sport. We can learn a lot from each other’s brand activities in the marketplace. When it comes to brands that give us a lot to learn from lately, J.C. Penney offers some valuable lessons. It certainly has been a roller-coaster year for the retailer since Ron Johnson was appointed CEO at the end of 2011. Despite his efforts, Johnson’s superstar reputation as former head of Apple’s retail stores didn’t translate to success at J.C. Penney, where annual sales reportedly dropped 25 percent.
Johnson’s departure this week marks a good time to step back and see what core marketing lessons we can learn from his tenure at J.C. Penney.
1. Know your core customer.
The first principle of marketing is to continually know your customer better than ever and better than your competition. J.C. Penney ultimately didn’t seem to know what their customers wanted — something that can stop a brand in its tracks. Johnson changed the retailer’s pricing strategy from offering discount sales to “everyday low prices,” a strategy that aims to offer customers low prices all the time so they don’t have to wait for or expect merchandise to go on sale. While the strategy may have seemed smart on paper, the brand was not able to break their customers’ penchant for “sales,” signaling that perhaps they didn’t fully understand how their customers shop.
Remember you can’t simply trust your gut when it comes to issues like motivating purchase and changing pricing. They require a thorough analysis and a solid research plan.
Lesson learned: Make sure you know how your customer is going to react before you make a radical change in your brand by doing some form of market testing. Do your homework to prevent a problem later.
2. Don’t expect customers to change their behavior easily.
Building awareness is one thing, altering perceptions is another, but creating behavioral change is at a whole other level. Changing deeply-seeded shopping behaviors and challenging the industry’s status quo are nearly impossible, creating the hardest of all marketing challenges. For Johnson, creating a strict “no sales” policy along with introducing new product lines turned out to be too much for customers to handle in such a short amount of time.
Lesson learned: Know when you are biting off more than you can chew. Ask yourself the question: “Am I asking my customers to accept too much?” Keep it simple for customers and they will return the favor with loyalty.
3. When you’ve got a plan, stick to it.
Yes, moving to an “everyday low prices” model was a bold move. I had a lot of respect for the strategy. The problem is that J.C. Penney may have caved in too quickly at the first sign of weakness. If you are going to make a bold move, you need to stick with it long enough to see if it’s actually going to work. You shouldn’t fold at the first sign of trouble and jump from one strategy to another.
Successful brands navigate through choppy waters and manage for the long haul. Or, in the worst case scenario, they modify their game-plan to an entirely new strategy and make a clean break. J.C. Penney eventually tried to straddle the fence by offering a mix of “sales” within a “no sales” campaign, which left consumers not knowing what to expect and as a result, not shopping.
Lesson learned: Stick to the plan and when you are ready to abandon ship, don’t waffle — jump entirely.