Jcpenney Swot Analysis Paper

4 SWOT Analysis
In order to better understand JCPenney and its future, it is vital to take a closer look at the internal and external factors that affect the company. By identifying JCPenney’s strengths, weaknesses, opportunities, and threats, a strategy can then be created that will distinguish JCPenney from its competitors. Hopefully this analysis will provide insight into JCPenney’s falling sales and help establish goals for a turnaround.

4.1 Strengths
Even though JCPenney has been dropping in sales, they still have a number of strengths that may help the company survive. For one, Mike Ullman, a former JCPenney’s CEO, is back in his previous position. After being gone for two years, Ullman replaced Ron Johnson as CEO on April 8, 2014

(“What’s next,” 2013). This is a potential strength because Ullman is known for his strong relationships with suppliers and his relaxed implementation style (“What’s next,” 2013). He could be the answer to securing the company’s future.

Additionally, JCPenney has a long history of brand recognition in established locations nationwide.

They also have a strong supply chain: well diversified suppliers, compelling brands, point-of-sale technology, and effective cost and inventory management (Zacks Equity Research, 2012). Their improved website functionally, JCP Rewards program, and in-store Sephora departments are also key strengths to note.

4.2 Weaknesses
One of JCPenney’s most obvious weaknesses is their falling sales and liquidity problems. According to an article in USA Today, JC Penney saw a 32% decrease in sales during the 2012 holiday season compared to the year before (Hadley, 2013). However, this decline in comparable sales has underlying factors. Some of these include: decrease in popularity, changing business strategies, and lack of coupons.

Under CEO Ron Johnson, JCPenney abandoned promotional sales and strategized building stores within stores (“J.C. Penney almost,” 2014). Johnson’s radical plans turned out to be a complete bust and are the main cause of the huge sales drop. Williams, a former customer of JCPenney commented, “I would go back. I miss it. That was my go-to store for a long time, and then it changed” (“What’s next,” 2013). Many customers also share Williams’

sentiment.

In addition, the company’s morale is a mentionable weakness. Because of JCPenney’s dropping sales, employee cutbacks were necessary. As of February 2013, JCPenney employed 116,000 full- and part-time workers; only a year before this number was 159,000 (“What’s next,” 2013). With a workforce slashed by nearly 30 percent, it comes as no surprise that company morale is on the low end.

4.3 Opportunities
Now that the strengths and weaknesses of JCPenney have been addressed, it will be easier to identify some of the company’s opportunities. A viable opportunity for JCPenney is attracting customers that have been historically loyal. Traditionally, the Hispanic community and Baby Boomers have been loyal customers (Hadley, 2013). Marketing to these two niches could prove to be a substantial advantage for JCPenney.

Furthermore, JCPenney must eliminate high-profile brands in order to win back lost customers and then gain new ones. The idea is to get rid of these high-profile brands in order to sell the company's more profitable, exclusive private-label brands (Derrick, 2013). A well-established marketing position with a well-defined market niche could just be the key JCPenney needs to move ahead.

4.4 Threats
Even though the economy is getting better, it’s still quite dismal. Every company is trying to survive this economic downturn, especially JCPenney. This economic slump means weak consumer spending. This means bad news not only for JCPenney, but also for its main competitors: Macy’s, Kohl’s, and Sears.

Another major threat to JCPenney are the expansion of its competitors. Over the past few years, JCPenney has progressively lost market share (Milheim, 2013). Compared to Macy’s and Kohl’s, JCPenney is on a downward spiral. The company must act, and fast if it is to survive in the retail industry. These threats can be counteracted through new marketing strategies and better financial control.

5 Problem Definition
After looking at the history, industry, and SWOT analysis of JCPenney, it is clear that this company must take progressive steps in order to succeed. Furthermore, understanding the right steps to take is crucial. This can be done through consumer research and first by asking the question: How can JCPenney survive, and ultimately thrive in the department and discount retail industry?

5.1 Research Objectives
Exploring the research problem requires developing corresponding research objectives. The following objectives will help answer the problem: determine JCPenney’s niche markets and how those consumers view JCPenney, gauge JCPenney’s advertising effects on consumers, and examine consumers’ views on JCPenney’s 2012 rebranding.

6 Analytical Tools
Exploring the research objectives through social media will without a doubt help address JCPenney’s research problem. Consumer comments on social media can provide useful data about how consumers really feel. Because information on social media is exorbitant, utilizing social analytical tools has become increasingly important. SocialMention, TweetReach, and HowSociable are all analytical tools that provide useful social media information.

After searching the keyword “JCPenney” on the aforementioned analytical tools, prevalent and relevant themes were discovered. SocialMention collects data for the current time of the search, TweetReach analyzes tweets after entering a search term, HowSociable measures the magnitude of a brand. All three offer an interesting outlook on JCPenney in social media.

A search conducted on October 9 on SocialMention found that JCPenney had a 41% chance of being discussed on social media. There were 18 relatively positive mentions to every 1 relatively negative mention. The reach was 47% and there was a 29% chance that individuals talking about the brand would do so again. Top hashtags, in order from most to least mentioned, included: jcpfanaticas, giveaway, win, hispanicheritage, and jcpenney. Out of all this data, was quite interesting that one of the top hashtags was hispanicheritage. This could help determine how the Hispanic community, a traditionally loyal group of customers, views JCPenney.

According to a TweetReach analysis conducted on October 14, JCPenney’s estimated reach was 53,242 twitter accounts. There was an average of 50 tweets by 43 contributors every 44 minutes. Although this analytical tool does not give a lot of direction on potential themes, it does show that twitter is fairly active in regards to JCPenney. This analytical tool simply shows that Twitter would be a realistic place to collect data.

The last social media analytical tool examined was HowSociable. The magnitude score on HowSociable indicates the level of activity around a brand during a given week. The range is from 0 to 10. A score of zero represents zero or near zero activity for the brand, and a score of 10 means the brand has saturated the social web. JCPenney’s social media brand magnitude for the week of October 6 through October 13 was 5.6. This number is a strong indicator that JCPenney is still relatively well known and talked in social media.

7 Data Collection and Analysis
7.1 Target Market
JCPenney, just like many other retailers, focuses on two things in their customer base, money and youth. These are just a couple of things that they are short on compared to their competitors. According to Kyle Stock, of Bloomberg BusinessWeek, almost half of JCPenney’s customers are above the age of 55 and only 20 percent are under the age of 35 compared to some of their main competitors such as Macy’s where around 36 percent of their shoppers are over the age of 55 and 29 percent are under 35. JCPenney also isn’t the more popular choice to a wealthier crowd, only 13 percent of its shoppers have an income of over $100,000 where 29 percent of their customers make less than $35,000 compared to Kohl’s 19 percent (Stock, 2013).

One of the new markets that JCPenney has recently marketed towards is the Hispanic community. The Hispanic market is JCPenney’s best chance to rebuild their brand and customer base by targeting older, lower-income less acculturated Hispanics (Smith, 2013). Hispanic women are also very active on social media where about 10 to 15 percent have likely engaged with JCPenney on Facebook over the past six months showing that they are more likely involved and responsive to new ideas (Smith, 2013). One of the ways JCPenney has been reaching out to the Hispanic community over social media is with their Facebook page “JCPenney Latino” which has over a quarter of a million likes and they are able to post about new products and interact with the Hispanic community.

JCPenney has already opened up more than 180 stores in areas where the Hispanic demographic or sales from their demographic is highest in the United States. One of their most recent major marketing campaigns toward reaching this demographic was with the 2014 World Cup in Brazil, included in this campaign were two 30-second ad spots that would be played during each of the 56 games of the tournament (Zmuda, 2014.). According to Caitlyn Bohannon, of Mobile Commerce Daily, 112 million households in the United States viewed the last world cup, half of which were Hispanic (Bohannon, 2014). To go along with the world cup marketing they created a tournament bracket with different clothing styles for each Latin country for them to vote for on the Latino Facebook page.
See Appendix A for a full list of comments and posts.

7.2 Billboard Ad

Figure 4. The Tea Kettle On This JCPenney Billboard Looks A Lot Like Hitler (Imgur, 2013)
Advertising is essential for most every business, especially the department and discount retail industry. Because this area can have such a large impact on the success of a company, finding the effects of advertising on consumers is important. After searching for popular JCPenney ads via Imgur, an image hosting and sharing site, it was quite apparent that one ad stood out from the rest. The image was titled, “The Tea Kettle On This JCPenney Billboard Looks A Lot Like Hitler” (Imgur, 2013). The source of the image could be traced back to Reddit.

Reddit, an anonymous entertainment, social networking service and news website, is more popular among men than women and the young than the old. The average profile of a user is an 18-29 year old male (Madrigal, 2013). Noting the demographics of this site can help explain the comments made by users regarding JCPenney’s tea kettle ad pictured in Figure 4.

The Reddit post titled, “This Kettle looks like Hilter!” was submitted on May 26, 2013 and received 136 user comments (“This kettle,” 2013). Quite a lot of users posted witty remarks in regards to the ad. JDGcamo commented, “Three easy payments of NEIN NEINty NEIN” (“This kettle,” 2013). Another user, daeblind, posted, “Mein kaffe.” It’s not until later in the thread that users start making connections between the ad and JCPenney. Interestingly enough, many users did not blame JCPenney for the controversial billboard. Romulusnr posted, “JCP ought to have vetted the proof from the ad agency. And the ad agency should have vetted it themselves first” (“This kettle,” 2013). This theme of blaming the ad agency for the controversy seemed quite common. Many people felt bad for JCPenney and one user, flightgirl1, commented, “This is ridiculous. Now a hurting company is suck even lower over bs” (“This kettle,” 2013). The thread’s users not only dismissed JCPenney’s responsibility for the ad, but they also expressed some empathy toward the company’s condition.

Figure 5. JCPenney Twitter Responses (“JCPenney [jcpenney],” 2013)

An analysis of the Reddit post shows that this billboard generated a strong buzz from consumers, but how much did it really affect the company? Soon after the incident, JCPenney responded to the dispute over Twitter. They claimed the teakettle’s resemblance to Hilter was unintentional (Sanburn, 2013). Figure 5 shows various responses to users. In addition, the out-of-stock teakettle was completely removed from the website, and the billboard was taken down (Sanburn, 2013).

It seems as though the billboard controversy actually helped JCPenney in some ways. For one, it created online exposure through social media which has, in turn, generated sales for the business (Langfield, 2013). In fact, after the billboard blew up online, JCPenney sold 16,000 teapots that week. After discontinuing it, people began selling it on eBay for $200. The item sold in JCPenney for $40 (Langfield, 2013). Nearly a year later, it’s almost as though the incident never happened. This shows that consumers weren’t very affected in the long run. While advertising seems to carry a lot of weight in regards to the retail industry, this controversy shows that ads may not carry the same weight for JCPenney. Consequently, changes in advertising for JCPenney may not result in overall success for the company.