JC Penney’s sweeping reinvention
is moving to 12 promo events—also
known as “months,” Mr. Johnson
quipped—this year from 590 in 2011.
Instead of spending $2 million per
promotion, Mr. Johnson said, the company will spend $80 million monthly
on promoting products. It expects to
save $300 million on advertising over
the next four years.
“We’ve now gone to a much more
brand-oriented message,” said Mr.
Clark. “Every month the message res-
onates with what’s happening that
month;then,secondarily,there are edu-
cational or informative messages about
the new JC Penney.”
Working with PMH, the retailer cre-
ated a personality—inspired by classic
Saturday Evening Post images—and
color palette for each month that will be
carried throughout marketing, in-store
displays and even external lighting.
“Anthemic work” will frame the
month’s big consumer events, such as
Valentine’s Day or July 4th. Images
from those spots will carry through to a
96-page perfect-bound book mailed
monthly, and featuring products and
The new marketing plan was well-received, but even that approval could
“No matter how successful the new
book and other forms of advertising are,
we do think there will be pushback in the
current über-promotional environment
as consumers adjust,” said Michael
Exstein,an analyst with Credit Suisse.In
addition, he said “since improved mar-
keting is a much quicker fix than the
actual in-store experience, we think the
company is at risk of overpromising the
in-store experience, at least initially, with
the new … advertising.”
Competitors will be watching closely,
but don’t expect rivals such as Macy’s or
Kohl’s to follow with dramatic changes
anytime soon. JC Penney’s reinvention
will be time-consuming, costly and
risky, and it’s dealing with “very promo-
tional peers whose cadence is not likely
to change,” Mr. Exstein said.
For example, several years ago
Macy’s sought to eliminate a fraction of
its ubiquitous promotions. After consumer backlash, it returned to its tried-and-true schemes.
Aleve, Advil try
is a bold bet, but it’s hardly fail-safe
to lock in gains
JC PENNEY from p. 1
they made after
VP-creative marketing, said he was
“gobsmacked” when Mr. Johnson outlined his vision to the chain’s senior
executives in early August.
The vision—seismic shifts cutting
across all aspects of the company’s pricing, promotion, presentation and products—was unveiled during a presentation in Manhattan last week.
Employees learned of the changes via
live feeds to stores and JC Penney headquarters in Plano, Texas.
It’s the most sweeping reinvention in
the $2.5 trillion retail category in recent
memory—if not in history—but Mr.
Johnson isn’t stopping there. Over the
the next few years, he promises to shake
things up further, putting departments
back in department store, eventually
remolding JC Penney’s stores into locations with 100 unique shops. He also
teased attendees with a brief discussion
of a new JC Penney prototype that will
be “heavily informed” by his corporate
alma mater that will launch in 2014.
Consumer reaction will commence
Feb. 1, when the changes will begin popping up in stores. But Wall Street has
already signaled its approval of the plan,
spurring a 17% rise in the retailer’s stock
and helping it hit a new 52-week high.
Still, many expressed caution.
“We believe the JC Penney team has
put together a unique and powerful
strategy that could alter the industry
long-term,” said Charles Grom, an analyst with Deutsche Bank. “However,
management’s confidence in the near-term success of the transformation” was
surprising, Mr. Grom said. He noted
few immediate changes to actual brands
and products, and added that the new
pricing strategy might not appeal to
some core customers.
JC Penney’s creative and marketing
teams have largely remained intact
throughout the process, according to
Mr. Clark. But the same can’t be said for
its agency partners. The retailer ended
its relationship with Saatchi & Saatchi
CEO of JC Penney
TYLENOL RIVALS from p. 3
BYTHEBOOK:A 96-page perfect-bound book featuring products and editorial
content will be mailed monthly to consumers.
in December and added Peterson Milla
Hooks and Mother to its roster. It continues to work with OMD and 360i.
“We shifted our philosophy from
an agency-of-record model to a model
[where we’ll] work with a collection of
the most talented people we possibly
can,” Mr. Clark said. An agency summit
that the company held several weeks
ago hosted 80 people representing
more than 30 agencies, he added.
Beginning Feb. 1, JC Penney will
embrace “fair and square” pricing—
everyday low prices, monthlong specials
and twice-monthly sales—and flat pric-
ing that eliminates 50- or 99-cent add-
ons. The transparent model was inspired
by the fact that only one in 500 JC
Penney items sells at full price, while
72% of revenue comes from products
sold at half off or more. Polarizing ads
from Mother act as a teaser for the
approach and feature the tagline,
“Enough. Is. Enough.”
“The customer knows the right
price,” Mr. Johnson said. “We can raise
the price all we want. She’s only going
to pay the right price. She’s an expert.”
The revised model also lets JC Penney
eliminate complicated promo schemes. It
Google embarks on unification
effort to better mine trove of data
GOOGLE from p. 3
tant—even if it’s never used for communication in the manner of Facebook.
It already has 90 million accounts, profiles that give Google the ID layer it has
With Google’s size and pervasiveness, a change of this scale is bound to be
scrutinized. A bipartisan group of eight
members of the House of
Representatives sent a letter to Mr. Page
last week, expressing concern about
users’ abilities to opt out of data collection and asking for clarification about
how Google stores information and
whether there are protections in place
for children and teenagers.
The profile data Google showed—
the result of its anonymous cookie—
was remarkable mostly for its banality.
But the company is shooting for an
always logged-in user.
“In short, we’ll treat you as a single
user across all our products, which will
mean a simpler, more intuitive Google
experience,” Alma Whitten, Google
director of privacy, product and engi-
neering, wrote in a blog post. (You Tube
and Gmail data won’t inform Google’s
anonymous cookie, which will still be
tied to anonymous browser activity.)
“data set is
together in a
way that I
mercial endorsement. Mr. Bon Jovi, representing the aging boomer facet of the
trend, joined Regis and Joy Philbin as
the first celebrities in the Advil campaign. The effort, “Real Advil Stories,”
came via McGarryBowen, Chicago.
Advil, along with Aleve sibling
Bayer aspirin, has substantially
ramped up spending in recent years as
J&J pulled the plug on ads for Tylenol
when its recall woes began in late
2009. J&J spent less than $1 million on
internal analgesics through the first 10
months of 2011, though it did spend
$13 million on Tylenol Precise pain
patches. That compares to a $164 million outlay on Tylenol in 2009 before
the recall crisis, according to Kantar
Media. Interpublic’s Martin Agency,
Richmond, Va., handles Tylenol.
J&J Chairman-CEO William
Weldon said on a Jan. 24 earnings conference call that full production for
Tylenol and other drugs affected by
recall crisis and a reopening of a key
plant in Pennsylvania won’t come
Such products as Tylenol Severe
Cold caplets and some children’s and
infant’s Tylenol brands have returned to
shelves, and J&J expects more to come
back throughout 2012, Mr.
“It will be
awhile until we
share,” he said,
adding that he
on the market
by the end of
2012, with marketing support
“People are looking forward to getting
[the products] back,” Mr. Weldon said,
citing signs of strong consumer
All branded competitors have
made gains on Tylenol. Advil overtook it for leadership among brands in
the category in the past year, and
Aleve pulled within about two share
points of becoming No. 2 for the 52
weeks ended Dec. 25, according to
But private label has made the
greatest gains, and now leads all
brands in the business, with a 38%
Mr. Flickinger said retailers generally reset OTC shelves in the spring,
so it may be more than a year before
Tylenol could hope to get its slots back.
Even then, he said, retailers won’t be
quick to give back gains won by their
high-margin store brands.
But even private label could benefit
from a little more Tylenol availability,
he said, since it can be hard for consumers to tell what store brands are
substituting for when branded products aren’t on the shelf.