CMO takes center stage in JCPenney cultural, strategic shift

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Mike Boylson is exec VP-chief marketing officer at JCPenney, now completing a five-year turnaround in which it jettisoned its Eckerd business to focus on core department stores, Internet and catalog sales. The $18 billion retailer earned $524 million in its last fiscal year, compared to a $928 million loss the prior year. In a tough competitive environment marked by the Federated/May and Kmart/Sears mergers, Mr. Boylson's challenge is to move the company from a promotional model to a branding model and make the century-old retailer middle America's favorite store over Target and Kohl's. He sat down with Advertising Age reporter Mya Frazier at the company's Plano, Texas offices last week.

Advertising Age: Describe the changes at JCPenney in recent years.

Mr. Boylson: Back in the late `90s, we were a company that was in trouble. We were a decentralized organization. The store controlled the buying and had accountability for the inventory. That model was becoming more obsolete and we weren't able to take advantage of our size and scale. ... We realized we had vacated our moderate roots and allowed other competition to steal market share. When we formed [our] Internet and catalog strategy, we were going back to our roots. That was the beginning of the five-year turnaround.

AA: How has the advertising focus changed under this new model?

Mr. Boylson: We were doing no branding at the time. Our advertising was totally focused on sales and promotion. Once we got used to being a centralized company, we were ready to start to do more than just promotional advertising.

AA: When did the switch flip from just promotional branding?

Mr. Boylson: We really started our initial branding effort with the launch of Chris Madden last year. We are building on that base as we move into this year. ...It's really important that our branding and marketing don't get ahead of our ability to build on [our] promise. If we had done the branding we did today two years ago, we would have enforced old perceptions and wasted a lot of ad money.

AA: Federated has said it plans to shift to a national TV buying after the May merger finalizes, which could potentially equate to a $1.2 billion outlay behind the Macy's banner. Are you worried about this shift?

Mr. Boylson: Certainly, they are a force to be reckoned with and the combined buying power on a national scale is going to be a factor. We are still targeting more of a moderate customer and they are targeting a more affluent customer than we are ... but it will take them awhile to sort out the pieces. It's no small task to pull two companies of that size together.

AA: How do you feel about network TV?

Mr. Boylson: The mass market is becoming less effective. ... When you look at television, it's the least measurable, the most expensive and is becoming the most fragmented. ... You have to be very targeted about your day-part mix, the stations and the strategies. In the long run, with the proliferation of stations and the advent of the Internet, it is going to have to be more about targeted marketing approaches.

AA: How are you going to better target your customers as the mass market continues to fragment?

Mr. Boylson: With the catalog and the Internet businesses, we can be extremely targeted and we know everything about every customer. We are getting better on the retail side. With privacy laws, we were starting to lose visibility, especially as people began using bank cards more. When they would move, we wouldn't know where. Now we have ZIP code capture and we do target very specifically on our own charge card.

AA: JCPenney CEO Myron Ullman defined your target as a woman aged 35 to 54 with an income between $35,000 and $85,000. What's the best medium to reach this target?

Mr. Boylson: There is not one single medium. The power of our marketing is the blend of print, direct mail, TV and Internet. ... That audience is so vast and their attitudes so different that any one medium is not going to give you what you need. The direct mail is the most measurable. ... Broadcast is the hardest to define, but TV has to be part of our mix for two reasons. The multi-sensory aspect of TV is there. TV has the unique ability, I think, to deliver an emotional message that print isn't able to. Second, even with all of its drawbacks, it is still an effective way to reach new customers.

AA: In outlining your vision for the J.C. Penney's brand, you referred to 2005 as a transition year. What do you wish you could do now that you can't?

Mr. Boylson: The No. 1 issue we have is getting our brand organization set. Our marketing department was really built to do sales promotion. ... It was never constructed to do the amount of branding we do today. We are aggressively looking for talent, primarily outside of the company, to supplement key areas on the branding side. It's an incredible opportunity for someone who wants to come in and get on the ground floor because this could be the turnaround story of the decade in retail.

AA: There has been a good deal of talk about investing further in JCPenney's private-label brands.

Mr. Boylson: We have seven major private brands that all deserve a certain amount of marketing. ... Right now, I would like to run more campaigns. I would love to run Arizona more often and deeper than right now. It's a matter of reallocation. We have good campaigns, there's just not enough depth or weight behind them.

AA: You've said by supporting the private-label brands you get at the mother brand. Is this a new model?

Mr. Boylson: When Ullman came on board, one of his first meetings was with us to talk about our branding efforts. He also believes it's the right way to go to build the JCPenney brand, because there is so much underneath it. ... It was also much easier to bite off. It takes awhile for you to evolve to where you can just operate the brand on its own. It's kind of the brand chronicles approach McDonald's talks about in its marketing.

AA: How does this approach impact the way you tell your story?

Mr. Boylson: Take Chris Madden. She's a celebrity designer. She's got a line of merchandise with a distinct point of view. But it's Chris Madden for the JCPenney Home Collection and is offered exclusively at JCPenney. The campaign always ends up there.

AA: JCPenney has been actively building new private brands, including the Bisou Bisou line, Nicole by Nicole Miller and the branded wedding registry with Colin Cowie. How do you decide to build a new brand?

Mr. Boylson: We do a gap analysis and look at the different parts of [the consumer's] life and her different style preferences. We look for voids. We look for gaps where there is a style preference that is missing and look to build a brand to fill those gaps with our private brands.

AA: Do you see a demographic that is underserved?

Mr. Boylson: Ullman identified the gap between the junior business and the misses business, between 20 to 35 years old.

AA: JCPenney has rolled out 10 freestanding stores or off-mall locations over the last 10 months and plans to open 75 to 100 more over the next few years. How does the advertising model change?

Mr. Boylson: That's the beauty of it, it doesn't change. ... Because we are so spread out, we have to market nationally, just by the way we build our stores. We don't have to do any incremental marketing for new stores and it helps us leverage our national ad spend.

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