The J.C. Penney Debacle: Five Lessons Learned
By Ellis Verdi, president of the NYC advertising agency DeVito/Verdi
Here are the five lessons I learned from the J.C. Penney debacle — unfortunately we knew all of this before Ron took his ideas to market.
1. Advertising doesn’t work quickly to change behavior. Even if educating consumers on fair pricing made sense, having people understand "fair pricing" could take many years, and I’m not sure consumers even care. Aside from the pure challenge of getting the word out through advertising and in-store, because of its inherent complexity, it still requires enormous levels of advertising and time.
2. Consumers need to remain in control of value. After all, we are asking them to part with their money. "Trust me this is a low price" doesn’t work well unless they have years of successful experience with that store’s pricing format. In fact this was a wholesale change and those consumers seeking a deal, did not know they were or were not getting one.
3. The money guys have a hard time with a strategy dependent on communications. Ron’s idea requires a belief that consumers will see the wisdom of the change if they learn about it through advertising. Too many times the financial types don’t have the tools to evaluate that and actually tend to believe it more than they should – witness the boom/bust of the .com era, when financial organizations put tons of money in advertising, often with little to no success. Inventory management, finance, sourcing, staffing etc are all more tangible, more-easily quantifiable.
4. Ron actually didn’t have the right experience for Penney’s. Not that a direct knowledge of this type of retailing is critical, but the vision he created can’t be justified in any way based on his past experience. Neither Apple nor Target fits the bill. Most understand why Apple is less than relevant (high priced product that has a strong following, with good built in margins because it is manufactured by Apple versus buying from others etc…) but Target is also a different breed. Target’s cool commercials have the luxury of not having to be accountable in the same way (they sell detergent and products we need — not just want), and its message is critical to Target only because they have to create a look and feel to differentiate from Walmart. This direction has nothing to do with a value/price message, nor does it have that hard-hitting quality that is needed to drive traffic. JC Penney advertising has more responsibility. Target creative work shows a unique look/feel; J.C. Penney needs a strong, substantive message as well as a look/feel.
5. Even the most innovative strategies have to reflect what we know about the customers. It was reported that many SKUs of best selling products were discontinued because of a vision to go slightly higher end or specialized. Essentially eliminating products that customers want, in order to bring the tore up a notch, is bound to cause a backlash. We have learned there is often not as much thought given to the collateral damage of simply "elevating a brand," as compared to successfully serving the masses.
Entertainment Industry Foundation to sponsor Revlon women’s event
LOS ANGELES — The Entertainment Industry Foundation is sponsoring the Revlon Run/Walk for Women for the 20th year in a row, the group said Tuesday.
Emma Stone and Olivia Wilde will act as Revlon brand ambassadors and hosts for the New York event, which takes place on May 4, while Halle Berry will do the same for the Los Angeles event, on May 11, along with Entertainment Tonight correspondent Brooke Anderson and Dancing with the Stars host Carrie Ann Inaba.
To date, nearly 1 million people have participated in EIF Revlon Run/Walk for Women events, which have distributed more than $68 million to support women’s cancer research, counseling and outreach programs.
Obama looks to raise taxes on cigarettes
WASHINGTON — President Barack Obama has proposed increasing federal taxes on cigarettes, drawing criticism from tobacco companies and praise from anti-smoking groups.
As part of his proposed budget, Obama proposed raising the tax on cigarettes by 94 cents per pack, with similar increases on other tobacco products. The current tax is $1.01 per pack.
Published reports quoted spokespeople for tobacco companies like Reynolds American and Altria Group as saying the proposed tax increase was unfair because it would target low- to middle-income consumers. Still, according to the Office of Management and Budget, the proposed increase would raise $78.1 billion in federal revenue over the next decade for early childhood education, and a study by the Congressional Budget Office found that increasing tobacco taxes by 50 cents would prompt nearly 1.4 million adult smokers to quit by 2021.
"We urge Congress to support this proposal, which would have as great an impact in reducing tobacco use among kids as any action the federal government has taken," Campaign for Tobacco-Free Kids president Matthew Myers said.