respond to the following: (just a few sentences or questions for each) As the bo
ID: 395981 • Letter: R
Question
respond to the following: (just a few sentences or questions for each)
As the books states, customers are the base of a successful business-level strategy. With that being said, the new CEO did not take his current customer base into consideration when seeking to turn the company around. He chose to just have everyday low prices instead of slasher deals, which is what the consumer seemed to like. Consumers like markdowns and coupons, thats why every store's clearance section is always a mess like a teenagers closet. I think he was going for the Cost Leadership/Differentiation Strategy and it completely backfired on him.
It was a disaster because he was trying to lure new customers in instead of relying on the existing customer base. He thought that consumers that shopped at higher end stores would take notice to the brands sold at JC Penney and start their venture to shop there. Instead it caused already existing customers to turn away because one, they could no longer afford the pricing, and two because they were attracted to the low mark downs and coupons in the first place.
Explanation / Answer
Understanding the branding as well as the customer segment is one of the most important part for any business. As so was directly focusing on creating a low cost pricing strategy, staying competitive in the environment requires changing according to the Trends. In this specific situation so failed to change which lead the organisation to a disaster and the customers directly turned to their competitors or any other service provider which are providing products according to their mind set and matching with the psychological acceptance of coupon or low price based differentiation strategical behaviour.
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