Sobhan 347Somak 348Somnath 349Somya 350Soumya 351Sourav 352

TYLENOL’S REBOUND:The Rise, Fall and Rise of Tylenol

Tylenol: Background

• Johnson & Johnson, as a company has always been known for its ethical

and socially responsible approach to conducting business

• Mc Neil, a Johnson & Johnson subsidiary, has a painkiller called Tylenol.

• Tylenol was a market leader in the OTC analgesic product category with a

market share of 35.4 % and contributed to 17-18% of the company’s

revenues

The Cyanide Crisis

The Cyanide Crisis

• In 1982, a series of deaths in Chicago resulting from tampered Tylenol

capsules laced with cyanide, created a major crisis for the company.

• As a result, the market share came crashing down to 18.3%, thousands of

bottles were pulled off the shelves and the stock prices of J&J plunged.

• Poisoned capsules were from four manufacturing lots and they were taken

from different pharmacies over a period of a week to a month.

• Some malevolent person or persons responsible for the loss of seven lives,

spent a few hours in tampering and resealing the bottles and then placing

them back on the shelves of five different stores in the Chicago area.

• The massive news reports about the cyanide laced capsules created a

nation wide outcry.

• Johnson & Johnson received 1411 telephone calls within 10 days of the crisis.

Tylenol: The Recall

The 2 vital questions before Johnson & Johnson were

• How to protect the Consumers?

• How to recreate the severely damaged Brand Equity?

Johnson & Johnson’s executives had to weigh several pressing issues:

• A recall would involve a loss of up to $100 million.

• The loss was not covered by insurance.

• News of a recall could further damage the brand equity; Tylenol might never

be able to regain the confidence and loyalty of the public, and its 37

percent market share.

• The news and loss would surely result in a dramatic drop in the company’s

stock.

• The competition in the analgesic market was fierce. Competitors would try

to make Tylenol’s loss their gain.

TYLENOL’S RECALL DECISION

The Rationalisations

Immanuel Kant View:

Actions are not good or bad based on the purposes for which we act. Ask if the

basis of our action could become a universal law for all moral actors in similar

circumstances.

The Rationale:

If it is wrong for any company to sell a potentially defective product, it is wrong

for Johnson and Johnson to do so despite the considerable cost of a recall. This

rule would prohibit seeing the consumer purely as a means to corporate.

UNIVERSAL OBLIGATION

John Rawls View:

People will choose proper rules when they are forced to reason impartially.

The Rationale:

Management and stockholders of Johnson & Johnson would have reasoned

impartially; that is, they would never have put the consumer at risk any more

than they would have been willing to put themselves at risk!

UNIVERSAL OBLIGATION

John Stuart Mill says:

The approach to ethical reasoning is known as Utilitarianism.

According to Mill, actions that produce the most good for the most people are

considered morally right.

The Rationale:

Following this course, the decision makers at Johnson & Johnson would be

forced to consider not only the interests of Johnson & Johnson, but also the

interests of the public at large. Determining the greatest good for the greatest

number would require a cost and benefit analysis for all parties concerned.

This method of reasoning probably would have required the product recall. The

protection of the millions of Tylenol users represents the greater good and

outweighs the financial costs to Johnson & Johnson.

UTILITARIANISM

• This approach has human dignity at its centre.

• Ethical reasoning according to this approach will ask the question: Which

action most leads to the protection and promotion of human dignity?

• This approach also includes the wisdom contained in the prior methods.

Universal obligation (Kant and Rawls) must be respected because of our

equal human dignity, and we must consider carefully the ultimate impact

(Utilitarianism) on actual human beings when reaching a judgment.

ECONOMIC PERSONALISM

Tylenol: Steadying the Ship

The expensive measures taken included

• Task force of top level executives set up

• Massive product recalls of 22 million bottles

• Media messages in the form of press conferences and TV Shows.

• Product Testing

• Halting of all advertisements for a few weeks

TYLENOL’S RECOVERY MEASURES

• Consumer Research to study company perception

• Offering to swap Tylenol tablets for Tylenol capsules

• Innovating a 3-layer tamper resistant packaging.

• Sales promotion tools like Coupons and Discounts

• Letter of backing from the Food and Drug Administration

These measures cost the organization tens of millions of dollars.

TYLENOL’S RECOVERY MEASURES

RESURGENCE OF TYLENOL

A resurgent Tylenol by the end of the year could be attributed to

• Johnson & Johnson leadership

• Intelligent and powerful advertising by Compton

• Public confidence in the product, attributed to the powerful

presence of the brand Johnson and Johnson.

• Befriended Media

Tylenol: Crisis Management

CRISIS MANAGEMENT

• The company’s proactive and extremely prompt actions helped alleviate

the problem, protect consumer interest and reposition the brand.

• Johnson & Johnson's main mission with Tylenol being to enhance the

public's well-being the organization's leadership set the example from the

beginning by making public safety the organizations number one

concern.

• Sympathy strategy won support from the public by portraying the

organization as the unfair victim of an attack from an outside entity.The

company accepted complete responsibility for the crisis and incurred a

lot of expenses for damage control, instead of being in denial.

• Even though the company had the easier option of changing the productname and re-launching it, they chose otherwise.

• Because the tampering happened outside the factory premises, thecompany could have put the blame on the distributors or the retailoutlets, but they didn’t; instead they owned up.

• The company’s communication strategy was also aligned towardscreating public awareness, addressing safety issues and offering a swap.

• It also made itself available to the media for questioning.

CRISIS MANAGEMENT

• Came out with a permanent solution of Triple sealed tamper resistantpackaging which shows their sensitivity to the issue.

• Customer loyalty – Because of Tylenol’s image as a brand endorsed bymedical practitioners and its ad campaign which showed real lifeincidents, it commanded immense consumer loyalty.

• In their PR campaigns the PR task force even decided to appear on 60minutes despite initial reservations about its aggressive style ofquestioning.

• They adopted a direct stance which was much appreciated.

CRISIS MANAGEMENT

• Johnson & Johnson understood its social responsibility to protect human lives,

whose unique value is inestimable. Human beings were put before things or

money. This action was consistent with the protection of human dignity, and

therefore the recall was a proper exercise of managerial freedom.

• Recognizing their social obligation, Johnson & Johnson acted to protect

people on the material level. Because they too were fragile and morally

inconsistent, the J&J executives could have chosen otherwise. They

recognized basic equality by not putting their own good above others.

• In sum, they chose the action that most led to the protection and promotion

of human dignity.

WRAPPING IT UP

#347 #348 #349

#350 #351 #352

Won’t return your Tylenol! :P

Tylenol makes me strong and

tall!

#347, I will find you and kill you.

Tylenol! Ooh! Yum Yum!

Err…With my proud ancestor. :P

Thanks!