Why J.C. Penney Was Smart to Hire the Man Behind New Coke

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Credit: Alastair Grant, AP
As if J.C. Penney (JCP) wasn't being subjected to enough mockery this week after its horrible fourth-quarter earnings report, now it's getting grief over its hiring of the man behind "New Coke."

During Wednesday's earnings call, CEO Ron Johnson announced that he'd brought on Sergio Zyman as a marketing advisor. Zyman, Johnson explained, had spent time with Coca-Cola (KO) and The Gap (GPS), and also heads his own marketing firm.

"Sergio has a unique ability to understand customers, as well as strategies that will succeed based on rapid fire test and response," Johnson said during the call.

But Business Insider notes that Zyman has a pretty big black mark on his resume: He was the marketing mind behind New Coke, a reformulation of the classic Coke recipe that crashed and burned in the 1980s.

As the story point out, Zyman was also responsible for the launch of Diet Coke, and as far as we're concerned that should more than make up for his misstep with New Coke.

But the New Coke fiasco isn't entirely irrelevant here. After all, Zyman is infamous for replacing a beloved product with something new and unfamiliar that everyone hated, which is a storyline J.C. Penney is all too familiar with these days. Customers left in droves after Johnson did away with sales and coupons, and I've gotten several emails this week from former J.C. Penney shoppers who said they were put off by the retailer's new apparel offerings.

The comparison isn't perfect: J.C. Penney wasn't exactly a model of success before Johnson arrived. But it seems poetic that Johnson is bringing on a guy who has first-hand experience with introducing a disastrous change to an established brand.

And maybe that's exactly the point. Zyman surely learned from his mistake, so he's certainly not about to pull another drastic reinvention without properly testing it. In fact, Johnson's reference to "rapid-fire test and response" suggests that Zyman will be making sure that any drastic change in strategy is properly tested before being unleashed on customers.

And you could argue that that's exactly the sort of adult supervision that's needed at J.C. Penney right now. Johnson's "fair and square pricing" strategy -- which he now acknowledges was a "big mistake" -- was rolled out nationwide without first being tested at select stores. And when an executive suggested such a test might be prudent, he supposedly retorted, "we didn't test at Apple."

Zyman knows better than anyone the perils of that sort of thinking.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

Photo Credit: Alastair Grant, AP

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36 Comments

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kitaen_ilolo

Please tell me how I can write this man?

December 05 2013 at 2:34 PM Report abuse rate up rate down Reply
philntx

Company name is JCPenney.
Too bad they just eliminated the tenured salon receptionist position in every store with a salon.

March 04 2013 at 11:06 PM Report abuse rate up rate down Reply
bdm57

This article implies that Sergio Zyman created and approved the decision to make the New Coke. He was just the guy told to market it. A little more research and accurate reporting is needed by the Daily Finance. The chairman and chief executive officer of Coke back in 1985 was Roberto Goizueta.

March 04 2013 at 7:21 PM Report abuse rate up rate down Reply
dkelmstra

What really turned off shoppers was JC PENNY support of the gay lifestyle. While JCP ignores that fact I can tell you that it offended many who felt JCP was a family oriented store. I stopped shopping at JCP due to their lack of support for family values and morals.

March 04 2013 at 6:51 PM Report abuse +1 rate up rate down Reply
bettebeegreen

Zyman's reformulated coke was a joke. Why mess with a popular product. The same with JC Penney. Yes, Pennys needed updating, and the boutiques are cute, but why not have a panel of women, who do most of the buying, comprised of Professional/management women, young women, seniors and teens. I went in to buy a suit at Pennys about three years ago. The outfit came with a vest, NO jacket, and a skirt and slacks. The store manager walked by and asked if I liked it. I said, it doesn't have a blazer or any jacket, I work in upper management with men. I can't afford to look like a secretary. I can't buy a suit without a jacket. That's like selling a male CEO pants and no matching jacket for his suit. Pennys doesn't need Zyman, he needs a panel of women who know what they need and why

March 04 2013 at 4:45 PM Report abuse rate up rate down Reply
Miss Thing

JCP stinks. I don't like shopping there anymore. I still go to the salon but I will be leaving there soon too. The salon is not set up well at all!

March 04 2013 at 4:44 PM Report abuse rate up rate down Reply
bakethis

Johnson's doing away with coupons and sales may be part of the problem, but his doing away with merchandise long time shoppers used and wanted is a bigger problem. He is catering to a young, hip demographic. He's trying to compete with established retailers who have that corner marketed.
Do any of these guys realize there are a lot of baby boomers with cash who are a market also? That age group also needs clothing and it ain't skinny jeans, nor do they want neon sheets, curtains or tee shirts. Some retailer needs to fill this need.

March 04 2013 at 4:21 PM Report abuse +2 rate up rate down Reply
Gary

New Coke was nothing but a smokescreen to allow for the change to high-fructose corn syrup in Coke. The taste difference was too big to overcome so Coke needed a throw-away product to fill time while they instituted their devious scheme. Anyone who has tasted Mexican Coke knows what "The Real Thing" was and is not now.

March 04 2013 at 9:30 AM Report abuse +1 rate up rate down Reply
wlh1923

As long as Huff Post keep up with their unrelenting campaign to smear and bring down JC Penny the company isn't going to recover no matter who is the CEO. The daily articles on here slamming Pennys to curry favor with the extreme couponer crowd seem to be doing the trick. Keep it up Huff Post and soon there won't be a JC Penny to complain about.

March 03 2013 at 2:56 PM Report abuse rate up rate down Reply
1 reply to wlh1923's comment
Miss Thing

JCP shouldn't have made everything so bad for the customer. They should have done their research. If they change quickly, customer may come back. it's not Huff Post's fault. They are just reporting what is going on.

March 04 2013 at 4:46 PM Report abuse -1 rate up rate down Reply
mr41005

What did the new guy do for the Gap? They have been falling for years

March 03 2013 at 1:03 PM Report abuse +1 rate up rate down Reply