Marketing Strategy and Media Plan
The media plan of JC Penney has some strong points and some weaknesses. The strengths are that the advertisements endeavor to position JC Penney as a fashion store. On the other hand there are some media tactics that detract from the positioning it hopes to achieve. What is proposed is that JC Penney should desist from using techniques that do not support its overall marketing strategy. On the other hand the media mix and communications strategy of JC Penney should be focused more on positioning the company as a fashionable company (Muldoon. K, 2006). Finally, metrics should be developed to monitor the implementation and effectiveness of the media plan.
The marketing strategy of JC Penney is to target middle level consumers. Its pricing strategy does not target the premium segment like some of its competitors like Marcy’s, Dillard’s, and Belk, nor does it focus on discount store customers like Wal-Mart. The direct competitors of JC Penney are Kohl’s and Sears. In addition, the distribution strategy of JC Penney stores is to locate the stores in suburban malls. This strategy is a change from the traditional strategy of locating the JC Penney stores in downtown area. Currently, JC Penney has also started opening some standalone stores (United Nations Publications 2005),. At the same time, JC Penney has started selling its products on the internet. JC Penney has been particularly successful in selling furnishings and apparel through the internet. It has emerged as one of the most successful “hybrid” internet marketers. Its total internet sales crossed the 1 billion mark in 2005. As far at the product strategy of JC Penney is concerned it has started concentrating on brands like Arizona Jeans, Worthington, and St. John’s Bay. JC Penney has moved away from its drug stores business by selling off its Eckerd division. In addition, the strategy of JC Penney is to develop reposition itself as a premium store. It sponsored the surfing star Thomson to support a proprietary brand, entered a joint venture with Sephora and a premium casual wear brand for women Studio.
A part of the marketing strategy of JC Penney is to launch its back to the school campaign in which school children are targeted. As a part of this campaign JC Penney is trying to move up its image on the premium dimension by offering brands like Miss Bisou, Levis, South Pole, and Fang. In addition, JC Penney is selling school uniforms in partnership with IZOD. JC Penney promises to take care of special size needs of uniforms. The premium denim for the back to the school segment is buttressed by Young Men’s.
J.C. Penney had an advertisement budget of $400 million dollars during 2005 (McMains. A & Gianatasin. D, 2006). The media company Saatchi &Saatchi has now been selected as a media partner (J.C. Penny Company, Inc. 2006). The media strategy is that its TV commercials can be viewed online; ordering can be done immediately, and the visuals reinforce the images created by Penney’s catalog and print ads (Muldoon. K, 2006). The catalog, print ads and the web have a non-cluttering look that match the image of the store. News and current headlines work towards giving JC Penney a strong image. The largest catalog merchant of general merchandise image of JC Penney is further reinforced by the steady use of print media being used by JC Penney. The media mix of JC Penney is very interesting. Its advertisements on TV featured MTV Video Awards Show. This advertising media is innovative and targets teens and kids. In addition, there were new spots interspersed with the live show. It tried to target a wide range of audience from the age group of 11 to 36. Continuing with its back to school program, JC Penney sponsored the 2006 Teen Choice Awards, and the U.S.: Premio Juventud, on Univision. However it has been alleged that JC Penney’s interactive agencies are using ad ware and spy ware. The objective of such media use is to acquire more customers it is better for a company that is strengthening its premium positioning to go in for more conventional methods of customer acquisition.
What JC Penney should be doing as far as its web policies are concerned is to ask its interactive agency for a combined report for clicks through conversion for interactive campaigns through a common interface. The media strategy should include email campaigns, rich media placements and banners (Sissors. J & Baron. E, 2002). If JC Penney receives combined report, it can calculate its returns on investments measurements. JC Penney is claiming that it has adopted integrated marketing (Muldoon. K, 2006). In reality this means having an integrated multi-channel approach. There is a need to integrate banner advertising, email marketing, referral marketing, rewards programs, loyalty marketing, affiliate marketing, email marketing and banner advertising.
The media plan for JC Penney begins with the budget for its media expenditure. The media expenditure should be commensurate with the strategy of marketing the brands, repositioning its outlets and increasing its sales through the internet (J.C. Penny Company, Inc. 2006). To achieve these goals an expenditure of $550 million dollars is appropriate. The strategy of JC Penney should be to reinforce the element of premium in its positioning. In the 90s the image of JC Penney took a beating because its policy of middle positioning lead to mediocrity in offerings and weak image. The media policy in no way should be at variance with its strategy of improving its image. There are current media policies of JC Penney like using spy ware and ad ware that have the potential of harming the image of JC Penney. Such strategies should best be avoided. Similarly, the audience targeted by JC Penney should be divided into two specific groups. First, the targeting of school buyers should be targeted at school students. For example, the sites that are used by school students should have the banners of products that are in the ‘back to school’ category. Second, the targeting of above the middle consumers should use lifestyle characteristics encouraging those consumers who are conscious of style, who want to use high quality products and are having a yearly income between $80,000 and $150,000. The ultimate test of the media plan is the increase in revenues the media plan brings about. We plan that for the year 2007 there would be an increase in the overall revenue of JC Penney of 35%. The increase in internet sales would be between 40 to 50 percent. In addition, there would be same store increase in sales of at least 25%. The media outlets used would be TV, newspapers and magazines, billboards and the Internet.
The goals that the media plan would strive to achieve are to establish brands like Arizona Jeans, Worthington, St. John’s Bay, Miss Bisou, Levis, South Pole, and Fang. Further, the media effort should establish the per store sales of the standalone stores of JC Penney. Finally, the media should increase the internet revenues of JC Penney by at least 40%. The media plan shall also ensure that the image of JC Penney as a fast growing, successful company is well established in the minds of the investor. For this reason, the media plan of JC Penney should support the corporate image of JC Penney and ensure that the brand is positioned as one that is offering better labels than what was offered before. There is need to reinforce the perception that JC Penney stores are now offering excellent and high quality labels and brands. Further, the internet based marketing strategy should also reinforce the image of JC Penney as a high class departmental store.
These goals will be achieved during the one year period ending December 31st 2007.
One of the first media goals will be to build up a loyalty program. This should include a membership package offered to those segments of customers that have the highest potential. This can be determined from a survey made of regular online customers (Cooper. S, Hebing. R, & Hebing. R. Jr., 2003).. JC Penney will then determine the type of loyalty program that will deliver the best ROI. Each target will receive a membership package by electronic mail. This will have a letter explaining how the package works and describe 50 ‘standard gifts’. During the course of the year these JC Penney customers will receive three further letters each offering between 20 to 40 “Time Bound Opportunities”, opportunities to purchase select products at exceptionally low prices. These opportunities are designed to involve the members further partake in the program. Care will be taken that the special opportunities offered to the customers are appropriate to the segment that is targeted. For example, if the customer is in the age group 15-25 then products from “back to school” categories will be offered. The objective of offering time bound opportunities will be to increase the involvement of the customers. For example, those customers that are purchasing online will be offered exceptional opportunities if they visit the nearest physical JC Penney store. Similarly, those customers who visit the stores will be given a membership card with login details if they chose to purchase online products from the company website. They will get substantial discounts for their purchases. This media plan is bound to be successful because of the accurate targeting that is possible for JC Penney. The opportunity offerings will match the profile of the customer and those products offered to him will appeal to him, will be of direct use to him and will make it easy for him to use multiple channels. The purpose of this advertising medium and promotion is to build loyalty among customers. The extent of repeated buying that takes place will be an indicator of the success rate of this program.
Creating loyalty and encouraging its customers to use its different channels matches with the overall marketing strategy of JC Penney. Customers in suburban areas are encouraged to use the website as well as to visit the JC Penney stores. Moreover, the customer is strongly encouraged to purchase again and again from JC Penney. The discounts are being offered only on select items that would be of use to the target segment. These are not blanket sales promotions where the discounted items are sold to everyone. This strategy can be leveraged to increase website based sales substantially.
Email advertising is not recommended as e-mail advertising is associated with low cost purchases. For instance, e-mail advertising is much more effective for Wal-Mart customers than it is for JC Penney. Instead the media plan for JC Penney should have a referral program that will support its marketing strategy. In accordance with the objectives of JC Penney and its marketing strategy, the referral program will not offer a cash reward for a referral but instead send the customer a letter of thanks and a gift. The gift will be targeted at the segment to which the referrer belongs.
Both the referral program and the loyalty program will strive to get new customers, increase revenues and improve the position of the JC Penney brand, showrooms and website. Each of these programs will be targeted at those segments in which JC Penney wants to increase its sales (Sissors. J & Baron. E, 2002). For instance, JC Penney will target every “back to the school” customer with both loyalty programs as well as with the referral program. In this case every referral is likely to bring in more revenue and every school student who uses the loyalty program is likely to use more JC Penney products that are targeted to that segment.
The T.V. and print ads will also support the marketing strategy of JC Penney. The effectiveness of the ads both on T.V and print will measure the effectiveness of the campaign (Cooper. S, Hebing. R, & Hebing. R. Jr., 2003),. For example the T.V. commercials that are targeted at the “back to the school” campaign should get responses from the school segment. In case the responses to these advertisements are received from other segments, then the advertisements are not properly targeted. In case of print media there will be coupons that the respondents will be requested to return. From these coupons it will be possible to determine if these advertisements have been properly targeted. Similarly, TV ads on different channels will have a number or an answer that the respondents need to enter if they are replying online. This will help ascertain the accuracy of the advertising.
In accordance with the marketing strategy of JC Penney it is important that the company looks at every new customer acquired not from the perspective of the value of the purchases made but from the perspective of lifetime value of the customer ‘acquired’ (Sissors. J & Baron. E, 2002). This is the reason we have decided to focus on the loyalty program. This is the reason why JC Penney will compare the cost of acquiring a customer with the lifetime value of the customer. The lifetime value of a customer value will also form an important measure for evaluating the effectiveness of advertising (Cooper. S, Hebing. R, & Hebing. R. Jr., 2003). In addition, we have gone in for multi-channel marketing because research has shown that those customers who use the company’s three outlets that is catalogs, internet sites and store spend almost four time with the marketer than those that use only one channel (Kraslivosky. P, 2004).
The criteria for evaluating every advertising campaign for JC Penney will be based on the strategy of JC Penney and the objectives of the campaign. In this context the criteria and the required levels will be used as bench marks for JC Penney. For instance, the revenue increases directly attributable to JC Penney’s referral program will be used as a benchmark for future referral programs for the company. The ease of measurement is marked in case of online advertising and this provides several advantages to JC Penney. The advertising investment and its monitoring can be one almost instantaneously and responses can be fine tuned to the target market (Cooper. S, Hebing. R & Hebing. R. Jr., 2003).
Currently, the advertisements of JC Penney focus more on the digital effects and fast pace. For example, the Skateboarding ad shows music videos and games. The idea is that the latest digital effects will drive home the message that JC Penney is a fast paced premium retailer. What I propose is an execution in which there are women with old fashioned clothes who trudge into a JC Penney store and when they breeze outside they are transformed by the high fashioned clothes that they are wearing. Another, TV commercial that I want to be used by JC Penney is that of multiple screens showing models walking down the ramps. When the camera focuses on each screen the dress label shows JC Penney. One more TV commercial that I want to be used by JC Penney is that of an exceptionally fashionably dressed man walking down the road when an ordinarily dressed man catches hold of his coat. Then another man grasps him from the other side, and another, till there is a crowd that is trying to hold onto him. It is obvious that they are all trying to grab onto his clothes and the JC Penney label shows. Why I am suggesting a combination of these three commercials is that these commercials leave no doubt that JC Penney is now a store for fashion and this buttresses its premium image.
I also want the MTV video awards ads to be modified. In the ad there should be a screen where viewers are seated and watching the awards ceremony. In to the room walks in a fashionable attired woman and every one in the audience turns away from the screen and looks at her. Her lapel shows that she is wearing fashion from JC Penney.
The monitoring of JC Penney media plan will be done through a set of metrics. The first set of metrics will be related to the goals of JC Penney. These metrics will be the sales growth experienced, the per store sales growth rate, the positioning of JC Penney at the end of the period, the growth in brand sales and the percentage increase in online sales. Five performance levels will be attributed to each metric corresponding to a five point scale. For instance the sales growth will be 40% and above, between 35 – 39 %, 30 – 34%, 25 – 29% and 20 – 24%. The performance level of 40% and above will get a score of 5, 35 – 39% will get a score of 4 and so on. At the end of the plan period that is one year, corresponding to the performance the rating will be entered and a composite score calculated for each element of the media plan.
While monitoring, the second set of metrics will be related to the target audience and the extent to which the targeting has been accurate. The third set of metrics will be related to the budget and timing of the media plan. And the fourth set of metrics will be related to the performance and effectiveness of JC Penney media outlets.
These four sets of metrics will not only help JC Penney monitor the media plan but will also help identify the areas that need corrective measures. For example, if at the end of the year the lowest composite score is received by budget and timing, then individual elements of the budget and timing can be studied. If it is found that the actual TV expenditure exceeded the budget, then the responsibility for the overspending can be fixed and corrective action can be taken so that such overspending does not occur in future.
Based on the four sets of metrics, contracts will be drawn up with the relevant managers of JC Penney. For instance, the metrics for the evaluation of TV advertising effectiveness can be discussed with the advertising manager and adjustments made to these metrics before the monitoring period. Once the metrics have been agreed to then these metrics form a contract with the JC Penney advertising manager. At the end of the plan period the same form will be retrieved and the JC Penney advertising manager will be called in to rate the advertising effectiveness with the help of these metrics. The composite score of this set of metrics may even be used to determine the salary increments or promotion of the advertising manager.
To sum, there are some strengths in the current media plan of JC Penney. These include the sponsorship of events that are targeted at teens. However, there is a need to make some improvements in their media plan. This includes eliminating those strategies like spending on ad ware and spy ware that detract from the strategy of positioning JC Penney as an upscale fashion store. In addition, the message of TV advertisements should be focused on positioning JC Penney as a fashion store. Moreover, internet media strategies should support the marketing strategy of JC Penney. Finally, the media plan should carefully be monitored by using benchmarking.
Cooper. S, Hebing. R, & Hebing. R. Jr., (2003), The Successful Marketing Plan: A Disciplines and Comprehensive Approach, McGraw-Hill Professional.
J.C. Penny Company, Inc. (2006), Press Release. Release Retrieved on February 5, 2007 from: http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-newsArticle&ID=901229&highlight=
Kraslivosky. P, (2004) Newspapers Try Again to Reinvent the Insert Business, Retrieved on February 5, 2007 from: http://krasilovsky.net/brief-091304-shoplocal.htm.
McMains. A & Gianatasin. D, (2006) J.C. Penny Shifts to Saatchi, Retrieved on February 5, 2007 from: http://www.adweek.com/aw/national/article_display.jsp?vnu_content_id=1003086165
Muldoon. K, (2006), A Report From the Front, Retrieved on February 5, 2007 from: http://directmag.com/opinions-columnists/directmuldoon/marketing_report_front/
Sissors. J & Baron. E, (2002) Advertising Media Planning, McGraw-Hill Professional.
United Nations Publications (2005), Get Connected: E-applications in the Textile and Clothing Sector, Case study: JC Penney, pg 85.