The Low Prices vs Bargains Dilemma

It happens more often than we think. Super smart CEOs wrongly making simplistic assumptions about what consumers want or need.

The classic American department store chain JCPenney is a tragic example of this.

In 2011, JCPenney hired with great fanfare, a guy called Ron Johnson as their new CEO. Ron was the former head of Apple's retail stores. Ron Johnson made Apple stores the envy of the retail industry.

And that was why the JCPenney board hired him. They were hoping Ron could do his magic and make JCPenney cool again.

JCPenney was legendary famous for its coupons, deals and in-store discounts. But Ron got rid of all that. Ron had a vision for a new JCPenney.

And that vision included no more coupons and no more 590 sales a year. Ron's vision was simple. The new JCPenney was all about “fair and square” pricing.

You'd think that “fair and square” would be a great pricing strategy, right? After all, who doesn't like honest, predictable, low-prices, all-year long?

So JCPenney launched an aggressive advertising campaign to tell America about the new simplified and low-prices.

Now here's where things get interesting.

America hated it. In fact, it was a huuuuuge disaster. And in 2012 JCPenney lost $985 million.

How could this possibly happen?

Here's the thing Ron got totally wrong. People don't want low prices, they want bargains.

Low prices make us feel like we're tightwad bastards (Scrooge McDuck style). But bargains make us feel special and smart. And they allow our brains to change the narrative, "I didn't spend $60, I saved $45".

That's why everyone loves a good bargain (even millionaires). Because bargains make us feel like we're outsmarting other people.

Your pal,


Miguel Ferreira
Founder & Chief Copywriter, Teardwn + Nishi + Jack Had A Groove FM

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