Case 7.docx

Case Study #8 BUS 120 (Friday) Group number 1 Ishant Mithrani (8687777744 ;[email protected]) Tushar Malhotra (6239859918 ;[email protected])

Date Submitted: 15/03/19 Due Date: 15/03/19

Table of Contents Certificate Originality…………………………………………3

of

Acknowledgement…………………………………………….. …4 Question/Answers…………………………………….... ………..5 Original ……13

Research……..…………………………………...

Relationship ……16

to

Concepts………………………………...

References……………………………………………………….. 18

2

3

Acknowledgement We express our gratitude to professor Shyam Vyas for assigning us this case study and bestowing us with the opportunity to delve into the subject of marketing. We give special thanks to the innumerable entities that assisted us in our research and helped us in drawing meaningful conclusions from this case. We are in debt to them for their invaluable contributions and insights.

4

Summary Tylenol was introduced back in 1961 by McNeilab Inc. (a subsidiary of Johnson and Johnson). After its launch, many me too products came along, such as Datril. They initiated their first major consumer advertising campaign in 1976 and between 1976 – 1982, Tylenol’s annual sales rose to $400 Million. By 1982, they were dominating the number one analgesic of the pain reliever market and became the undisputed market leader. However, on 30 Sept, multiple cases were reported caused by injecting extra strength capsule laced with cyanide. McNeil as a response bought back Tylenol from retailers and consumers and spent around $ 100M as an expense. As a result, Tylenol’s sales dropped by 80%. But, even after such drastic drops in sales, McNeil believed that the product’s image could be revived. The company took major steps to regain public confidence such as, make the packaging tamper resistant. They introduced packaging with glued end flaps, a neck seal and an inner foil. Further, they included warnings on the label like “Do not use if safety seals are broken”. They adopted a push strategy to push the products across levels of distribution and make it available nationally in a short amount of time. Other efforts included, a communication program to ensure the consumer that a situation such as before is never repeated, an “intensive marketing communications and promotions program”. Shortly after such plans were implemented, a press conference was hosted internationally to communicate about the new packaging.

5

Promotion strategies include – sales promotions by introducing coupons redeemable by previous Tylenol users. Advertisements were also in full swing, promoting a message to “trust Tylenol”. They conducted a survey which revealed new issues such as, 90% were aware that only capsules were involved, 9094% of the American adults knew about the Tylenol case. Even after such difficulties, Johnson and Johnson had relaunched Tylenol as a brand. Their expenses amounted to $100 million but within a year they able to recover $400 million and regain 32% market share.

Questions/Answers Q1. What marketing lessons do you draw from this case ? Briefly discuss. The group firmly believes that the core lesson of this is Crisis Management. Johnson & Johnson set an example of the entire industry on how to turn a crisis into an opportunity. They set a benchmark on the most products recalled in 1982. Their quick and well thought out actions resulted in the regaining of their market share. Public Relations – Johnson & Johnson ran an aggressive PR campaign after it’s incident. Its primary aim was to assure people that Tylenol is safe now and an incident like this would never be repeated. They recalled each and every product on shelves of stores and with the consumers. They delivered presentations to medical personnel to reduce their risk of buying and to effectively reintroduce Tylenol. This effective strategy (as discussed in class) is more believable, less controllable. 6

Focus on Long Term Profitability – Even though, every marketer would’ve suggested McNeil to discard Tylenol and not to waste any more efforts. McNeil still believed that the company image could be revived. Johnson & Johnson didn’t care about short-term costs but long-term profitability. They incurred $100 million in those 5 months but managed to recover $400 million within a year. Brand Loyalty – It is a situation when the consumer buys the product again and again. The customer will buy the product again and again only if he perceives it as the superior/better product relatively. Tylenol had a significant market share before 1982 and had brand loyalty among its customers. But, after its image was tarnished it became almost an impossible job for them to revive it. Promotional Strategies – Promotional Strategies like advertising helped them communicate with the public to change their perceptions about Tylenol. They ran advertisements like “Continue to trust Tylenol”. Advertisements but, as we learned in class are “less believable and more controllable” Additional strategies include sales promotion, by giving 25% couponshttp://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htm which helped reduce risk of the consumers and increase trialability. Packaging – Packaging is crucial product decision. It helps promote, protect and transport the product. Packaging can help build confidence towards the product. In Tylenol’s case, their upgrades in packaging helped build consumer confidence back into the company. They started using 7

temper-proof packaging to protect the product from external tampering so that such situation can never repeat. Communication Without effective communication, proper marketing cannot be done. The underlying purpose of communication is behaviour modification. It is done to provide information which reduces risk and increases friability. Even in this case, Tylenol communicates every change they make, to the public. They held press conferences and made personal presentations to medical facilities, to gain their confidence. They communicated through multiple channels, but they said the same message, i.e. they followed integrated marketing communication. Hence, communication with the target audience is the key to successful marketing.

https://www.entrepreneur.com/article/231874

8

Q2. To what extent did the strong brand loyalty prior to the poisoning incident aid the makers of Tylenol in helping to revive the brand ?

Ans.

Brand loyalty is a consumer behaviour pattern where consumers become committed to a particular brand and make repeat purchases over time. Tylenol was having one third market share and people have brand loyalty. After that incident people realized that the company has not done anything wrong and after watching the efforts of the company to revive the brand, within a year from 7% market share; they captured back their one third market share. This was all possible because of the strong brand loyalty which people were having in Tylenol. As great companies and great brands stand on a platform of great values. The features that made Johnson & Johnson's handling of the crisis a success included the following: 

They acted immediately, with complete openness about what had happened, and quickly sought to remove any source of danger based on the worst case scenario not

waiting

for

evidence

to

see

whether

the

contamination might be more widespread 

Having acted immediately, they then sought to ensure that measures were taken which would prevent as far as possible a reoccurrence of the problem

9



They showed themselves to be prepared to bear the short term cost in the name of consumer safety. That more than anything else established a basis for trust with their customers

Nothing good happens without trust.

One of the most

overlooked concepts in crisis management and mitigation is forgetting about the ‘speed of trust.’ It’s a concept that reflects the speed of gaining or losing the trust that communities have in your brand.

https://prezi.com/puncyt4h8j-n/the-tylenol/study/ To revive the brand they used following strategies :

 Advertising campaign promoting the new tamper proof packaging,  $2.50-off coupon and a new pricing program that gave customers as much as 25 per cent off.  The

crisis

made

the

company

aware

of

its

vulnerability so it created tamper proof packaging to reduce the risk of this happening again. Johnson & Johnson successfully handled their crisis effectively.  The company was open to the media  It was willing to recall the product  It appealed to the American sense of fair play and asked for the public’s trust Tylenol needed to promote customers who may have been deterred from the product as a result of the

10

poisonings,

the

company

unleashed

an

extensive

marketing and promotional programme The number one concern was for the public and Tylenol customers,

and

this

showed

the

public

that

the

company cared more for its key stakeholders the public, then the loss of profit to the company. Johnsons & Johnsons over reacting response to the cyanide poisoning crisis was the major reason to why the company bounced back so quickly after the crisis. The

decision

demonstrated

to

carry

the

out

concept

a

nationwide

re-call

of

corporate

social

responsibility and diminished any uncertainty of public trust with the product. They

handled

the

crisis

effectively

under

the circumstances. As this type of crisis was one of the first of its kind and with no crisis plan to fall back which at the time most companies

11

Q3. How can consumer product companies protect themselves against future incidents of this type ? Do you believe this has or will impact governmental regulations and requirements the world over ? Ans. Consumer product companies can protect themselves against future incidents of this type by adapting latest methods of tamper proof packaging. Packaging ensures the protection of the products that are meant to be distributed in the market for the purpose of sale, storage, use etc. Generally, it refers to the process of designing, evaluating, and producing packages. Some of the common packaging products include boxes, cartons, cans, bottles, bags, envelopes, wrappers, and containers.

Different types of packaging methods are: 

Anti-corrosive Packaging



Pharma Packaging



Plastics Packaging



Flexible Packaging

Importance of tamper proof packaging:  Hygiene

:

Packaging

reduces

exposure

to

contaminants in the air and bacteria during handling, which can lead to illness -- including food poisoning.

12

 Shelf Life : Different packaging helps prolong the shelf life of various foods and drinks.  Shelf Life : Different packaging helps prolong the shelf life of various foods and drinks. https://www.investopedia.com/terms/c/cpg.asp

Yes, this has and will impact the government regulations to issue certain guidelines regarding the protection of the products.

13 https://www.investopedia.com/terms/c/cpg.asp

Q4. As a top decision-maker in any industry that produces ingestible products – would you be in favour of temperproof packages ? Would that make costs of package higher ? Your thoughts please.

Temper proof packaging provides protection to the products. It provides confidence to the supplier regarding the quality and safety about the product at the time of delivery. It ensures the security of the product especially in case of pharmaceuticals, where there is a need to ensure the safety of the item before delivering it to the patients. “You gain reliable product security from preshipment to shelf” (packaging strategies.com, 2018). As a top decision maker in a company that produces ingestible products, Yes the group would be in favour of temper-proof packages. As it protects the product and hence increases customer satisfaction. It also includes the option of printing of company’s logo to increase awareness about the company as a brand. I would use temper-proof packaging rather than normal packaging as keeping the consumer safe is essential for long term profitability. As far as costing goes, the group profoundly thinks that temper-proof packaging would decrease the long-term costs of the company. Consider Tylenol’s case, if they would have used temper-proof packaging right from the beginning, they wouldn’t have spent $100 million on recalling products. Further, they wouldn’t have lost consumer trust and faith. In the short run, it would increase costs, but its benefits would outweigh the costs, mainly because it increases

14

customer confidence and provided customer satisfaction along with brand loyalty. Moreover, upon conducting further research, the group found out that temper-proof packaging is easier to assemble, minimizes packaging times, eliminates the need for tapes to save time and money. (gwp.co.uk).

https://www.gwp.co.uk/packaging/fulfilment-packaging-3pl/tamper-proof-packaging/ https://www.packagingstrategies.com/blogs/14-packaging-strategies-blog/post/90195-the-benefits-of-tamper-evident-packaging

15

Original Research

Do you show brand loyalty while purchasing medicines

No; 33.66%

Yes; 66.34%

16

What kind of packing do you prefer while purchasing medicines ?

14

86

Tamper Proof

Any Packing

A California jury on Wednesday awarded $29 million to a woman who said that asbestos in Johnson & Johnson’s talcum-powderbased products caused her cancer.

About Tylenol..

17

https://www.tylenol.com/news/about-us

18

19

https://www.tylenol.com/news/about-us

Relationship to Concepts Public Relations Public Relations (PR) is indirectly paid for by the company. It using key medias such as Tv, Print, broadcast, radio or holding press conferences. It is a strategic communication process that builds beneficial relationships between organizations and their audiences (forbes.com). They can be used to protect or build reputation of the company in the eyes of the customer. It can also be said as PR is earned media whereas advertising is paid media. Brand Loyalty Brand loyalty is the consumer’s commitment to purchase the product again and again. It’s the job of the marketer to provide the consumer with such an experience that they keep coming back. Johnson & Johnson was the market leader before the incident. Even after the incident, the company knew that the Brand loyalty among the consumers could be revived through aggressive promotional strategies. Promotional Techniques – Promotional Techniques include 4 major factors i.e. public relations, advertising, sales promotion, direct selling. In Tylenol’s case, they commissioned an aggressive PR campaign which aimed at changing consumer perception. In Advertising, they promoted messages such as “Trust Tylenol” to again persuade people to gain back consumer trust and loyalty. Sales promotion is a limited time duration activity done to reduce the risk of buying. Tylenol offered $2.5 coupons to previous/existing customers. Strong Distribution channels

20

Distribution channels have many levels because each of them performs different and significant functions. Johnson and Johnson maintained strong distribution channels. They managed to recall every product and distribute new products nationally in just a span of 6 months.

https://www.forbes.com/sites/robertwynne/2016/01/21/five-things-everyone-should-know-aboutpublic-relations/ Crisis Management https://www.penefit.com/why-brand-loyalty-marketing-important/

The core essence of this case study is how Johnson & Johnson set an example in Crisis Management. They managed to turn this threat into an opportunity by using Public Relations. Tylenol set the benchmark for consumer recall back in 1982. The Washington Post said, "Johnson & Johnson has effectively demonstrated how a major business ought to handle a disaster". Conclusion Johnson & Johnson acted quickly and showed to the consumers that they follow their values and are bear a short-term cost for the protection and safety of consumers. This resulted in them regaining 70% of their market share in only 5-6 months.

21

References https://www.gwp.co.uk/packaging/fulfilment-packaging3pl/tamper-proof-packaging/ https://www.packagingstrategies.com/blogs/14-packagingstrategies-blog/post/90195-the-benefits-of-tamper-evidentpackaging http://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htm https://www.entrepreneur.com/article/231874 https://www.forbes.com/sites/robertwynne/2016/01/21/fivethings-everyone-should-know-about-public-relations/ https://www.penefit.com/why-brand-loyalty-marketingimportant/ https://www.tylenol.com/news/about-us https://in.reuters.com/finance/stocks/company-news/JNJ.N https://www.investopedia.com/terms/c/cpg.asp https://prezi.com/puncyt4h8j-n/the-tylenol/study/

22