The example used by Lonnie to drive this point home involved JCP (formerly JC Penny). Ron Johnson, JCP’s ousted CEO, boldly came in as the new CEO of JCP in November 2011 and decided to immediately implement a new strategy. Gone were the days of marking down prices for the customer and in were the “everyday low prices”.
In theory, Johnson’s strategy doesn’t sound particularly horrible, but it never caught on among customers or brought in the money it expected. What Johnson failed to do prior to implementing this strategy was appropriately scaled market research. If Johnson had tested out the strategy in a few select stores or discussed the strategy with shoppers, he may have realized it would not resonate well with JCP’s current customers.
JCP has since fired Ron Johnson and is working hard to win back its core customers and turn around the sinking business.
While ignoring your customers happens in every industry – even sports & entertainment – Turnkey’s market research clients can be cited as excellent examples of companies that reach out to fans prior to making important decisions. For example:
- Before changing prices and implementing a new ticket plan type, the Seattle Sounders conducted a pricing optimization study that determined the All You Can Eat package they were considering was only valued at $1 by fans. Therefore, this package was not offered. Instead, optimal pricing and packages were put in place for the season.
- The New York Jets were considering the creation of a customized team wine. Before moving forward, the team decided to survey fans regarding their wine drinking and purchasing habits/preferences, and potential interest in a Jets wine. Having the data on hand ultimately formed the blueprint for a new Jets wine – “Jets Uncorked”, a California Cabernet Sauvignon – created with fans’ preferences front-of-mind.
Learn from JCP – don’t ignore your customers! Engage them in the decision making process through market research!
Read Kevin Lonnie’s full article, “It’s The Money, Stupid!”, here.