haelee catchpole yma scholarship 2013
TRANSCRIPT
RUNNING HEAD: J.C. PENNEY: A STRATEGY TO CAPTURE THE MILLENNIAL CUSTOMER
Haelee Catchpole
University of North Carolina at Greensboro
Conoscenza: A Feminine, Versatile, Professional line
J.C. Penney: A Strategy to Capture the Millennial Customer
J.C. Penney: A Strategy to Capture the Millennial Customer 1
THE MILLENNIAL CUSTOMER
The millennial customer is very involved with self-expression; they often define themselves by
what they wear. This generation of customers loves to “stand out to fit in”, they try to fit in with
their friends and social groups while still maintaining their individuality (Forbes, 2013). The
clothes and accessories worn communicate non-verbally to those all around. Born between the
years of 1985 and 2000, these individuals, use technology for all purposes (Pew Research, 2010).
Connected via technology with the world around them, many have created profiles on popular
social networking sites. Millennials are known to extensively research and follow brands online
before and after purchases. Social media is key in promoting brand awareness.
According to Trends magazine, the millennial consumer’s connection is not just social. There
is a very fine line that is drawn between product quality and product use for the millennial
customer. This is not to say that they do not have boundaries but to amplify the significance of
word of mouth advertising. If you make a product that they love, the millennial generation will
rave about it through their posts. On the other hand if something is perceived wrong with the
product this customer will tend to automatically blame the products for not meeting their needs.
Living primarily in urban areas, the millennial generation has become more in tuned to
fashion around them and what is worn by others. To the millennial consumer the world is small.
Those not living in urban areas do not have to travel to the city to buy the new selection, but they
can use technology to research, select and purchase products instead.
More students are continuing their education after high school. Research shows that, “more
than half (54%) have at least some college education (Pew, Research 2010). The boomerang
effect has become more noticeable as college graduates are finding it increasingly more difficult
to obtain a job in their career field. “Despite their economic standings the millennial customer
can still be portrayed as a powerful purchaser” (Forbes, 2013). With young adults moving back
in with their parents they have greater disposable income as parents are subsidizing their
lifestyles and everyday expenses.
Another major impact the millennial consumer has in the retail market today, is that they are
likely to live in nontraditional families “with 75 percent in households of five or more.” With
these households not necessarily being comprised of traditional families, the millennial customer
is surrounded by a network of their peers, overall, reflecting their purchasing power
(Understanding the millennial, 2012).
J.C. Penney: A Strategy to Capture the Millennial Customer 2
The largest segment of customers since the baby boomers, the millennial generation holds
great expectations for brands and customer service (Pew Research, 2010). This generation is
looking for a product that allows them to stand out in their own way while still conforming to the
trends and styles they see around them. Creating a product that fills the needs of the millennial
generation, while giving them access to it 24/7 will allow J.C. Penney’s to reach this customer in
the retail sector. This case study will focus on how J.C. Penney will capture and retain the
millennial customer, through the introduction of a new product line and OMNI channel retailing
efforts.
SWOT (STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS)
Table 1, shown below briefly describes the strengths, weakness, opportunities, and threats of
the millennial generation. Table 1:
Every generation has its unique strengths and weaknesses. The millennial generation
strengths include: their use of technology, connectedness with others, ability to adapt, and their
interaction with media. As stated by the Bulldog Reporter (2013), “63% stated that being
technologically savvy, is the greatest strength the millennial generation has to offer in the market
place.” The use of technology allows for retailers to better obtain this consumers attention.
While their weakness may be their demand for perfection, this generation is often more
dissatisfied when a product does not fulfill their needs. As stated by the Bull Dog Reporter
Strengths: -‐ Quick to adapt -‐ Connected -‐ Interaction with media -‐ Technology Savvy
Weaknesses: -‐ Demand For Perfection -‐ Self-‐centered world -‐ Dissatisfaction hits them harder -‐ Portrayed as lazy -‐ Over inflated sense of self
Opportunities:
-‐ Constant innovations -‐ Trend setters -‐ Increase technology -‐ Looking for the “next best thing”
Threats: -‐ Limited discretionary income -‐ Low employment -‐ Expect everything to be easy -‐ Limited attention span
J.C. Penney: A Strategy to Capture the Millennial Customer 3
(2013), “29% agreed that lack of commitment was the millennial generation’s greatest weakness,
followed by 27% having an over-inflated sense of self.” This weakness can pose obstacles for
retailers, specifically J.C. Penney, as they are faced with the challenge of having to drive
marketing strategies that relate to the consumer.
The millennial generation tends to be trendsetters, with lifestyles that constantly push them to
find the “next best thing”. Retailers must continue innovating existing products to help this
generation with the demands and different needs they possess. With constant development of
new and improved technology, this generation influences producers to continue improving
existing products, supplies, and methods. As stated by Strategic Management (2013), “millennial
attitudes are early indicators of more widespread future trends.”
Retailers, such as J.C. Penney are affected by economic burdens of this generation due to the
current recession. Retailers have to find the perfect combination of good quality and realistic
price point. The millennial customer tends to lack a full time career, making it difficult to
purchase expensive apparel. Bob Funk, CEO of Express Employment (2013) states, “millennials
are a strong, free-thinking group whose attitude toward their employers is often ‘easy come easy
go’. This mind set can also lend itself to this generation’s loyalty to a retailer.” J.C. Penney’s
must work to achieve a strong awareness and loyalty with this generation in order to gain their
disposable income and maintain a strong relationship to maximize future purchasing powers.
PRODUCT LINE
J.C. Penney will implement a new product line that will provide a fashionable style at an
everyday low cost. To aid J.C. Penney in the regrowth of their market share, the introduction of
an innovative business casual line, will allow them to reach the millennial female. This line will
help the 20-28 year old female, transition from college to a career in business. With more women
graduating from college, J.C. Penney should offer a line that fits their lifestyle, is affordable, and
will facilitate their move up the corporate ladder. Gettings, Johnson, Brunner & Frantz (2007)
noted, “ …there once was a time in American history when the thought of women working for
complex, multi-national technology companies, giant advertising firms, and massive publishing
houses was snickered at behind closed boardroom doors. Today, women are running those
companies—from some of those very same boardrooms.”
J.C. Penney: A Strategy to Capture the Millennial Customer 4
The garments chosen for the product line will consist of a slim fit full leg pant, a fit to curve
pencil skirt, a cropped blazer, a contour dress, an all-purpose button up top, a peplum top, an eye
lash lank tank, a scooped ruffle tank, and a bow tie blouse. These nine items will be displayed in
a manner that indicates easy to wear and can be mixed and matched and worn with different
accessories to address their versatility. All nine pieces of the product line will be available for
purchase online at JCPenney.com, as well as placed in a large majority of J.C. Penney stores.
The line will be characterized by effortless beauty and “go anywhere” style. All nine-garments
in the product line will be machine washable and easy to maintain. The material used will have a
percentage of Lycra to help prevent wrinkles and maintain the garment shape. Versatility,
comfort, ease of care and proper fit will make the female consumer feel confident and beautiful
in the workplace.
The garments in the line will consist of two bottoms, five tops, a jacket, and dress. The two
bottoms in the line will include a full-length slim pant sold at $40.00 and a pencil skirt, with a
price of $35.00. The tops for the collection will include a bow tie button blouse, bateau peplum
top, eyelash tank, scooped ruffle tank, and bow tie blouse will make up the tops for the
collection, ranging in price from the $18.00 tank to the $30.00 bow tie blouse. The cropped
blazer will be sold at $45.00 and the contour style dress will be sold at $55.00.
BRAND IDENTITY
The new product line will be named Conoscenza [co-no-scèn-za], the Italian word for
knowledge. The line will consist of a perfect blend between
versatility and functionality. The trendy, comfortable, high
quality line will have price points that range from twenty to sixty
dollars. These prices will fall within already existing price points
displayed in product lines such as Liz Claiborne, Nicole-by-
Nicole Miller, and Joe Fresh line at the J.C. Penney’s store. The
color theme of dark red throughout the labels and packaging details
will enhance brand awareness. Dark red can often be seen as powerful and arousing, which can
help create awareness to this target market. The logo for Conoscenza will look similar to figure
1, displaying the bold red incorporated with a calligraphy style font.
Figure 1
J.C. Penney: A Strategy to Capture the Millennial Customer 5
Conoscenza will stress that employees possess genuine, fun, friendly, and approachable
characteristics in their personality. Since most of Conoscenza’s customers will be young adults,
employees are expected to treat customers like professionals and respect them for not only being
a customer but also in hope to gain their customer loyalty. Customer service programs revolve
around the time of the pre transaction, transaction, and post transaction to insure Conoscenza has
a competitive gain.
MARKETING STRATEGY
Conoscenza’s mission is to make selecting a professional wardrobe appear easy. This will help
promote Conoscenza’s brand identity as being “trendy” and “fashionable”, at an affordable price
point.
The main marketing strategy is to communicate with the customers about the new
Conoscenza line and the products it has to offer. Promoting Conoscenza through mobile devices,
computers, TV, radio, print, and brick and mortar stores, will aid in the launching of the new
line. Each marketing strategy will allow the customer to consistently be reminded of the product
characteristics the Conoscenza line holds.
Conoscenza will build their identity and create awareness through the use of savings days,
employment of personal shoppers, creation of a loyalty program, and use of technology. “Saving
days” will be proposed once throughout each month, Friday- Sunday. Customers will be
rewarded if they make purchases over $50.00 of Conoscenza products, by receiving
“Conoscenza cash”. “Conoscenza cash” will be given to the customer and can use during the
following month to get either $10 off a purchase of $35.00, $15 off a purchase $50.00, or $30 off
a purchase of $100.00.
The loyalty program at Conoscenza will start after the customer’s first purchase of a product
from the Conoscenza line. Each personal shopper will record the customer’s general information
such as phone number, address, and email at the point of sale. They will also record the size of
the customer, to help personal shoppers the next time they visit the store. Personal shoppers will
be employed to help provide information and styling to Conoscenza customers. The focus will be
for personal shoppers and sales associates to provide the customer with a positive, memorable
experience.
J.C. Penney: A Strategy to Capture the Millennial Customer 6
J.C. Penney’s will promote a new “Dress Smart App”, featuring the new Conoscenza line.
Through this app customers will be able to view the new line with the option to mix and match
pieces to complete a look. When searching through the “Dress Smart App”, customers will be
able to purchase any item from the Conoscenza style they create by clicking the “buy now” pop
up. If the customer’s wishes to see the tangible product before purchase, the “locate me" button
will display the nearest J.C. Penney location that has the specific Conoscenza garment in store.
The app will feature a style calendar, alerting system, and matching section displaying outfits
selected by Stacy London and Clinton Kelly. The alerting system will allow Conoscenza to
inform customers of new items in the line, showing the customer what might look great paired
with their existing products. The style calendar will give the customer an option to take pictures
of outfits they wear daily and display the specific dates worn. Customers can then look back and
see what they have already worn and view favorite outfits that they have received compliments
on.
Customers often have no trouble finding key pieces, but struggle putting together an entire
outfit. To help the customer assemble an ensemble, Stacy London and Clinton Kelly will be used
as an aid in promotion of “What to Wear”. The “What to Wear” theme will feature pictures and
displays of entire outfits, consisting of Conoscenza pieces picked out by Clinton and Stacy. The
outfits will start with a basic Conoscenza bottom such as the black slim leg pant or pencil skirt,
then combined with a different top and blazer.
PART TWO:
ASSORTMENT PLAN
The assortments for the Conoscenza line will consist of a ratio of one bottom to three tops.
Tops, and Jackets will have a range of sizes between XS to XL, bottoms and dresses will range
in size from 0 to 14. The quantities for each item will contain more in sizes small and medium,
and 4 to 8 as these are the median sizes for the Conoscenza collection. Each product in the
collection will be available for purchase in a variety of colors. The line will consist of ten color
choices including, Jet Black, Bright White, Placid Blue, Hemlock, Radiant Orchard, Dazzling
Blue, Violet Tulip, Sand, Paloma, and Cayenne. Each product will contain a percentage of
Cotton, Lycra, and Polyester fabrics, as these fabrics consist of characteristics that include, great
comfort, excellent strength, and color retention (Regal fabrics, 2006). Refer to tables, 2-5 for
specific product colors, sizes, and silhouettes. All vector sketches are taken from fashion snoops.
J.C. Penney: A Strategy to Capture the Millennial Customer 7
Table 2:
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J.C. Penney: A Strategy to Capture the Millennial Customer 8
COMPETITIVE ANALYSIS
Kohl’s, and Target are two of J.C. Penney’s largest competitor’s in the department store
sector. “Kohl's snags the top spot this year with a 5.11 percent profit margin, as it continues
to refine its store experience to better serve the customer.” (Kohl's Department Stores,
2013). Kohl’s has seen an increase in market share and offers a variety of different exclusive
brands such as, “Rock & Republic, Simply Vera Wang, Jennifer Lopez, LC Lauren Conrad,
Marc Anthony, ELLE™, and Dana Buchman.” Introducing these lines has allowed Kohl’s to
gain a broader target market while reaching out to the millennial consumer.
Examples of new strategies used by Kohl’s are its remodeling of stores, moving customer
service from the back of the store to the front, and converting to all-‐electronic signage,
freeing up associates for more customer-‐facing engagements. The Kohl's website offers a
"Small Space Style" page where shoppers can get ideas about furnishing an apartment on a
small budget. In its march to perfect the Omni channel experience, Kohl's has equipped all
stores with Wi-‐Fi, and replaced gift registries with kiosks. Kohl’s global inventory visibility
Table 5:
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J.C. Penney: A Strategy to Capture the Millennial Customer 9
project will allow the retailer to better track in-‐store inventory (Kohl's Department Stores,
2013).
Target Corp. a large competitor to J.C. Penney, is a place where low prices for quality
goods exist, allowing them to have a large following amongst the younger demographic (JC
Penney, 2011). Known for the red displayed throughout their store and worn on
employees, Target uses this marketing technique to help them stand out amongst their
competitors and create brand awareness. Without seeing the name, most consumers can
recognize target through their red and white circle logo. When the subject of marketing at
Target comes up, the first thing that usually comes to mind is the company’s clever, hip
advertising. “The idea is for our guests to understand that they don’t have to sacrifice
quality and style and good taste and sophistication for price,” explained Micheal Francis,
then executive vice president and chief marketing officer for Target, in 2008. (Brand
Promise, 2012)
Kohl’s and Target have focused their marketing strategies on targeting the millennial
consumer. Without targeting the millennial consumer, J.C. Penney can face losses compared
to companies such as Kohl’s and Target. J.C. Penney can benefit by more strategically
targeting the millennial generation through similar strategies of “hip advertising” and
“exclusive brands” generally used by Kohl’s and Target. The introduction of the
Conoscenza line in the J.C. Penney stores will offer a new brand that will attract the
millennial female. In addition to the product itself, J.C. Penney will use emails and the
“Dress Smart App” to provide information on how and why the product will benefit this
specific customer.
SALES PLAN
In developing a six- month plan with sales of $2.5 million at retail, monthly sales, seasonal
turnover rate, and markdown rate were based on averages obtained from the J.C. Penney annual
report (JC Penney annual report).. These numbers were used as a guideline and were fluctuated
based on the items sold in the collection, and holidays during the month. The initial markup was
based on J.C. Penney’s previous gross margin and markup percentages from CSI market (JC
Penney Company, Inc.). See Table 6 for specific numbers.
J.C. Penney: A Strategy to Capture the Millennial Customer 10
Table 6:
VISUAL DISPLAY
The line will be presented in the J.C. Penney store in the form of a little boutique. The area
will consist of warm and inviting earth tones with adding a splash of red hues. Garments from
the Conoscenza line will be displayed on mannequins. Customers will easily be able to locate the
Conoscenza section in the store through the brand logo displayed in Figure 1.
When a customer enters into the Conoscenza section in J.C. Penney, their experience will start
with the inviting atmosphere and the smart layout of the line. Conoscenza will be an eye catcher
and attract shoppers to the J.C. Penney store. This will be executed by making sure there is
plenty of walking space for people to get around and shop the collection, and presenting all
merchandise at eye level or below for easy accessibility. Each garment will be hung on racks in
order of size and color, making sure that the racks are not over packed or bunched together
allowing the customer to shop. Wood slat wall fixtures will surround the Conoscenza line
collection giving the section an enclosed feel. Clothes will hang inside the wardrobes as well as
racks throughout the center of the enclosed space. A separate area will also be designated for a
line that leads up to the cashier, allowing complete access to the merchandise.
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J.C. Penney: A Strategy to Capture the Millennial Customer 11
Available for purchase online at JCPenney.com, Conoscenza will be located under the shop
brands section in the Women’s tab. The Conoscenza web page will feature a top banner
displaying an outfit worn by a model composed of Conoscenza garments. The top banner will
also display the Conoscenza logo and promote any current sales of the line. The sales and outfit
displayed on the top banner are likely to change weekly to keep costumers aware of current
promotions and display new garments. Below the banner customers will be able to shop all of the
items produced by the Conoscenza brand. Customers will be able to narrow their search by
selecting a product type of either bottoms, tops, dresses, or jackets. When viewing a specific
garment customers will be informed of the size, color, price, and description. Similar to the
“Dress Smart App”, customers will be able to pair different Conoscenza garments together
online to create a complete look.
ADVERTISING CAMPAIGN
As consumers only take in a little bit of information they are given in an advertisement, it is
important to make the ad clear and precise. To create brand awareness ads will be placed in
popular magazines [read by this millennial customer] such as Cosmopolitan, Glamour, and
People Style Watch. Sixty second TV commercials will be seen on popular watched networks
such as ABC, Fox, and CW, allowing Conoscenza to connect with a large audience of
viewers. The ads will feature some of the new key designs that will be displayed in the line
throughout the J.C. Penney store. The ad may feature a female entrepreneur or celebrity such as
Olivia Palmero from The City.
Widgets will be displayed on the bottom of each print ad, as well as a QR code for the Dress
Smart App. By following the line on a social networking site such as Instagram, Twitter,
Tumbler, Facebook, the customer will be updated daily on styles that can be seen in the store,
new looks that can be pulled together using a signature item, how to wear the looks, and what
accessories to pair with each look.
To display the new designs of the Conoscenza line, J.C. Penney will use the tagline,
“Change doesn’t have to be hard when the transition is made easy”, as an aid in advertisement
in every medium. The campaign will be based around the problem solution technique,
displaying before and after product use, a consumer feeling messy and frustrated versus feeling
organized and clean .The advertisements will consist of a millennial female aged 22 getting
ready for the morning. For print ads the advertisement will be split in half. One half will display
J.C. Penney: A Strategy to Capture the Millennial Customer 12
a messy un-organized closet with a woman showing frustration and anger looking for an outfit.
The other half will show a clean closet consisting of the nine Conoscenza items displaying a
happy and content woman showing her using the “Dress Smart App” to plan her outfit.
The 60 second TV commercial will display a scene of what the morning rush might look like
for the millennial consumer:
“Does your morning rush often look like this”, (Displaying a frustrated female age 22, in
a messy and unorganized room with clothes everywhere), “What if it could look like this”
(Displaying the same female content, in a clean and organized room with the nine
Conoscenza garments hanging and the women using her phone to pick out an outfit).
“The new Conoscenza line at J.C. Penney offers versatility and comfort, making it easy
to plan outfits and make it out the door on time” “With the new line the free “Dress Smart
App” allows you to view the different articles of clothing while mixing and matching the
colors and silhouettes together to create a whole look” “Check out your J.C. Penney store
today and look for the Conoscenza line.”
The Conoscenza line will also prepare banner ads to be displayed on the internet to help gain
awareness. These ads will feature the simple, clean, organized life that can be shown through the
purchasing of the Conoscenza line and the “Dress Smart App”.
Consisting of an average gross margin of 29.55, taken from July 2013 (J.C. Penney gross,
2013), Conoscenza can estimate spending 2.8% of the total sales on advertising (Baragrey,
2012). Conoscenza plans to spend around $70,000 of the 2.5 million sales on their advertising
strategies. The total budget will be picked up by J.C. Penney in their help to promote this private
label in their store. The overall budget is likely to change and fluctuate based on the amount of
sales received each month as well as monthly, seasonal, and time rating changes for each
advertising medium. Conoscenza plans to start off with a monthly advertisement placement in
three different magazines, as well as weekly commercial displayed on the four different TV
networks. The number of advertisements and placements is likely to change after a month trial
period. The trial period will allow Conoscenza to see which medium is allowing them to reach
their target customer in the most efficient manner.
CONCLUSION
As stated by the Boston consulting group (2012), “Some may argue that the peak spending
years of the millennial are far enough in the future that companies can take their time in
J.C. Penney: A Strategy to Capture the Millennial Customer 13
developing products and services that will appeal to them.” Ultimately influencing today’s big
spenders, the 35-74 year old non millennial, the tech-savvy lifestyle the millennial generation
contains is an indicator that J.C. Penney must stay on top of the trends. Introducing the new
product line, Conoscenza, will help J.C. Penney’s regain awareness and capture the millennial
generation through reiterating versatility, comfort, and easy care of the Conoscenza products,
while promoting the new “Dress Smart App”.
J.C. Penney: A Strategy to Capture the Millennial Customer 14
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