I'm Sorry -- Now Boost My Sales

Department-store chain J.C. Penney (NYSE: JCP  ) recently launched a mea culpa advertising campaign, asking customers to give it another shot after royally screwing up its marketing, switching as it did from regular sales days to an everyday low-price scheme. Customers fled, sales plunged, and Penney risks financial disaster. I likened the new advertising to begging and thought it unseemly for the venerable retailer to get on its knees.

Spirits maker Beam  (NYSE: BEAM  ) did the same thing after its Maker's Mark brand announced that it was going to water down its iconic bourbon to stretch volume, lowering alcohol content from 45% to 42%. After the outcry, it quickly reversed course and made a big show of contrition on its Facebook page.

While this seems to be a new trend in corporate advertising -- making a big blunder and then telling your customers you're sorry -- it's not really all that novel. Coca-Cola  (NYSE: KO  ) famously (or infamously) was forced to acknowledge the error of its ways with New Coke -- but there seems to be more of this kind of thing around these days. 

Beam released its first-quarter earnings results the other day and noted a spike in Maker's Mark sales because of its "error." First-quarter comparable sales surged 44% as management attributed the sustained demand to its proposed change. Some are even hinting at the possibility it was all a calculated move, though as Penney can attest, throwing consumers off their stride can be deadly.

After Anheuser-Busch InBev  (NYSE: BUD  ) got sued for watering down its beer earlier this year, it may be time for it to go on an apology tour in hopes of causing a recovery in beer sales.

So there could be hope for Penney in Beam's effort. Although the distiller admits the sales growth rate is unsustainable, it did revive an interest in the brand, and even Coke credits the New Coke debacle with helping it regain lost market share from PepsiCo. Although there's a big difference in a bourbon or cola and an amorphous clothing and housewares chain, perhaps asking forgiveness will have a similar salutary effect on Penney's sales numbers after all.

If you're wondering whether J.C. Penney is a buy today, you're invited to claim a copy of The Motley Fool's must-read report on the company. Learn everything you need to know about Penney's turnaround -- or lack thereof. Simply click here now for instant access.


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  • Report this Comment On May 09, 2013, at 8:00 AM, aaplbot wrote:

    JCP is going BK the slow way. Have fun with the volatility but thats about all you can do with this POS stock

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