Did Lack of Consumer Research Sink JC Penney?

In 2012 then CEO of J.C. Penney put into place a new pricing strategy. An article in USA Today he said that there wasn’t time to test the pricing strategy before rolling out.

He argued that testing would have been impossible because the company needed quick results and if he hadn’t taken a strong stance against discounting, he would not have been able to get new, stylish brands on board.

So the first reason not to research was a lack of time.

Which is curious, since how much time would it take to do an online survey for at least some indication of how J.C. Penney shoppers feel about the pricing?  A week?  An in-store test would take longer but even then we are talking about  matter of weeks not months.

Then we learned from yesterday’s New York Times:

By early fall 2011, Mr. Johnson was tackling Penney’s pricing, which he thought used too many discounts. He ignored a study Penney had just completed on customer preferences, and gave merchants a one-sheet grid explaining what prices they could use.

“Ron’s response at the time was, just like at Apple, customers don’t always know what they want,” said an executive who advocated testing. “We’re not going to test it — we’re going to roll it out.”

That’s a different story entirely. Customer research was done and ignored.

We don’t know what was in that research, so it is hard to say for certain that it would have prevented the retailer from such a major misstep. Even so, there is a cautionary lesson here.

Sometimes a little market research can be a major insurance policy against extraordinary risk.

And, yes, I know everyone in the universe will say shout “Look at Apple! They don’t waste money on market research!”

To which I suggest we do an Apple to Apple comparison.

Apple rolled out stores over time. If the first few had failed, then the company would have abandoned the plan at a manageable cost and minimal risk to the brand image. J.C. Penney was attempting to change what had become a defining element of the brand – the pricing strategy – across thousands of stores in a short span of time.

There’s a big difference between not doing consumer research before launching an individual product and not doing research before overhauling an existing major line of business.

A final word — not all market research is equal. It appears that Pepsico and Arnell did market research before launching the disastrous new Tropicana package design in 2009. The articles published around that time implied that the research study itself was flawed, that they did not pick up on how meamingful was the visual metaphor of a straw in an orange.

As the great market researcher Valentine Appel used to say, “All market research is a waste of money. Either it tells me what I already know, so why did I do it? Or else the research tells me the opposite of what I know, so I don’t believe it.”

 

 

 

 

 

0 Responses to “Did Lack of Consumer Research Sink JC Penney?”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 27 other followers