Question

JC Penney has faced an identity crisis in recent years. Select the optimal generic strategy for JC Penney to pursue so the company achieves sustainable competitive advantage. Support your selection with researched sources. Include the generic strategy you have selected in the subject field of your initial post.

Debate the pros and cons of each of the generic strategies with your classmates to determine the best generic strategy for JC Penney to pursue. You will know their selection from their subject line.

Should JC Penney pursue a different generic strategy for the different markets it competes in? What are the strategic implications of changing its strategy?

Answer 1

There are 4 generic strategies given by Porter.

He has explained these strategies using two dimensions. One is competitive advantage and other is competitive scope.

1. Cost Leadership: It is the strategy that says to provide product/ services at the lowest prices than competitor.
2. Differentiation: This means providing the unique products/ services to the customers compared to the competitor. The product must have unique features that are not available in competitor’s product.
3. Cost Focus: Being a cost leader for niche market. This is with specific customer segment.
4. Differentiation Focus: Focusing on the basis of differentiation, but with specific target market.

What went wrong:

JCP tried following strategies:

1. Everyday discounts- Prices are reduced
2. Easy pricing - Rather than $14.99 it priced it $14 or $15
3. Coupons were introduced
4. Fair pricing
5. New logo

Even after applying such strategies, JCP is still struggling. Reasons are as follows.

1. Frequent changes in leaders.
2. Unable to identify the customer needs.
3. Unexpected high sale-60% or 65%off created confusion
4. Online sales is not done rigorously.

Pros and cons for each generic strategy for JCP.

Strategy	Pros	Cons
Cost leadership	May attract more customers	It will create financial crisis as the company is already having high debt
Differentiation	May be useful in financial terms as the unique products have high prices and ultimately high margin	Again due to high debt, it is very risky to invest in expensive products.
Cost focus	Useful to segments like customers for apparel, Shoes and other related products	Initially company would not be able to recover the debt. It will not give immediate results.
Differentiation Focus	Useful for appliances, and home décor merchandise. This can increase the sales.	It will require initial investment for the products.

Should JC Penney pursue a different generic strategy for the different markets it competes in? What are the strategic implications of changing its strategy?

Yes. JCP should use integrated cost- differentiation strategy.

For the apparel JCP can focus on differentiation strategy for just Women and Kids clothing. The benefits are obvious. Women are more fashion conscious and they always look for the unique clothes and accessories. As women customers will automatically increase kids customers. Since those fashion segment has high margins, company can work on its financial system also.

For appliances and other home décor, company should focus on differentiation. As home décor is related to the emotions and comfort, customers will select the products on these criteria. For such unique, comfortable products, people will not hesitate give some extra bucks.

Apart from that company should work on the facility system. The expensive but unique products must be in front. This will increase the foot steps in the store.

Online selling must be encouraged.