Case Study #8
BUS 120 (Friday)
Group number 1
Tushar Malhotra (6239859918 ;
[email protected])
Date Submitted: 15/03/19
Due Date: 15/03/19
Table of Contents
Certificate of
Originality…………………………………………3
Acknowledgement……………………………………………..
…4
Question/Answers……………………………………....
………..5
Original Research……..…………………………………...
……13
Relationship to Concepts………………………………...
……16
References………………………………………………………..
18
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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.
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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.
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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, 90-
94% 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.
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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
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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.
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https://www.entrepreneur.com/article/231874
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
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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.
To revive the brand they used following strategies :
https://prezi.com/puncyt4h8j-n/the-tylenol/study/
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
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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 to carry out a nationwide re-call
demonstrated the concept 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
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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.
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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.
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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 temper-
proof 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 pre-
shipment 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
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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
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Original Research
Do you show brand loyalty while purchasing medicines
No; 33.66%
Yes; 66.34%
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What kind of packing do you prefer while purchasing medicines ?
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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-powder-
based products caused her
cancer.
About Tylenol..
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https://www.tylenol.com/news/about-us
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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
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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-about-
Crisis Management public-relations/
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.
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References
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
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/five-
things-everyone-should-know-about-public-relations/
https://www.penefit.com/why-brand-loyalty-marketing-
important/
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/
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