Insights Industry News

April 18, 2013

It’s The Money, Stupid!

Lessons learned from JC Penney when they ignored their customers and took it upon themselves to re-invent the JC Penney experience.

Kevin Lonnie

by Kevin Lonnie

Founder & CEO at KL Communications Inc

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I consider it one of my more endearing features that I remain fascinated by the question “why?”

At least that’s true in a business sense.  On a personal level when I am asked to explain the “Whys” of my behavior, it’s usually followed by a “What” (i.e. “Why did you do that? What could you possibly have been thinking?”).

But I digress.

If I were to address the core “Why” of market research, I would say it’s about the money.  More specifically, it’s how to make and save money via better informed business decisions.

Of course, you don’t have to invest in MR, you can go with your gut and boldly stake out your own direction.

One man who chose to skip MR is Ron Johnson, the former CEO of JCP (soon to be JC Penney again).  Just two years ago, Mr. Johnson arrived with much fanfare after his spectacular success creating the Apple retail experience.   Mr. Johnson and some key stockholders took it upon themselves to re-invent the JC Penney experience.   They boldly rolled out this strategy on a national level.

This is what CNBC had to say after Mr. Johnson was fired:

Instead of focusing on what the JC Penney customer wanted, however, Johnson seemed to be intent on teaching the JC Penney customer what it should want. The sales that had been the hallmark of the JC Penney shopping experience were replaced with “everyday low prices.” The idea was that customers would be better off without the confusing strategy of constantly changing prices.

Clearly, the coupon-clipping JC Penney customer did not appreciate this lesson.

In the case of JCP it was not a bad idea to try and shift customer thinking, but it was a poorly informed strategy. Did JCP at least test the strategy in some of their stores or markets, or survey their core customers (data is power) to determine how it would translate nationally…no, they didn’t.  You can’t demand your core customers to change their relationship with you just because you have changed your strategy, or expect an entirely new group of customers to materialize and take their place.  The “fair and square” shoppers JCP wanted to attract never stepped up, while the traditional JC Penney shoppers could no longer experience the thrill of scoring a great coupon or deal.

It’s good to be an industry trailblazer…except JCP neglected to get buy-in from their customers who then chose not to ‘buy in’ JCP stores.  A hard lesson learned, one from which they may not recover.

In contrast, Apple could afford to be arrogant; they had an amazing visionary calling the shots.  And I would argue that Steve Jobs was one of the smartest, most intuitive ethnographers who ever lived.   Folks with relentless passion and curiosity are always observing and realizing what’s possible.

The moral of our story is that it is far wiser, effective, and profitable to create with your customers instead of foisting your ideas upon them.

Perhaps a few spectacular fails along the lines of JCP will prove a boon for the market research industry.  It’s all good to make bold transformational decisions, but at the end of the day, money talks.

And MR is very, very good at helping firms make money.

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brand strategyconsumer behavior

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