CRISIS MANAGEMENT Johnson & Johnson- Tylenol By: ARUSHI KAUSHIK PALVI JASWAL SUNAINA ANAND DIVYANGANA AGARWAL SHREYA AHUJA DEVAM RANJAN
WHAT IS A CRISIS? A crisis is any event that is, or expected to lead to, an unstable and dangerous situation affecting an individual, group, community, or whole society. Crises are deemed to be negative changes in the security, economic, political, societal, or environmental affairs, especially when they occur abruptly, with little or no warning. More loosely, it is a term meaning a testing time or an emergency event.
Johnson & Johnson was found by three brothers, Robert Wood Johnson, JamesWood Johnson and Edward Mead Johnson, found Johnson & Johnson in New Brunswick, New Jersey, U.S. in 1886. It is a large, diverse health care firm. Company introduced first commercial First Aid Box, baby powder, no more tears shampoo and modern form of medicine packaging along with many useful medicines.
Before TYLENOL the crisis, Tylenol was the most successful product in the United States with over one hundred million users. Tylenol was responsible for 19 percent of Johnson & Johnsons corporate profits during the first 3 quarters of 1982.
Tylenol accounted for 13 percent of Johnson & Johnsons year-to-year sales growth and 33 percent of the companys year-to-year profit growth. Tylenol was the absolute leader in the painkiller field accounting for a 37 percent market share.
WHAT HAPPENED? In October of 1982, Tylenol, faced a tremendous crisis when seven people in Chicago were reported dead after taking extra-strength Tylenol capsules. It was reported that an unknown suspects put 65 milligrams of deadly cyanide into Tylenol capsules.
The tampering occurred once the product reached the shelves. They were removed from the shelves, infected with cyanide and returned to the shelves. In 1982, Tylenol controlled 37 percent of its market with revenue of about $1.2 million. Immediately after the cyanide poisonings, its market share was reduced to seven percent.
PREPARATION FOR POTENTIAL CRISIS Assess the risk. Plan for crisis Effect on constituencies. Plan a communication strategy- what/when/how/how much/to? Assign Teams Planning for centralisation. Formal plan
STEPS TAKEN The teams strategy guidance from Burke was first, "How do we protect the people?" and second "How do we save this product?” The companys first actions were to immediately alerted consumers across the nation, via the media, not to consume any type of Tylenol product.
So, Public announcements were made, warning people about the consumption of the product. Johnson & Johnson was faced with the dilemma of the best way to deal with the problem without destroying the reputation of the company and its most profitable product. It followed the guideline of protecting people first and property second.
McNeil Consumer Products, a subsidiary of Johnson & Johnson, conducted an immediate product recall from the entire country which amounted to about 31 million bottles A loss of more than $100 million dollars incured. Additionally, they halted all advertisement for the product.
Although Johnson & Johnson knew they were not responsible for the tampering of the product, they assumed responsibility by ensuring public safety first and took the required steps. The company used the 1-800 number to respond to inquires from customers concerning safety of Tylenol. They also establish a toll-free line for news organizations to call and receive pre- taped daily messages with updated statements about the crisis
RE-INTRODUCTION OF TYLENOL Tylenol products were re- introduced containing a triple-seal tamper resistant packaging. Furthermore, they promoted caplets, which are more resistant to tampering.
To motivate consumers to buy the product, they offered a $2.50 off coupon on the purchase of their product. They were available in the newspapers as well as by calling a toll-free number. To recover loss stock from the crisis, Johnson & Johnson made a new pricing program that gave consumers up to 25% off the purchase of the product. Over 2250 sales people made presentations for the medical community to restore confidence on the product.
CONCLUSIONThe features that made Johnson & Johnsons handling of the crisis a success included the following: They acted quickly, with complete openness about what had happened, and immediately 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 quickly, they then sought to ensure that measures were taken which would prevent as far as possible a recurrence of the problem 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