Through outsourcing and strategic alliances

At the beginning of 1992, the computer hardware industry had become completely vulnerable to commoditization. This resulted in a vicious price war which took market share away from premium priced brands like Apple.As a result, the company had to formulate new strategies in order to build and maintain a competitive edge. In this respect, Apple stood in a unique position because its level of vertical and horizontal integration was matched only by IBM’s and IBM was competing in a different market.One of the strategies that the management undertook was to open its system to other standards and expand market share that way. This strategy was implemented through outsourcing and strategic alliances.Through outsourcing and strategic alliances, the company was able to not only minimize costs but also to differentiate its product line in order to widen its market appeal. However, as mentioned before, Apple stood in a unique position to exercise a considerable level of impact on the indu stry whether competing with a closed system or an open-ended one.Porter’s five forces before opening the systemWhen Apple had first started selling its computers, the threat of new entrants had been minimal because the company was implementing a proprietary technology. However when IBM entered the industry with its open-ended systems, most manufacturers could manufacture clones at a fraction of the cost.This increased the threat of new entrants. Because the threat of new entrants was high, the threat of substitute products was also high. In this context, Apple began to lose market share because even though it was generating considerable value through packaging hardware and software together, the fact that it manufactured all the components in-house meant that the company was forced to sell its products at a premium price.This was a severe disadvantage for the company as competitors could offer the same level of features in their products at a fraction of the cost. Because of the high threat of new entrants and substitute products, the threat of competition was also very high.The competitive strategies that major players in the industry were implementing at the time were based on both hardware and software. In this respect, Apple’s graphical user interface had gained considerable market share because of its ease of use. However Microsoft had also been developing the Windows operating system which had competing features and which had the additional advantage of greater market penetration.Competitive strategies in the computer hardware industry in the mid 80s started to focus more on software as hardware was becoming increasingly commoditized. This meant that the only way for hardware manufacturers to develop a unique selling proposition was to package more software features into the hardware.The hardware manufacturers could not incorporate the Apple operating system because it was not compatible with any hardware specifications other than those man ufactured at Apple. This resulted in increased market penetration for Microsoft’s operating system. However because Apple was developing a proprietary technology, it could not take advantage of the fast growing size of the market. As a result, the company was forced to confine its marketing and selling operations to the existing clients.However the availability of low priced competitor products meant that Apple was losing even its existing customers to the clone manufacturers. In this respect, the most profitable customer group was that consisting of corporate clients. However this segment of the market was price sensitive and therefore prioritized cost considerations ahead of other product features.This was the reason why Apple had been experiencing decreasing returns at the beginning of the 90’s. In spite of the nature of its organization structure which enabled it to offer complete solutions, Apple began to suffer a distinct disadvantage from its high prices.The fac t that there was a high threat of new entrants and substitute products resulted in a high threat of bargaining power from the customers. Clone manufacturers like Dell did not have to engage in extensive research and development activities in order to manufacture new products. Instead they manufactured products based on standards pioneered by IBM.As a result, cost of production was considerably lower for these companies than they were for companies like IBM and Apple which had to conduct capital-intensive research and development activities periodically in order to bring out new product lines. With Dell for example, the competitive advantage lay in its unique distribution structure which cut costs further. This enabled clone manufacturers to offer a wide variety of product offerings, in the process facilitating a considerable level of bargaining power for the buyers.The bargaining power of suppliers was medium because most hardware manufacturers tended to maintain a joint venture fra mework in developing their products.For example, IBM had a partnership with Intel for sourcing the latter’s microprocessors. This partnership meant that manufacturers and their suppliers did not have to negotiate prices every time they developed a new standard. Therefore the industry was favourably positioned in terms of the bargaining power of suppliers for those manufacturers who maintained open standards.

Education versus Experience Essay

The topic under discussion today is experience versus education. Can experience make up for the lack of a degree, or does a degree provides something that experience cannot? Is one more valuable than the other? Talk about a discussion that will have you chasing your tail! It’s truly a trap debate because the right answer is ‘it depends’ (Author: John Ha www. reliableplant. com). This means that we can not give an overall view to the worlds prospective. In this essay I will prop up the experience group as weighed against to the education as according to me it is more worthy and admirable. Although both the terms are by hook or by crook inter related but still there is one chief difference in the two. Education can be gained through experience but there is no chance of gaining experience through education as experience is only achieved by understanding different circumstances. There is an immense need of understanding the meaning of different textbooks educating you with different things. This understanding can only be gained through experiencing the unusual circumstances of life. This means that although education is awfully essential part of our lives but it can not hammer the experience that an aged person has. In my eyes experience can tackle a problem without education whereas the education cannot tackle a problem without experience. In this article I am sustaining the experience and philanthropic worth to experience as weighed against to the education. In this article more focus is on firefighters and paramedics that require more experience than education. Even a highly educated person cannot deal an emergency as well as a lesser educated and more experienced person can. ‘Education is the process of training and developing the knowledge, skill, mind, character, etc especially by formal schooling, teaching and training’ (Webster’s Dictionary). This means that education is only amassing of knowledge about something but we are not proverbial with the things which will ensue when we will try to put this knowledge into it. ‘What is education, knowledge in basic skills, academics, technical, discipline, citizenship or is it something else? Our society says only scholastic nitty-gritty are imperative and that is based on accumulating knowledge without understanding its worth. How about the processing of knowledge, using muse, farsighted ambitions, creativity, risk, ability to rebound back from failure, motivation? Most education institutions don’t deem these skills. These skills are allied with understanding the value of knowledge. There is a huge disconnected gap and this is a problem for high school students in particular’ (www. motivation-tools. com). This is education all about and what we can dig up and be on familiar terms with from education. ‘Experience is the act of living through an event or events; personal involvement in or observation of events as they occur’ (Webster’s Dictionary). We can be the expert in any subject only by being greatly experienced in the certain subject. It is not a subject of our school time tables. Here it means that the subject of our life. It means that certain profession of our life for example Firefighter-Paramedics. ‘Experience refers to the nature of the events someone or something has undergone. Experience is what is happening to us all the time as long as we exist. Experience, used in the present tense, refers to the slanted nature of one’s contemporary existence. Humans have a multitude of expressions, behaviors, language, emotions, etc. that typify and transmit our moment-to-moment experiences. Experience, used in the past tense, refers to the accumulated product (or residue) of past experiences e. g. , after many hours of training and practice building furniture out of wood, we now consider him to be an experienced wood craftsman’ (www. wilderdom. com). We are more in concern with the experience from the past. The events that took place and what we learnt from them. â€Å"Firefighters are rescuers comprehensively trained first and foremost to put out perilous fires that threaten civilian populations and property to salvage people from car accidents, collapsed and burning buildings and other such situations. The increasing convolution of modern industrialized life with an increase in the scale of hazards has stimulated both advances in firefighting technology and a broadening of the firefighter-rescuer’s remit. They occasionally provide emergency medical services† (WIKIPEDIA). This is one source that requires more experience in there profession. â€Å"A paramedic is a medical professional, habitually a member of the emergency medical service, who principally provides pre-hospital sophisticated medical and trauma care. A paramedic is emotional with providing emergency on-scene treatment, catastrophe intrusion, and life-saving stabilization and, when apposite, convey of ill or injured patients to definitive emergency medical and surgical treatment facilities, such as hospitals and trauma centers† (WIKIPEDIA). This is another field which acquires mostly the experience than education. Although the education is very essential part in this profession but without experience it is almost impossible to deal with emergency cases. This is the reason giving great importance to the experience sectors.

Health Education Plan Assignment Example | Topics and Well Written Essays - 1000 words

Health Education Plan - Assignment Example Particularly, in Los Angeles, more than one in five students in Grades 5th, 7th and 9th were found to be obese (ibid.). This truth puts the youth at risk of obesity. This paper addresses the present problem by proposing a community health education plan for parents of at-risk and obese youth in Los Angeles. First, the paper tackles the present problem based on recent statistics and community health analysis. Second, it proposes a comprehensive education plan aimed at parents to guide them in child weight management. Third, it suggests relevant research to control the obesity situation in the Los Angeles community. The health education program shall run for six months, and a monthly assessment should be done to note down the improvements not only in the weight of the population but likewise in their eating habits and view of nutrition. The program shall include nutritional information, cooking sessions, exercise drills, activity planning, school and house-to-house visits, and follow u p sessions. The objectives of the program are as follows: To provide information on obesity, its causes and effects, and other related information To improve the eating and cooking habits of families by conducting cooking sessions, information campaign, and school/home visits To increase the physical activity and exercise habits of the community by conducting physical exercise, teaching them how to plan and monitor their children’s physical activities, and providing means for physical activity among the youth To inculcate the value of health and good nutrition among the youth by holding poster-making contests, rhythmic gymnastics, and other forms of exercise. The participants shall be composed of parents and children. Mothers and fathers are both welcome to attend the activities, which shall be held for two hours every Saturday morning and may extend in the afternoon, to give way for other activities such as contests, exercise, and other physical activities for children. The success of implementing a health education program depends on proper planning and assessment. Thus, in order to achieve success, an analysis of the target population and Los Angeles county based on Windshield Survey must be conducted first. A Windshield Survey of Los Angeles primarily shows that it is a well-populated county. It is home to different ethnicities including African-Americans, Latinos, Whites, and Asians. In a research conducted in 2001 (cited in County of Los Angeles Department of Health and Services, 2003), it was found out that 55 percent of the county’s population is either overweight or obese, and many others are at risk for becoming overweight. Similarly, more than 15 percent of the adolescent population is overweight. African-Americans were found to have the highest incidence of obesity, and the problem is mostly related to low economic status (OHAE, 2007). Thus, the highest prevalence of obesity was noted among families with the lowest incomes. The relati on between poverty and obesity suggests the poor nutrition that families can afford. Families with low income usually feed their children with starch and carbohydrates, which is opposite the daily nutritional recommendation of five servings of fruits and vegetables and little fat. In this regard, it is important to include in the health education seminar the proper nutrition or recommended foods that parents should provide their children. This topic should be included in Day 1. The first session should

Research ethics and nature of practitioner research Literature review

Research ethics and nature of practitioner research - Literature review Example Even so, it has only been until recent that, in education, teachers began benefitting from the practice. Practitioner research has been employed as a means of bridging the gap between practices and theory. There have been the urges for teachers to cultivate action research as a way of improving education, as well as reconstructing knowledge (Berker 103). Other areas of practice have also not been left behind, all targeting to add to existing information, as well as bridging the gap between theory and practice. Various debates pertaining to practitioner research have emerged. As such, there have been deliberations pertaining to the real nature of practitioner research, as well as its values, qualities and the underlying activities. This paper explores the nature of practitioner research. Besides, ethical codes of conduct have been one of the areas that can not be overlooked as far as the efficacy of practitioner research is concerned. Putting this into consideration, this paper explor es various issues pertaining to ethics, in relation to practitioner research. Ethics and practitioner Research Ethics are about actions people or members of certain community should undertake. There is a close relationship between ethics and morality. Thus, a practitioner who behaves in a manner that is moral can be said to uphold ethics For instance, journalists who tell the truth would be said to be ethical. In the same way, soldiers ought to be courageous and a research practitioner should stick to ethics of research (Pewro 56). Ethics are also a set of desirable feature that an organization needs its members to uphold. Despite the fact that fact that ethics have often been associated with mannerism or etiquette, the two terms are not the same. In this regard, codes of ethics should not incline on areas such as a mode of dressing, as well as politeness of the research practitioners. Additionally, there is no association between aesthetics and ethics. Parallels can only be drawn b etween morality and ethics. Thus, ethical codes of conduct are based on principles of morality. Nevertheless, it also encompasses what is desirable. For instance, a mechanical engineer may insist on certain wheels because he is concerned about upholding safety. Research practitioners may insist on certain approaches because of reliability. Clearly, such may be beyond the stipulations of moral principles, as well as the law (Ayres and Braithwaite 23). Sanctions should only be applied in relation to minimum standards (morality), rather than the expected ideals (ethics). The perception that ethical codes of conduct are rules that delineate actions that are supposed to be carried out is not comprehensive. More often than not, ethics allude to virtues, such as those pertaining to integrity, and condemn vices such as those associated with dishonesty. In addition, codes of conduct ought to touch on attitudes such as empathy and sympathy (Bless 34). In all these cases, ethos and the culture of organization, society or community are what influence the ethical code of conduct. Culture can be viewed as attitudes of people towards certain subjects, people or actions. The subject of ethic is often inclined on culture; thus, any approach pertaining to ethics and ethical code of conduct should put into consideration various cultural aspects. In this regard, the ethical codes of

Learning English in Terms of Globalization Essay

Learning English in Terms of Globalization - Essay Example As such, the advantage in this scenario goes to employees or applicants from countries such as the United States or the United Kingdom, who have been utilizing the English language as their primary language since childhood. However, for one originating from a country such as Iran, in which English is generally not used as the lingua franca, this has some implications. For one thing, these English language learners need are prone to experiencing more difficulty in learning the language that is inversely proportional to its relationship with the student’s mother tongue. For instance, whereas German students should find it easy or at the very least manageable to learn to speak English due to its close relationship with the German tongue, their Chinese peers may have more trouble due to their own language being completely different in comparison (McKay and Schaetzel, 2008). Aside from this, the intricacies of their culture may necessitate favoring one approach to teaching them, as can again be seen in how Chinese students were found to derive more benefit from teacher-led lectures as compared to more unorthodox methods of instruction, such as classroom discussion and learning activities (Jin and Cortazzi, 1998). Needless to say, would-be teachers of English to speakers of other languages need to be especially sensitive to the learning styles and preferences of their students. This being the case, this student has come up with a lesson plan, in line with the standards espoused by TESOL.org, which shall be used in an attempt to teach the English language to speakers of other languages. Besides this, the findings of authoritative studies on the subject were also taken into account in order to come up with a more appropriate, comprehensive and effective lesson plan. The Integration of Content and Language The lesson plan adopted a Content-Language integrated approach, which entails unique structuring of one’s day-to-day lessons. For instance, this require s a working knowledge on the teacher’s part of the 6 characteristics that support learning, as well as of the objectives behind such an approach and the nature of language and content input. The teacher also needs to be able to activate the stock knowledge of his students, in part so he can teach them new words in such a way that they will be retained. The guided practice also needs to be conducted, as do appropriate independent practice activities. Last but not least, the learning achieved by students needs to be assessed, both by the teacher as well as the students themselves. Of course, to better understand what the integration of the Content- and Language-based approach entails, one would be wise to first understand the aims and objectives of the individual approaches.  

Immigration and the challenges associated with socio-political Essay

Immigration and the challenges associated with socio-political integration in the European Union - Essay Example While the government has framed policies aimed at diluting specific differences that hamper active social participation and economic inclusion, differences associated with cultural identities have been fashioned into new processes of delineating and being a ‘true’ European. The governmental policies that aim at resolving differences between the native population and immigrants face major challenges owing to the large number of immigrants entering the EU from various developing nations. There are growing concerns about the immigration policies in both receiver and sending countries, wherein there are speculations about a large-scale increase in migration flows in the near future. According to various reviews, calculations on future flow of immigration from developing nations to the EU show that there may be 13.5 million immigrants within the EU, from the year 2000 until 2050 (Mansoor and Quillin, 2007). The calculations that give an average estimate are based on various e conomic and demographic factors significant in determining immigration flows. Along with these numbers, one must also take into consideration political, social and cultural aspects of the immigrants, owing to the intricate nature of the issue, closely related to human trafficking, irregular migration, and shifting borders. The demographic framework of a nation is greatly affected by migratory  movements, and owing to the inherent differences   in  socioeconomic and   demographic   structure   of  the immigrant   populations   in regard to   the   host   population,   migration   flows   significantly influence public expenditure, income distribution, demographic  evolution,   social  stratification  along with economic development (Amin,  1995).   With rising economic challenges emerging from a steady increase in elderly the population within  European  societies,  the  European  Commission  regards the  entry  and  integra tion of immigrants  within the EU  an added demographic challenge  that involves providing better living and working conditions, employment,  and education  for the immigrants and  working out a long-term, sustainable  budgetary plan (Linz and Stula, 2010). Immigration  may be triggered due to various reasons that may vary from political, economic, or personal  reasons,  while migration may also be  voluntary  or  even forced, and the later often involves human trafficking  (Kraler, Kofman, Kohli and Schmoll, 2011).  From a historical  perspective,  Europe  has always faced  migration  from different parts of the world. Prior to WWI,  during  the era of industrialisation,  there were large-scale transatlantic  labour migrations. Post WWII, during the period of severe economic crises and reconstruction,  Europe  became  an  important  destination for many immigrants.  This  was  mainly  due  to  large numbers of la bourers migrating  to the European continent from  various  parts  of  the  world  due to  work  shortage in their own countries (Castles and Miller,  2010). At this time, there were also intra-European  migrations, where  labourers  from  south  Europe  moved to various west European nations.   Subsequently there were  settlements  established, and  families brought over for reunification. Besides labour migration,  there were war refugees and  natural disaster  refugees that came  to  Europe  from the former USSR, Africa and the  Balkans, thus further adding to the social and cultural diversities within the EU population. In this context, the essay will review various research papers and analyse the different challenges associated with

Account Essay Example | Topics and Well Written Essays - 1000 words

Account - Essay Example Return on capital employed or Return on Total assets measures the firm’s overall effectiveness in generating the profits. This ratio has gone up a little from 0.6 in 2005 to 0.7 in 2006. This increase does not signify much. The assets of the company are underutilized. Similarly return on net assets (also known as return on equity- ROE) measures the return earned on owners’ investments. Arriva Plc. earned 0.22 on equity or net assets in 2005 and 0.21 of net assets in 2006. The earnings are certainly not encouraging. Debtors’ collection period and Creditors’ payment period reflects average age of accounts receivable and accounts payable respectively. These collection and payment periods have shown a little improvement. Average collection period has come down from 47.98 days in 2005 to 46.04 in2006. Also average payment period has also come down from 95.78 days in 2005 to 82.67 days in 2005. This reflects the working capital problems or cash shortage being faced by Arriva Plc. Creditors have started doubting the company because of its dwindling liquidity position. That is why creditors have reduced the credit period. Gross profit ratio cannot be calculated as there are no trading activities involved. But the net profit ratio shows an improvement from 5.9% in 2005 to 6.06% in 2006. This is certainly an achievement despite cash crunch and difficulties in meeting short term obligations faced by Arriva Plc. during the year 2006. Finally it has been observed that Arriva Plc. is a low geared company. With complete reliance on equities Arriva Plc. is finding it difficult to mobilize funds. It is suggestible for Arriva to reconsider about capital mix. It may be beneficial to bring in more debts not only to improve working capital position but to utilize assets to their full capacity. One of the fastest growing industries in world is travel and tourism. Its financial managements assume importance as under noted issues impact the volumes and costs

Business law Essay Example | Topics and Well Written Essays - 1500 words - 9

Business law - Essay Example This piece of research work is an attempt to analyze the changes brought by Human Rights Act in English law. This paper discusses the influences of Human Rights Act on business environment based on sources of English law and European Court of Human Right cases. Chandler and Waud (2003) stated that The Human Rights Act 1998 gives ‘further effect’ to the rights and freedom that are guaranteed to all citizens by European Convention on Human Rights and Fundamental Freedom. More specifically, it doesn’t form or create any new statutory or law rights. It imposes duties on public authorities to act in any possible way that is compatible with Convention right (p. 419). The Human rights Act also imposes duty on tribunal to consider any relevant decision or advisory opinion of the European Court of Human Rights (ECHR) when determining issues in connection with convention right. According to the Act, it is unlawful for any public body to act in any way which is not compatible with Convention rights. The Act also requires UK judges to consider decisions of the Strasbourg court and also to consider legislation as long as it is compatible with Convention Rights. The Human Rights Act is applicable to all public bodies in the United Kingdom like central government and local authorities. It has greater influence on private law legislation as well. The Human Rights Act places duties on all courts and tribunals within the United Kingdom in order to interpret legislation in way that is compatible with ECHR. Whenever it is not possible to interpret an act in accordance with Convention, a declaration of the same must be issued by the court under section 4 and it must state how the legislation breaches human rights. It is illegal for a public authority to act in a way that contravene convention right and therefore public authority includes any other person who functions in functions of a public nature. Betten (1999) emphasizes that the passing of Human

Juvenile's Competance Essay Example | Topics and Well Written Essays - 500 words

Juvenile's Competance - Essay Example Overall, the sample size consisted of 927 adolescents in juvenile detention facilities and community settings who were compared to 466 young adults in jails and in the community. There were four sites selected also using the criteria mentioned above. Two evaluation methods, which have their own focus, were used in the study. To assess criminal defendant's abilities to participate in their defense, the MacArthur Competence Assessment Tool-Criminal Adjudication (MacCAT12CA) was used. The instrument's items included Understanding, Reasoning and Appreciation where their answers are scored according to a set of criteria established by the authors of the instrument. Although the instrument has been successfully applied in determining the competency of adults to participate in their trial and is widely used by forensic mental health professionals, this was the first time it was used on youths. Since this is the case, we may very well speculate that the tool may produce flawed results. The second method was the MacArthur Judgment Evaluation (MacJEN) used to examine the existence and degree of judgment immaturity especially the potential relation between immaturity and choices that defendants make in the course of adjudication.

J.C. Penney’s “Fair and Square” Pricing Strategy Essay Example for Free

J.C. Penney’s â€Å"Fair and Square† Pricing Strategy Essay Retailing is hard, and that’s what Steve [Jobs] said to me when we started stores at Apple. — Ron Johnson, CEO, J.C. Penney1 It was August 2012 and the release of second quarter earnings was looming for Ron Johnson, the chief executive officer of J.C. Penney, one of America’s first department stores. Johnson, HBS ’84, had intimated to Wall Street that the retailer’s second quarter results were likely to miss expectations again, following dismal first quarter results that had sent the company’s stock price careening to less than half of its February 2012 value of a share. The Q1 news released in May was grim: a $163 million loss, same store revenue down 19%, and the number of customers shopping in J.C. Penney stores down 10%. These results were particularly disheartening given the company’s radical repositioning of its business model and its brand in February 2012. The centerpiece of the repositioning initiative was a switch from J.C. Penney’s existing high-low pricing strategy, in which the retailer ran frequent sales to offer customers deep discounts off of its higher list prices, to a new strategy the company dubbed â€Å"Fair and Square† pricing. â€Å"Fair and Square† pricing was meant to simplify J.C. Penney’s pricing structure and make it more straightforward for customers to shop. It offered great prices every day, with less frequent price promotions. The company touted its new pricing strategy as offering â€Å"no games, no gimmicks† and invited consumers to â€Å"do the math† to see how it offered them cheaper prices on a regular basis with less hassle. Moving away from high-low pricing was a massive shift for J.C. Penney. In 2011, the retailer spent $1.2 billion to execute 590 different sales events and promotions2 and generated 72% of its $17.3 billion in annual revenue from products sold at steep discounts of more than 50% off of the initial list price.3 Wall Street was initially  supportive of the company’s plans for change. Investors, who sent J.C. Penney’s stock soaring up 24% following the announcement of the new pricing plan, viewed it as a way for J.C. Penney to escape the ruthless downward spiral of escalating price promotions that gripped America’s retailers struggling to survive the economic recession. But by mid-summer 2012, customers and shareholders appeared to be voting with their feet, leaving the retailer in droves. Was Johnson’s new pricing strategy misguided or was it just a matter of time before customers fully embraced it? Johnson was under enormous pressure to turn things around quickly as the all-important back-to-school and holiday shopping seasons were imminent. Many voices were calling on him to consider changing the pricing strategy again. ________________________________________________________________________________________________________________ HBS Professor Elie Ofek and Professor Jill Avery (Simmons School of Management) prepared this case. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright  © 2012, 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Jack Cherewatti in MKTG MGMT taught by S. Adam Brasel Boston College from November 2014 to May 2015. For the exclusive use of J. Cherewatti 513-036 J.C. Penney’s â€Å"Fair and Square† Pricing Strategy Company Background Johnson was at the helm of what at one time was considered America’s most  venerated department store. Once the largest department store chain in the country with over 2,000 stores, as of 2012, the 110 year old retailer operated 1,100 stores, claiming to serve more than half of America’s households with 41 million square feet of retail space. Founded by James Cash Penney in 1902, the company’s first outlet was opened in a Wyoming mining town under the name â€Å"The Golden Rule,† that signified its philosophy of treating customers the way Penney himself wished to be treated. Johnson believed that his â€Å"Fair and Square† pricing plan corresponded to the founder’s beliefs, â€Å"Now if you go back to the founding of this company, James Cash Penney believed in everyday fair prices. He said, ‘We don’t mark goods up just to mark them down. We don’t believe in sales.’†4 The company enjoyed years of rapid growt h and expansion. By its 50th anniversary, annual sales exceeded $1 billion. It initially offered consumers one stop shopping as a mass merchandiser, selling soft goods, such as clothing, as well as hard goods, such as appliances, hardware, electronics, and sporting goods. Its retail business was joined by a mail order catalog in 1963 and an ecommerce website in 1998. However, following tough times in the 1980’s, the company reorganized, phasing out its hard goods lines and refocusing on its soft goods to become a fashion oriented department store. But by its 100th anniversary, the company appeared to be running out of steam. Price-oriented mass merchandisers, such as Walmart and Target, had garnered the lower end of the market, while higher end department stores, such as Macy’s and Nordstrom’s, were catering to the upwardly mobile middle class. Although the economic recession of 2008 was difficult for all retailers due to consumers’ increasing frugality, middle market retailers, like J.C. Penney and Sears, were hit the hardest. By 2011, J.C. Penney’s stores were old, often disorganized, and faded, and the brand and its merchandise were starting to feel dated. About 400 of its stores were located in small towns, such as Alpena, Michigan with a population of a little over 10,000. In such towns, there were often only few, if any, other department stores. The remaining 700 or so stores were located in major metropolitan areas, often in suburban malls, such as the Northshore Mall in Peabody, Massachusetts (15 miles north of Boston). Following years of store closings, sales malaise, declining market share,  slumping earnings, and weak stock market performance, activist investor and hedge fund manager, William Ackman (HBS ’92) obtained an 18% majority shareholder position in the company in 2010–2011. He was determined to turn J.C Penney around and extract its value, much of which was locked up in its vast real estate holdings that were estimated to be worth $11 billion.5 J.C. Penney owned 400 of its retail stores and paid low rents (an average of less than $5 per square foot) for the remainder. Specialty stores like Gap paid much higher rents (around $40 per square foot) for their retail space.6 Looking to shake up the company, Ackman was instrumental in luring Johnson to take the CEO position. Johnson was a big catch. In the 1990s, he was vice president of merchandising at Target where he helped transform the mass merchandiser into a hot retail brand selling stylish yet affordable products. During his time there, Johnson negotiated a contract with designer Michael Graves, beginning Target’s profitable partnerships with high end designers, which enhanced its brand image as a chic, fashion-forward retailer. Starting in 2000, he worked with Steve Jobs to develop the wildly successful Apple retail stores. Johnson was the brainchild behind the â€Å"Genius Bars† concept, a free technical help and support area staffed by knowledgeable customer service representatives, widely touted as one of the most innovative retail concepts of the last decade. Johnson was regarded by many as creative and determined; according to a friend, â€Å"What people loved more about him than his talent was his persistence. He was just relentless.†7 Johnson’s deep retail experience combined with his wholesome charisma and boyish enthusiasm made him the perfect change agent. The media dubbed him the â€Å"Steve Jobs of the retail industry† and on the day his appointment was announced J.C. Penney’s stock jumped 18%. An Industry under Pressure J.C. Penney’s 2011 sales were lower than they were in the 1990s and the retail landscape was getting more competitive. Department stores, in particular, were under increased pressure. New retail formats, such as big box retailers like Walmart that operated free standing supercenters selling mass merchandise and small specialty stores like Gap and J. Crew that were located in shopping malls and offered specialized merchandise, were squeezing department stores out of the market (see Exhibit 2). An emerging challenge came from large international clothing retailers, such as HM and ZARA, that were aggressively entering the U.S. market. These retailers relied on shorter product life cycles and partnerships with top designers to offer fast-fashion merchandise at relatively low prices. Johnson explained the challenge as he stepped into his new role: Over the past 30 years the department store has become a less relevant part of the retail infrastructure, largely because of decisions the stores have made. As America exploded with big box and specialty stores and new shopping formats, department stores abdicated their unique role instead of engaging the competition. They retreated from categories and assortments that made them distinctive. Department stores were once the most popular places for Americans to shop, offering distinctive merchandise in elegant settings that provided special services, such as tearooms, salons, and on-site tailoring, and served as social hubs. Johnson reminisced, â€Å"In the golden age of department stores, America’s families came for more than just to shop. They were able to have fun experiences and were offered a range of useful services. . . . If we want to transform the department store, we have to understand what happened. These stores were a pillar of the community.†9 Johnson, unlike others, believed that department stores could be revived. â€Å"There’s no reason department stores can’t flourish. They can be people’s favorite place to shop. They’ve got all these strategic advantages—the lowest cost of real estate, exceptional access to merchandise, scale to create enormous marketing power, colocation with specialty stores. And people like stores  with huge assortments and one-stop shopping.†10 J.C. Penney’s performance had been lackluster for quite some time, and the retailer was losing market share even within the shrinking department store channel (see Exhibits 3 and 4). Competitors Macy’s and Kohl’s were nipping at J.C. Penney’s business from both the high and low end. The average J.C. Penney customer only visited a store four times per year and sales per square foot ($156) were low compared to those of its competitors and the specialty stores Johnson hoped to emulate (Gap $30011, Apple $5,626 in sales per square foot). 12 Department stores and big box stores had increased their promotional budgets since the outbreak of the Great Recession in 2007 and most used blockbuster sales, coupons, and frequent price promotion to drive purchases. According to consulting firm A.T. Kearney, more than 40% of the items Americans bought in 2011 were bought on sale, up from 10% in 1990.13 Many retailers were eager to wean shoppers off of the big discounts that had become commonplace. Competition was also increasing from online retailing. Yet Johnson believed brick and mortar stores were still relevant, â€Å"Physical stores are still the primary way people acquire merchandise and I think that will be true 50 years from now. . . . A store has got to be much more than a place to acquire merchandise. It’s got to help people enrich their lives. If the store just fulfills a specific product need, it’s not creating new types of value for the consumer. It’s transacting. Any website can do that.†14 Many of J.C. Penney’s largest competitors, such as Macy’s, seemed to have a different  view and were investing heavily in their e-commerce operations and in catering to what they called the â€Å"omnichannel† consumer, who accessed the retailer through the web, on mobile devices or in physical stores (often as part of the same purchase decision). Although it had been a pioneer in multi-channel commerce, with 2001 combined cata log and web sales of nearly $3.4 billion, J.C. Penney’s ecommerce sales had stagnated over the last three years while those of Macy’s and Kohl’s had grown substantially during the same time frame.15 (See Exhibit 5 for E-commerce sales growth). J.C. Penney’s Radical Makeover Following his appointment in November 2011, Johnson determined that nothing short of a complete overhaul would solve J.C. Penney’s problems. Just two months after taking the helm, Johnson and his newly recruited leadership team, culled largely from Apple and Target, announced a radical repositioning of the J.C. Penney business model and brand. Following the announcement, Forbes magazine dubbed J.C. Penney the most interesting retail story of the year, proclaiming, â€Å"This week, Johnson took a sledgehammer to the J.C. Penney way of doing business. It’s the most exciting thing I’ve seen in retail since Apple opened stores, again with Johnson at the helm.†16 The turnaround plan evoked J.C. Penney’s founding spirit, and Johnson declared it a reclamation of the company’s heritage. J.C. Penney’s website announced, â€Å"Over 100 years ago, James Cash Penney founded his company on the principle of treating customers the way he wanted to b e treated himself: fair and square. Today, rooted in its rich heritage, J.C. Penney Company, Inc. is re-imagining every aspect of its business in order to reclaim its birthright and become America’s favorite store. . . . At every visit, customers will discover straightforward Fair and Square Pricing.†17 The four-year plan involved several distinct, yet integrated elements that touched every part of the business and were designed to recreate a golden age department store that appealed to all Americans, across age, income, and geographic demographics. As Johnson explained, â€Å"We are going to rethink every aspect of our business, boldly pursue change, and create long-term shareholder value, as we become America’s favorite store. Every initiative we pursue will be guided by our core value to treat customers as we would like to be treated—fair and square.†18 New Logo J.C. Penney had been tinkering with its brand logo, changing it three times in three years. In 2011, the company asked the public for help in redesigning the logo in a crowd-sourcing experiment. The winning design was submitted by a University of Cincinnati student and was unveiled with much fanfare via social media. In 2012, Johnson scrapped this design and hired an agency to redesign the logo once again. The new logo evoked the American flag with red, white, and blue colors and the letters â€Å"jcp† in lower case font within a square that represented the new â€Å"Fair and Square† mantra. J.C. Penney, which many affectionately called â€Å"Penney’s† would now be known as â€Å"jcp.† (See Exhibit 6 for the new logo.) New Brand Spokesperson One of the most exciting and controversial developments of the plan was the announcement of comedian and talk show host Ellen DeGeneres as the new brand spokesperson. DeGeneres, who once worked at a J.C. Penney store as a teenager in Louisiana, appeared in television advertising, developed J.C. Penney themed skits for her popular talk show, and tweeted about the company on Twitter. Johnson proclaimed DeGeneres to be â€Å"one of the most fun and vibrant people in entertainment today, with great warmth and a down-to-earth attitude. . . . Importantly, we share the same fundamental values as Ellen.†19 Shortly after DeGeneres’ advertising debut, the conservative Christian group One Million Moms took offense, citing DeGeneres’ homosexuality as  problematic for the brand’s image and its traditional family shopper demographic. The group asked its members to boycott J.C. Penney and to call their local store manager to ask for DeGeneres’ removal as spokesperson. DeGeneres went on the offensive to defend her personal values and to reassert her relationship with her fans and with J.C. Penney, producing a witty, yet heartfelt response delivered on her talk show that quickly went viral on the social web. A firestorm erupted and played out on J.C. Penney’s Facebook page, where both pro- and anti-gay posters pledged their support for and/or rejection of the retailer. J.C. Penney survived the controversy by standing firmly behind its choice of spokesperson. The protest event generated significant positive press for the company and Facebook feedback was more positive than negative. Riding the wave of publicity, J.C. Penney went on to feature two gay dads in a widely touted Father’s Day advertising campaign. New Store Design While the new logo and spokesperson were short-term fixes that could be executed quickly, Johnson knew from his experience at Apple that, to really make a difference, he had to make significant changes to the product offering, a longer term proposition. He embarked on a multi-year plan to re-energize and redesign J.C. Penney’s product offering and its merchandising at retail. He began by forging new supplier relationships with top brands like Martha Stewart and hot designers like Nanette Lepore to create J.C. Penney-specific merchandise lines, a strategy reminiscent of Target. He then went to work to improve the quality of J.C. Penney’s sagging and dated private label brands, Worthington, St. John’s Bay, The Original Arizona Jeans Co, and Stafford, to reinvigorate them and restore their brand integrity. These efforts could also build on J.C. Penney’s recent purchase of the Liz Claiborne brands (which, among others, included Liz Claiborne branded apparel, L ucky Jeans, Kate Spade and Juicy Couture) and the ongoing opening of about 300 Sephora locations inside J.C. Penney stores, which offered a select set of Sephora beauty care products. 20 He envisioned the in-store retail environment as a series of interactive specialty â€Å"Shops,† along a visually engaging and vibrant â€Å"Street,† with a central â€Å"Square† that would serve as the social hub of the store. J.C. Penney’s vast array of  merchandise, currently hung on crowded racks and shelves, would be regrouped and merchandised in 80-100 â€Å"stores-within-a-store,† each meant to simulate the buying experience of a specialty shop. The first shop to appear was devoted to jeans and featured a denim bar, trained fit specialists, and Levi’s innovative Curve ID program that helped women find the right jeans for their body type (see Exhibit 7). Plans for future shops included Joe Fresh and Mango. The company planned to install two to three new shops each month, beginning in August 2012, over a four year period. Many of the shops were designed to pull in younger shoppers, a deficit in J.C. Penney’s current customer base. The â€Å"Street† would consist of wider aisles with a fresh, clean look, more streamlined with less signage and bold, colorful, upscale graphics featuring the square from the new logo (see Exhibit 8). Each month would have its own unique personality and color-coded signage that changed the look of the store to freshen its appeal. Ten thousand square feet at the center of the store would be designated for the â€Å"Town Square.† In this area, J.C. Penney planned to offer complimentary services, such as gift wrapping, and special promotional events to create fun and excitement. During the summer of 2012, the company offered free hot dogs and ice cream, free â€Å"Go USA† Olympic t-shirts during the Summer Olympics, and free back-to-school haircuts for school children. Johnson summarized his vision for the new environment, â€Å"We are going to make the store a place people love to come-just to come. We’ll transform the buying experience not unlike what we did at Apple.†21 New Sales Structure To support the new retail environment, Johnson needed to re-energize J.C. Penney’s sales force. His goal was to create a team of specialists who were product experts, much like Apple’s Geniuses. J.C. Penney sales clerks had always been paid commissions based on how much they sold. This system encouraged sales clerks to sell aggressively to customers. Johnson felt that this aggressive sales culture did not fit with the new â€Å"Fair and Square† positioning and set out to change it by eliminating all sales commissions. It was a controversial decision, especially among the sales employees, many of whom had just been through a wave of layoffs and were nervous about keeping their jobs. Johnson explained his rationale for the change, â€Å"A lot of great retailers don’t use commissions. We never used them at Apple. . . . And I think it’s a better thing to do to pay people in advance for what you want them to do and let them look in the customers’ hearts and try to help them. . . . We think we’ve got a great way to do business for the middle class, where we really put a big bear hug around the middle class and help them look better and live better every day.† 22 But some employees expressed dissatisfaction, â€Å"I must take offense at Ron Johnson’s reason for eliminating commission. Ron Johnson should remember that J.C. Penney is not Target, we are better. When people come into our store they expect to be greeted, they expect someone to be available to help, they expect good service,† said a sales associate. Another associate claimed, â€Å"I lost about $250 per pay period and Mr. Johnson thinks this is FAIR and SQUARE. From all of J.C. Penney’s little workers, this stinks.† Another lamented, â€Å"We long-term employees are heartbroken at what we see around us. Ron Johnson may have a grand plan, and it may work, but we feel like he is destroying ‘us’ in the process of implementation. It has become an awful place to work, short-staffed to the point that we struggle to properly service what customers we do have.†23 But without a doubt, the cornerstone of the change program was a new pricing scheme that many believed to be the riskiest part of the strategy. The New Pricing Strategy Looking at the numbers, Johnson believed that he needed to address the existing high-low pricing structure that had gotten out of control. J.C.  Penney’s customers had become hooked on the deals; over the past ten years, the average discount to get customers to buy went from 38% to 60%24. â€Å"At some point you, as a brand, just look desperate. J.C. Penney spent over $1 billion [on price promotion], and the customer didn’t even pay attention,† he agonized.25 In his first report to shareholders, he spoke about the detrimental long term effects of excessive price promotions, â€Å"Plagued by the ‘games’ of the industry over the last several decades, retailers-including J.C. Penneybarraged customers with a constant stream of promotions that proved to be ineffective. Each time we participated in this pricing war, we were discounting our brand and eroding the trust and loyalty of our customers.† The company announced its â€Å"Fair and Square† pricing plan in January 2012. The plan had three pricing tiers. First, the company reduced prices by an average of 40% to offer consumers an â€Å"Every Day Fair and Square† price. Second, every month the company ran a â€Å"Month Long Values Event† with special pricing on seasonal items, marked down an additional 20-29%, meant to coincide with events such as Back-to-School and Father’s Day. Third, every first and third Friday of each month (paydays for many working Americans) were designated â€Å"Best Price Fridays,† where J.C. Penney would offer special deals on items it was looking to liquidate, about 20% of the store’s stock, at deals of about 1/3 off of the every day price. Each price point was supported by unique signage at retail, (see Exhibit 9). J.C. Penney eliminated its famous â€Å"Doorbuster† sales, such as those that it traditionally held on Black Friday, the day after Tha nksgiving and the busiest shopping day of the year, that featured outrageously low prices on  over 500 items from 4:00 a.m. to 1:00 p.m. Exhibit 10 shows an example of the different price tiers. Importantly, J.C. Penney avoided using the words â€Å"sale† and â€Å"clearance† in its messaging of the new program to consumers. Said Johnson, â€Å"Sale is not in our vocabulary. . . . Every item in the store is priced to be its best price every day.†27 The â€Å"Fair and Square† price was the only price listed on the price tag, moving J.C. Penney away from the practice of listing the manufacturer’s suggested retail price (MSRP) and the sale price, which was intended to show customers how much they were saving relative to somewhat fictitious list price. In the highly competitive world of retailing, nearly no one priced goods at the MSRP. Breaking with another retailing best-practice, J.C. Penney ended all of its â€Å"Fair and Square† prices with .00 instead of .99, rounding up to the nearest dollar. Johnson also instituted a no restrictions â€Å"Happy Returns† return policy, designed to take the hassle out of returning items, eve n without a receipt. In effect, the new plan combined elements of two traditional pricing strategies. The â€Å"Every Day Fair and Square† prices represented an everyday-low-price (EDLP) strategy, while the â€Å"Month Long Values† and â€Å"Best Price Fridays† maintained some emphasis on high-low pricing. High-low pricing strategies are intended to allow retailers to use price discrimination to maximize the average price paid by customers who differ in their willingness to pay. Customers who are highly price sensitive wait for sale days to purchase, use coupons and rebates, scour the crowded clearance racks to find a bargain, and take advantage of retailer’s door buster specials on big shopping days like Black Friday. Customers who are less price sensitive buy when it is convenient for them, tend not to use coupons and rebates due to the time it takes to clip and organize them, and rarely join in on door buster specials or clearance sales. Thus, the retailer reaps higher non-sale prices from many of their purchases. However, given the predominance of high-low pricing strategies across retailers in today’s marketplace, even less price-sensitive consumers had become savvy about waiting for sales to buy or comparing across retailers to find the store offering the best prices that week. Instantaneous price comparisons were  getting easier, given the rise of mobile applications that allowed a consumer to scan a bar code on a product and find the lowest price for it at online retailers and nearby stores. Kohl’s was an aggressive high-low retailer, featuring small electronic signs on shelves throughout the store that displayed original prices and discounted prices. These signs allowed Kohl’s the flexibility to change prices instantly, to facilitate frequent, short-term sales. Marketing consultant Jonathan Salem Baskin offered his thoughts on the high-low practice retailers engage in, â€Å"When no price is ‘the’ price for an item, it means that instead retailers engage customers in a constant cat-andmouse game in pursuit of the truth. No individual store can own sale pricing; each simply participates in a round-robin of discounted offers that its competitors have and/or will again match.†28 Johnson felt that today’s retail customer was savvy, â€Å"The customer knows the right price. To think you can fool a customer is kind of crazy.†2 EDLP pricing strategies, such as that offered by Walmart, promise consumers that they will pay the same, low price every day. This frees customers from waiting for sale periods to purchase, and eliminates the need for retailers to offer coupons to drive purchase or to engage in constant advertising of price promotions via weekly newspaper circulars. EDLP is designed to make customers feel comfortable purchasing at the retailer without worrying that they could be getting a better deal somewhere else or at another time. In general, most department store retailers used high/low pricing strategies. Macy’s and Sears had flirted with EDLP pricing in the past; but both had largely abandoned it once they realized how addicted department store customers were to sales, coupons, and other discount programs. Although  Macy’s still offered a limited set of items at an â€Å"everyday value† price, it heavily supplemented this practice with aggressive coupons and frequent sales events for the majority of the goods it carried. Macy’s customer Marietta Landon summarized the promotion addicted retail climate, â€Å"Especially Macy’s—they make every weekend a sale with saving passes and advertising galore.†30 The new pricing strategy was a big shift for J.C. Penney, a company known and loved for its JCP Cash coupons distributed to customers via direct mail and email, its RedZone Clearance aisles, and its weekly circulars advertising that week’s price specials. The â€Å"Fair and Square† pricing program would eliminate all coupons and weekly circulars; instead the company would distribute a high quality, editorial content-heavy glossy magazine each month to highlight its Monthly Values. The 96page magazine was as much a branding vehicle as it was a promotional one. $80 million in promotional funding would support each Monthly Value event. J.C. Penney now promised its customers that they would not have to â€Å"jump through hoops to get a good price†. Johnson hailed the strategy for its simplicity and transparency and the way it respected customers, â€Å"People are disgusted with the lack of integrity on pricing,†31 adding that â€Å"We want shoppers to shop on their terms, not ours.† Johnson intimated that â€Å"By setting our store monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us.†32 Michael Francis, J.C. Penney’s new president, was excited about the new pricing moves, â€Å"We are redefining the J.C. Penney brand so we become a store for all Americans, by offering an experience they cannot get anywhere else. This will start by freeing consumers from the barrage of promotions and undifferentiated shopping experiences they have become used to and replacing it with something entirely fresh and new that is evident in every aspect of our store.†33 He added, â€Å"It will be a breath of much-needed fresh air and give [customers] reasons to visit J.C. Penney more often than ever before. Our objective is to make our customers love to shop again.†34 Francis was recruited by Johnson from Target and offered a signing bonus of $12 million  and a total compensation package worth $44.7 million. He was charged with managing the marketing and merchandising efforts. Reactions to â€Å"Fair and Square† Pricing  Industry observers could not contain their strong opinions on the new pricing strategy. Some called the move â€Å"refreshing, daring and probably exactly what the retailer needs,† noting that â€Å"it’s a shocking move for any retailer, let alone a department store where high-low pricing and promotions have long been the norm.†35 But others were far more skeptical. Pricing consultant Rafi Mohammed proclaimed, â€Å"J.C. Penney lacks the differentiation to make this pricing strategy successful. . . . When selling a relatively undifferentiated product, the only lever to generate higher sales is discounts. Even worse, if competitors drop prices on comparable products, J.C. Penney’s hands are tied-it is a sitting duck that can’t respond.†36 Mohammed also noted, â€Å"J.C. Penney’s Every Day prices will not be as low as the biggest discounts that it once offered. Instead, its pitch to customers is why play the â€Å"wait for the rock-bottom price† game when Penney offers â€Å"pretty good† prices every day?†37 Ignoring the skeptics, Johnson was committed to his new pricing plan, rolling it out across all stores on February 1st, after deciding not to conduct market research to test its appeal with customers, â€Å"We debated whether there was a way to test. . . . We would have needed everyone to run the old business model and would have had to add new people to run a test in 10 percent of our stores. . . . We knew the customer would love the new strategy. We decided to get on with our future.†38 Based on his experience at Apple, Johnson also believed that  customers didn’t always know what they wanted; it was up to companies to lead the way, â€Å"You can’t follow the customer. You’ve got to lead your customers—anticipate their needs and meet those needs, even before they know what they want.†39 A lot was riding on the decision. COO Mike Kramer explained, â€Å"We are fundamentally reimagining every aspect of our business and we fully expect the bold and strategic changes we are making to our operations will result in improved profitability. This should enable us to fund the transformation of J.C. Penney’s store experience, while at the same time returning value to shareholders with steady earnings growth.†40 Communicating â€Å"Fair and Square† DeGeneres was featured in a new advertising campaign to usher in the new â€Å"Fair and Square† positioning. Bearing the tagline â€Å"Enough. Is. Enough,† the campaign encouraged consumers to revolt against complex pricing structures, never-ending sales, an overabundance of direct mail circulars and coupons cluttering their mailboxes, and the hassles of returning unwanted products without a receipt. In the ads, DeGeneres travels back in time to ancient Rome, Edwardian England, and the Wild West to learn if today’s confusing price environment was always the norm. She encourages customers to reject the crazy price environment. The creative campaign was witty and contemporary; many found it reminiscent of Target’s award-winning advertising. It was quite a departure from J.C. Penney’s previous campaigns that were more typical of department store messaging. Launched during the Academy Awards broadcast, the ads appeared to be a hit with consumers. Ace Metrix reported that the ads scored well above average on persuasion and watchability metrics and achieved a personal best score for J.C. Penney.41 Initial Results In the first three months following the launch, 67% of products sold at J.C. Penney were purchased at the â€Å"Fair and Square† price, the highest price the retailer listed. Johnson could not hold back his satisfaction, â€Å"This is profound. People are now buying at the first price, [the] right price. That’s the dream of every retailer.†42 However, trouble was looming on the horizon. Through mid-March, mothers, a critically important target market for most department stores, steadily scored J.C. Penney lower on valueperception scores. These women, suddenly not receiving coupons and not seeing the weekly price promotions in the circulars, were downgrading their opinion of whether J.C. Penney offered good value for the money.43 This was despite the fact that J.C. Penney’s prices during the time period were actually quite competitive. A Deutsche Bank analyst report showed that for a random basket of 50 identical items, J.C. Penney was 9% cheaper than Macy’s, and 26% cheaper than Kohl’s. Consumer research firm BIGInsight reported negativity among adults 18+ for whether J.C. Penney’s advertising campaign was â€Å"Hot or Not?† and showed Macy’s gaining ground on J.C. Penney in women’s apparel shopping trips following the launch (See Exhibit 11). Morgan Stanley’s Michelle Clark reported consumer survey results revealing that â€Å"Shoppers think that the J.C. Penney of old actually offered better value than the â€Å"fair and square† model introduced a few months ago. Of the consumers who had been inside a J.C. Penney store since February, more cited higher prices (rather than lower) at the department store. In fact, only 16% of shoppers associated â€Å"Best Prices† with JCP. Furthermore, customers cited that bargains were harder to find and fewer aisles with deals were evident (see Exhibit 12).45 Loyal J.C. Penney customers were moving away from the retailer. One shopper, Wendy Ruud, complained that she was no longer receiving coupons from J.C. Penney and was shopping more frequently at Target and Walmart, â€Å"The closest J.C. Penney is about a half hour away from me. If I don’t get a special  discount, it’s not worth the trip,† she said.46 Another shopper e-mailed the Huffington Post saying, â€Å"They are catering to the younger shopper, and it isn’t the younger shopper that kept them afloat.†47 A third who considered herself â€Å"frumpy and proud,† commented, â€Å"He’s working hard to ‘de-frump’ the store without considering that many if not most of its customers might have shopped there precisely because they like the more conservative frumpy look.† 48 These early indicators played out in J.C. Penney’s first earnings report following the launch of the new plan. Johnson had to announce a significant earnings loss ($163 million) based on plummeting sales revenues (-19% overall, with e-commerce sales dropping 28%), gross margin compression (from 40.5% to 37.6%), and decreasing customer conversion. Johnson asked investors to be patient, calling the first quarter sales drop â€Å"the price we’re paying to get integrity back.†49 He held fast to his convictions, â€Å"We had to make the bold step. It’s one big year we have to go through. It’s really hard but we’ll get through it.†50 Investors showed no patience, sending the company’s stock down 20%, the biggest single day drop in over four decades.51 The critics did not waste time to pile on Johnson. Time columnist Brad Tuttle wrote, JC Penney’s message seems to be one that some shoppers don’t want to hear. They like playing games and hunting for deals, and the markdown from the original price is how they keep score. By eliminating coupons and most â€Å"sales,† JC Penney has been saying it doesn’t want to play games anymore. That sounds wonderful, but among certain shoppers, it’s the equivalent of grabbing the ball and taking it home. No more games, no more fun-and not much reason to visit JC Penney on a regular basis anymore. If, for the most part, a store’s prices are going to remain the same tomorrow, and next week, and the month after that, there’s not much incentive to browse the aisles for special deals today.52 A Forbes columnist concurred, â€Å"By taking away the weekly sales customers loved, Johnson abandoned his core JCP shopping enthusiasts. In effect, signaling to the core JCP enthusiastsshoppers who have sustained J.C. Penney through its years of retail muddling, that they no longer mattered. He confused them, and he pissed them off.†53 The Motley Fool sarcastically  quipped, â€Å"The silver lining in J.C. Penney’s awful report is that Sears [struggling with its own dismal results] has someone it can laugh at now.†54 Macy’s CFO Karen Hoguet was crowing that her company was benefiting from J.C. Penney’s missteps, reporting that sales in Macy’s stores that shared a mall with J.C. Penney were up significantly since the changes.55 And J.C. Penney’s apparel suppliers were becoming anxious, as their sales dropped precipitously, some as much as 70% over the prior year. One prominent supplier indicated that he was increasing his business with Kohl’s to make up for the shortfalls at J.C. Penney.56 These developments were sobering for Johnson yet he remained unfazed, â€Å"It’s been tougher than we anticipated†¦You know, we expected to be down. We are down a little more than we thought, but not enough to change the strategy†¦We’re treating this company as a startup†¦We’re inventing a whole new model to do business†¦It is a one year transition that’s part of a multi-year transformation. But once we get to one year of de-promoting or repurchasing our integrity, I fully expect us to grow. And so we’ve just got to get through that year. And we’ll get through it.†57 Speaking at Fortune magazine’s Brainstorm Tech conference in July, Johnson reiterated his support for the new pricing strategy, claiming that his board was â€Å"totally supportive†. When asked if he had a contingency plan whereby the company would revert back to high/low pricing, Johnson swore it was not in the cards, â€Å"It won’t happen while I’m here because I know it’s not the right thing to do. And I know this is what connects completely with our own unique heritage. And every longstanding company has a DNA in its core that  typically goes back to its founder. And when you reconnect with that, that’s when good things happen. That’s what Wal-Mart has had to do. And it’s really led to great success. That’s what Apple had to do when Steve came back. That’s what we’re going to do.†58 Making Some Adjustments As J.C. Penney management tried to decipher the disappointing results, much of the blame was put on the marketing execution and on customers’ stubborn reliance on price promotions. Mike Kramer, J.C. Penney’s new chief operating officer expressed his frustration, â€Å"Coupons, that drug. We did not realize how deep some of our customers were into this. . . . We have got to wean them off this and educate our consumers.†59 Johnson blamed the marketing execution, claiming that it failed to clearly communicate the new pricing strategy, â€Å"Our execution wasn’t what we needed. Our pricing is kind of confusing. Our marketing kind of overreached [Now] the most important thing is to educate consumers on the price changes and make sure the core customer understands J.C. Penney still has products they love, at exceptional value, every day.†60 Francis took the fall for the poor earnings, abruptly leaving the company a mere eight months after he started as pr esident. Following Francis’ departure, Johnson took responsibility for marketing and merchandising, believing that customers just didn’t understand the story behind â€Å"Fair and Square.† He tweaked the marketing plan, adding five additional â€Å"Best Price Fridays† to the calendar, including the important Fridays anchoring Memorial Day Weekend and Black Friday. The advertising creative was changed to incorporate a harder-hitting â€Å"Do the Math† positioning (See Exhibit 13 for an example). In June, J.C. Penney reintroduced the â€Å"S† word â€Å"sale† into its advertising to help clarify that its Best Price Friday deals actually extended through the weekend until all inventory was sold. Under pressure, Johnson speculated what his old mentor, Steve Jobs, who passed away in October 2011, would have advised, â€Å"I think Steve’s advice would be don’t worry about what others say. Trust your instincts. Do the right thing†¦Stay the course. But he would also say the essence is in the simplicity. And so he would have liked where we are going on pricing, but he would have said ‘You’ve got to clean it up. You’ve got to be more direct’.†61 Johnson buckled down, â€Å"What you can’t do is chicken out.  If you had looked at the data on the Genius Bar after a year and a half, we should have taken it out of the store. But it was something I believed in with every bone in my body.†62 He continued, â€Å"The world moves by innovators and innovators have to have the courage to imagine something that hasn’t been done before and the conviction to see it through†¦It is really hard. It takes a lot of courage. You’ve got to be able to have a few arrows shot in your back.

Cape May as a Summer Resort Town

Cape May as a Summer Resort Town Will Stevens A resort town is a town or city that relies heavily on the tourism as a main driver to its economy. Considered among the oldest resort towns in the United States, Cape May, New Jersey is situated at the southern tip of the state of New Jersey, and has provided beachgoers with a beautiful town since the mid 1700’s. Owing to its rich history as a whaling community, its role in both of the world wars, superior bird watching landscape, its recognition as a National Historic Landmark, and New Jersey’s large tourism industry, Cape May continues to enjoy success as a popular summer destination. According to The City of Cape May, the history of Cape May can be traced all the way back to the late 17th Century when the land was first settled. Its status as a beach destination began in the mid 1700’s when horse-drawn carriages arrived from Philadelphia. Over time, hotels were built and the Cape became the major beach destination for cities such as Philadelphia, New York, Baltimore, and Washington. It wasn’t until 1863, however, when the railroad between Philadelphia and Cape May was completed, that families began building summer vacation homes down the shore. Several fires have engulfed Cape May, and have resulted in the towns desire to maintain a â€Å"small town† feel and not have to compete with the high rise hotels that other resort towns have. This decision is crucial to the history of Cape May architecture and is the main reason why the city is considered a National Historic Landmark. The Cape May canal, Cape May Lewis Ferry, and the Cape May Coast G uard Station have also contributed to the history of Cape May. (City of Cape May) In Philippos J. Loukissas’ journal article about the impact of regional development, he states, â€Å"An increase in connections with the outside world also is assumed to have the positive effect of introducing new ideas into the community.† This hints at the importance of the Janelle model used be economic geographers, and can be applied to this history of Cape May as well. When the railroad between Philadelphia and Cape May was finished, this only further deepened the ties between the new places, and began the construction boom of vacation homes down the shore. Alternatively, the completion of the of the Garden State Parkway and the initiation of services on the Cape May Lewis Ferry have done wonders to connect Cape May and provide greater tourist exposure. The Garden State Parkway allows easier vehicle access with connectivity to the rest of the New Jersey highway network, and the Cape May Lewis allows Delawarean residents and travellers further south to access the Cape by way of the Delaware Bay. Tourism is obviously a major component of Cape May’s history, but it is also important to understand its role in New Jersey’s economy as a whole. In 2008, tourism expenditures in New Jersey were $38.8 billion supported by over 70 million visitors. Kenneth McGill even states in his report about New Jersey tourism that, â€Å"NJ Tourism is larger than the entire GDP of 120 countries.† And that, â€Å"1 in every 9 NJ workers owes his/her job to tourism.† McGill also states that New Jersey’s tourism industry is 2.1 times more concentrated than the US average, meaning that the percentage of workers directly or indirectly employed by the tourism industry is 2.1 times greater than the average US state. Perhaps unsurprisingly, the core tourism industry is the third largest private sector in the state, supporting over 350,000 jobs. Another staggering statistic presented by McGill is that other than investments and business travel, the in-state contribution t o the total tourism expenditure is only 20%, while the out-of-state contribution is more than 3 times that, at 64%, while Diane Wieland states that over 75% of visitors to Cape May County come from out-of-state. When comparing the tourism statistics of Cape May County to those of the entire state of NJ, it is clear that the economy of Cape May is heavily reliant on the activities of the tourism industry. In McGill’s report on the tourism industry in New Jersey, it is stated that 48.1% of the entire economy of Cape May County can be attributed to the travel and tourism industry. This is the largest percentage of all counties in the state, and shows just how important the industry is to southern New Jersey. McGill and Diane Wieland confirm the importance of Cape May as a summer resort town and popular vacation home destination in their statistics. McGill shows that over 50% of rental income of the entire state comes from Cape May County alone. Wieland also shows that nearly half of all rental and 2nd home properties in all of New Jersey are located in Cape May County. In fact, according to Wieland, 47% of all residences in Cape May County are considered 2nd homes or vacation homes. (Wie land) Tourism in Cape May is not limited to just beachgoers looking for a relaxing vacation. The Delaware Bay, especially the New Jersey banks, is world-renowned locations for bird watching. In Joanna Burger’s report on the affects of tourism on the local ecology, she mentions that the Delaware Bay area benefits from its low-lying mud flats and coastal marshes that are conducive to migrating shore birds. It was not until recently, however, that experts have realized that the millions of birds that pass through the Delaware Bay are attracted there by the abundance of horseshoe crab eggs in the springtime. The city of Cape May has taken advantage of this unique characteristic and has encouraged eco tourism to the area. (Burger) My own experiences have been greatly influenced by the touristic, seasonal nature of Cape May. My grandparents first purchased a property down the shore over 30 years ago, so the beach has been a big part of my family’s lives since before I was born. We have been taking weekend trips down the shore for my entire life, and I have spent the entirety of the summer, from when school gets out until Labor Day, in Cape May for almost 10 years. Our house isn’t big by any means, but it has enough beds that most of our family can be down simultaneously, and we have regularly had about 10 people on any given weekend. I can say with confidence that my family conforms to the typical summer vacationer stereotype. My grandparents will usually head down before Memorial Day to open up the house and get everything set up for the summer. Memorial Day is the first big weekend of the summer, and we are all usually down there. My sister and I are the only two that stay with my grandparents f or the entire summer, and we enjoy seeing our parents and aunts and cousins on weekends that they come down and visit. My sister and I also contribute to some of the tourism statistics that I stated earlier. Both of us have seasonal jobs that rely completely on the summer tourism activity in Cape May. My sister is a beach tagger, collecting money for the city of Cape May for people to use the beaches, and I was a lifeguard at a local campground. Both of these jobs are only sustainable during the summer months as the population of Cape May swells. Much of mine and my family’s experiences can be explained in Reiner Jaakscon’s article called â€Å"Second Home Domestic-Tourism†. Many passages from his article relate directly to my life and experiences down the shore. â€Å"The second home offers a sense of identity at many levels, approximating in microcosm a concentric-circles model of ethnocentricity.† (Jaakson 378) This is true with many small towns, but especially true with Cape May. It is nice to be able to identify with other people who have shore homes and also spend their summers down the shore; comparing experiences through a shared commonality and lifestyle. â€Å"The very idea of a second home that is used primarily, if not exclusively, for leisure and recreation has an element of make believe.† (Jaakson 379) The fact that it is the summer means that I have no other responsibilities other than to relax and enjoy myself. Because I am not in school five days a week means that my time sp ent in Cape May is used as a sort of escape from the real world where I can go to the beach and swim in the ocean and sleep in as long as I want and enjoy the hot summer weather. Our summer home provides me with a relaxing retreat from normal life, but it also allows our family to be much closer. â€Å"The second home provides for family togetherness of a different kind from that available in the city.† (Jaakson 379) This is especially true for my family. We are a very close family anyway, all living within 15 minutes of each other at home, but the closeness of our beach house allows us to have tighter bonds. â€Å"The smaller physical space and the immediate outdoors facilitate a closer family togetherness† (Jaakson 380) These two quotes from Jaakson perfectly encapsulate the dynamics within my family. While we live close together at home, we don’t visit each other often. It is a completely different story in the summertime. My sister and I are excited to spend time with our aunts when they come down and visit, and I enjoy spending time with my cousins when they are down too. Our summer home provides a platform for all of our family to c ome together and spend time with one another. Throughout its history, Cape May has evolved from a whaling community into one of the nations oldest beach towns. Its location at the southern tip of New Jersey and its long-standing popularity with Philadelphians and other out-of-state tourists have cemented Cape May’s position as one of the most popular summer beach towns in the country. Works Cited Burger, Joanna. Landscapes, Tourism, and Conservation. Science of the Total Environment 249.1-3: 39-49. Print. Cape May History. The City of Cape May. Cape May City, 2009. Web. 15 Apr. 2014. http://www.capemaycity.com/Cit-e-Access/webpage.cfm?TID=103TPID=10704>. Jaakson, Reiner. Second-Home Domestic Tourism. Annals of Tourism Research 13.3 (1986): 367-91. Print. Loukissas, Philippos J. Tourisms Regional Development Impacts a Comparative Analysis of the Greek Islands. Annals of Tourism Research 9.4 (1982): 523-41. Print. McGill, Kenneth. NJ Tourism: Holding Its Own During Difficult Times. VisitNJ.org. State of New Jersey, 2008. Web. 15 Apr. 2014. http://www.visitnj.org/sites/visitnj.org/files/tourism-ecom-impact-2008.pdf>. Wieland, Diane. Tourism Impacts in Cape May County. Cape May County. Cape May County, 2006. Web. 15 Apr. 2014. http://www.capemaycountygov.net/FCpdf/Tourism Impacts in Cape May County AVALON.pdf>. Wood, Ida Leigh, Jerry Tirrito, and Mariana Leckner. New Jersey Coastal Community Resilience Demonstration Project Report. NJ Sea Grant Consortium. N.p., Dec. 2010. Web. 15 Apr. 2014.