In February, JC Penney launched a rebranding initiative that would practically eliminate the sale- and discount-heavy marketing tactics that consumers have come to expect from retailers. However, JC Penney made a critical mistake in its rebranding strategy. Consumers weren't willing to make an instant jump from discounts and sales to every day low prices. As Tom Denari reminds us in an article from Advertising Age, consumers are not rational beings -- a trait JC Penney failed to address.
The problems JC Penney is having with its rebranding can be tied directly to the psychology of consumer behavior. As Daniel Kahnermann and Amos Tversky identified through years of research (stay tuned to the AYTM blog for more about their work), the brain is wired in such a way that there are two distinct ways that people think:
- System 1: Fast, automatic, emotional, subconscious, frequent, stereotypic
- System 2: Slow, effortful, logical, calculating, conscious, infrequent, conscious
In other words, people react instantly and emotionally to price. Seeing a sale price immediately elicits an emotional reaction that makes consumers feel like they're getting a great deal and spending their money wisely. They've been "trained" to think this way for a very long time, and they're unlikely to leap from that way of thinking quickly.When consumers see a higher price on a product and are given information that they can get that product for less money, their perceptions of the buying experience are quickly and subconsciously formed. The perception of a higher original price (despite the fact that the original price is inflated) equates to skewed perceptions of higher quality, higher ego, and higher desirability.JC Penney's mistake wasn't in trying to move away from inflated pricing to a more honest pricing strategy, but in doing so quickly and assuming that consumers would "get it" and jump on board instantly. JC Penney is fighting against conditioned thinking and responses, and it will take time to recondition consumers' feelings and reactions to pricing.At this point, JC Penney needs to get inside consumers' minds to learn how to recondition their thoughts, feelings, and reactions to price. Without that information, the company will have a difficult time creating the right messages and experiences to generate consumer acceptance of its new pricing strategy. JC Penney needs to make its new pricing strategy so hard to resist that consumers will accept nothing else.However, JC Penney also needs to differentiate its brand from other brands that promote every day low prices. Often those brands are viewed as offering lower quality, customer service, and so on. Unless JC Penney wants to reposition its brand to compete against Walmart and similar low cost providers, there will need to be a significant push to ensure consumers understand the difference between the new JC Penney honest pricing strategy and every day low price brands.Market research should play an important part in gathering information from consumers so JC Penney can develop the right messages and brand experiences to recondition their buying behaviors. I still think the JC Penney strategy can work, but the company needs to re-educate consumers both before they get to the store and while they're in the store. Using research findings, the company should be able to identify the best ways to do it.This is not a small task. It will take consistency, persistence, and restraint. It's not surprising that those are the three primary steps of brand building, because that's what JC Penney has to do. Rebuild its brand for the future. However, instead of viewing this as an uphill batter, it should be viewed as an opportunity to build a new level of trust with consumers. The JC Penney brand could become the brand that consumers know they can trust to get honest pricing, and that would be a great brand position to own.Image: JC Penney