What Is Ron Johnson's Cost-Leadership Strategy

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With the newly hired Chief Executive, Ron Johnson, JC Penny’s retail stores are preparing to make some risky changes to lower prices and offer great in-store sales incentives in an effort to increase its consumer base (JC Penney). Mr. Johnson is developing a comprehensive program designed to increase long-term success, called a strategic plan (Kinicki, 2015). While competing with other retail chains, JC Penney decided to change the floor plan of its stores to include an open area called the “Town Square”. This is meant to entice consumers with monthly freebies and services, while requiring they pass by current popular products to get to this area. They will also break down the departments and product lines into smaller sections, reducing the consumers need to hunt for items they are interested in. By reducing the brand name and celebrity clothing lines to a few strong ones, they will be able to offer lower prices on a regular basis. Setting designated days of the month for clearance sales makes it…show more content…
Johnson; newly hired CEO of JC Penney, utilized the cost-leadership and focus-differentiation strategies (JC Penney). The cost-leadership strategy aims to keep costs and prices low and serve a wide range of consumers (Kinicki, 2015). Mr. Johnson plans to reduce prices to amounts that consumers feel are appropriate for their value (JC Penney). The focus-differentiation strategy aims to provide products that are exclusive and of great value, also to a wide range of consumers. By reducing the number of private line labels to a strong few, the costs will be more significant. However, the profits saved from reducing the labels will help compensate for the higher priced and higher valued labels they will continue to offer. By definition the cost-leadership strategy aims to keep costs and prices low while focusing on a wide market (Kinicki,

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