Ron Johnson’s Mistake: The Importance of Market Research

By Annie Burnham

On Monday, April 8, JC Penney fired its CEO, Ron Johnson, and rehired previous CEO, Mike Ullman. Johnson was hired in an effort to improve the corporation’s profits after the 2008 recession; unfortunately, Johnson tried to make too many changes too quickly. Now, with 700 stores in the middle of a costly remodel, the (once again) new CEO Ullman has his work cut out for him.

The news that JC Penney was letting go of Ron Johnson came as no surprise to many. According to one source, the industry had started taking bets on when he would be ousted. “His Q4 2012 was probably the worst quarterly performance ever in the history of major retail,” wrote Business Insider, Jim Edwards.

“One of the big mistakes was perhaps too much change too quickly without adequate testing on what the impact would be,” Ackman said at a Reuters conference last week.

Mark Ellwood, a retail expert and author of the upcoming book “Bargain Fever”, compared Johnson to Marie Antoinette. “He always seemed slightly embarrassed that he was dealing in middle market product,” Ellwood said. “His attitude when he gave a rare interview was very much along the lines of ‘let me tell them what’s good for them,’ rather than ‘tell me what you want as a customer and let me see how I can achieve that.”

Business 2 Community stated that market research should underpin everything your business does, something the College of Business prides itself on. The research skills that are taught in the classroom compliment the outstanding work done for organizations by our faculty and graduates.

If Johnson had used the same types of research techniques and strategies that CSU COB students are taught, he would have been able to make better-informed decisions. Johnson may have avoided financial loss and disdain for his leadership by testing the market to see if the idea works with JC Penney’s consumer base.

Johnson created one of his problems by pushing away loyal customers and ignoring their needs. JC Penney has been around for 111 years and has a large customer base. Johnson treated JC Penney customers like he treated Apple’s customers, despite the differences between the companies and their customers. The failure to recognize those differences coupled with the sudden and vast number of changes helped lead to Johnsons failures as CEO.

Had Johnson spent more time getting to know the customer base, testing his plan to remodel stores, and not doing away with the coupon sales that drove much of JC Penney’s revenue, he might still be CEO of JC Penney, slowly transforming another retailer into a Wall Street superpower. Let this be a lesson to you readers – doing your homework pays off in the long run.

 

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3 thoughts on “Ron Johnson’s Mistake: The Importance of Market Research

  1. Pingback: Follow-up on JC Penney: Will their mea culpa commercial work? | bizcolostate

  2. Hey just wanted to give you a quick heads up. The text in your content seem to be running
    off the screen in Ie. I’m not sure if this is a formatting issue or something to do with internet browser compatibility but I thought I’d post to let you know.
    The design and style look great though! Hope you get
    the problem solved soon. Thanks

    • Thanks for letting us know! We aren’t seeing a problem in IE on our end, though. We’re not sure what the problem might be, but let us know if the problem persists. Thanks!

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