It's all inside...(repeat) ...It's all inside...
June 9, 2003-- Home Textiles Today,
JCPenney's marketing strategy is moving in lockstep with the company's merchandising focus on dominant categories and brands — home among them.
The company has boosted its advertising expenditures by more than 30 percent since 2000, putting its 2002 spending level at an estimated $1.3 billion. And Penney plans to fatten its advertising allocation by 5 percent to 10 percent this year, according to information presented during its two-day analysts meeting in April. Penney continues to funnel more dollars into TV and pre-print allocations, reducing direct mail in the process.
"We've learned how to leverage the power of centralization with a unified, national marketing presence," said Mike Boylson, executive vp, chief marketing officer. "The investment allows us to achieve the impressions we need to differentiate ourselves on a national scale."
Penney's new marketing mantra, he said, is balance, simplicity and repetition.
However, even though the merchandising and marketing departments now plan in tandem, the strategy faltered in the first quarter of this year, executives acknowledged last month during the company's quarterly conference call with investors.
"I think we were so successful [with marketing initiatives] a year ago, we didn't change it up enough," said Vanessa Castagna, chairman and ceo of JCPenney stores, catalog and Internet. "Store-wide events were weaker than they were a year ago, especially our April anniversary sale."
The marketing organization will continue to key in on big store-wide events, and will emphasize mid-week promotions and advertise more aggressively on weekend promotions.
Boylson cited Penney's marketing of the February 2003 home sale as one of the success stories for that strategy. Its mailer focused on dominant classification merchandise statements, pounding home a message of fashion at a compelling price.
"Our home business provides a tremendous strategic advantage for us. This semi-annual event has driven big sales gains, particularly in our major metro markets," Boylson said.
Penney has also developed strategic growth plans for selected leadership businesses where it believes it has a competitive advantage over its mid-tier rivals, Boylson said.
As part of this process, Penney is throwing more marketing muscle into raising the profile of its private brands — which contribute 40 percent of the company's sales, or roughly $278 million in 2002. Six megabrands account for approximately 70 percent of that private label business: JCPenney Home Collection (over $2.3 billion in soft home alone), the Arizona teen apparel collection, St. John's Bay casual and outdoor apparel, Worthington women's apparel, Stafford men's dress shirts and Delicates intimate apparel.
"As part of the company's vision, we continue to place greater emphasis on our private brands, targeting key consumer segments with a focused approach," said Patrick Conboy, vp, director of strategic marketing. "You're going to see more in the future, including some great new work around the JCPenney Home Collection, which will even further extend our reach with new customers."
As Penney's operations and IT departments have upgraded the company's analytical tools, the marketing department now is getting a handle on the market basket implications of the company's special events, Boylson said.
"We're learning more about ad responsiveness by item and category — what responds to price breaks, what doesn't," he said.
Penney's advertising direction is thrusting toward the contemporary — especially in national broadcast advertising. High-profile campaigns so far this year have included Penney's sponsorship of the Academy Awards telecast as well as a "Watch and Win" sweepstakes in conjunction with watch brand M.Z. Berger and the "Who Wants to be a Millionaire?" program. Through such initiatives, Penney is working to tell the modern consumer that the retailer is "her store, not her mother's store," Conboy said.
But broadcast, while a more important component of the marketing mix, isn't carrying the message alone. Penney is working to refine its multi-media marketing approach, Boylson said, "to drive a total event."
During its "lowest prices of the season event" event in February, a direct mail campaign targeting Penney's Gold Card customers aimed at driving traffic into the stores for the Friday preview day. An oversized circular for the public kick-off to the event hit 55 million homes. Both pieces featured buy-one/get one for a $1 offers. An added-value sweepstakes offered 10 new Corvettes, 100 Carnival cruises and 1,000 JCPenney gift cards worth $100 to customers who visited stores during a five-hour window on Saturday. The event was also promoted over the weekend with a national television campaign.
"We believe in delivering advertising with great consistency that resonates with [the consumer] by acting bigger," Conboy said. "We want to be in the biggest and best media where we can best dramatize our merchandise stories."
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