Is JC Penney’s No Coupon strategy working?

I saw this article today regarding the JC Penney’s pricing strategy. This year they eliminated their coupons that brought many early bird shoppers into the store. This year they decided to go to a no copon strategy and it does not seem to be yielding the results they anticipated. It will be interesting to see if they re-think the new strategy. Remember New Coke? You don’t? Point proven.

http://moneyland.time.com/2012/05/17/why-jcpenneys-no-more-coupons-experiment-is-failing/?iid=pf-main-lede

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Comments

  • Bill  On May 17, 2012 at 5:53 pm

    The CEO of Penney’s has made marketing and employee compensation decisions that I predict will be fatal to the company unless he quickly rescinds those decisions. The Amercan retail shopper has been conditioned over the last forty years to make discretionary purchases primarily when there is a financial incentive to act. And there is a sense of accomplishment to many when they make a purchase at a price lower than the published “regular” price even they believe the “regular” price has been inflated.

    Coupons and reduced sale prices incentivizes customers to take action before they lose the opportunity to save on the purchase price of items. Without that incentive, many shoppers will defer purchasing some items until the need for them is so acute that it is no longer a discretionary purchase.

    Then to add insult to injury, he removed the financial incentive of commissions on the sales made by their salespeople. It has long been proven that sales productivity declines when financial incentives are removed where they were previously offered. The negative impact is greater where they are removed than in organizations where they were never offered.

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