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

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.

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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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