Tylenol’s Miracle Comeback

Tylenols Miracle Comeback
A year after the poisonings, public confidence is restoredOne year ago last week, James Burke made a decision that will probably
be studied in business schools for a long time to come. Going against
the advice of Government agents and some of his own colleagues, the
chairman of Johnson & Johnson decided to spend whatever millions it
would cost to recall 31 million bottles of Tylenol capsules from store
shelves across the U.S. Officials at the Food and Drug Administration
feared that the recall would increase the panic already touched off by
the poisoning deaths of seven Chicago-area residents who had taken
capsules that had been laced with cyanide. The FBI argued that such an
expensive action would demonstrate to potential terrorists that they
could bring a $5.9 billion corporation to its knees. But Burke
prevailed, and his move proved to be decisive in a remarkable and
unparalleled win-back of public confidence in his company's product.By last week, Tylenol had regained more than 80% of the market share it
held before the still unsolved poisonings. “It's a miracle, pure and
simple,” said Joseph Riccardo of the Bear, Stearns investment banking
firm. “The consensus among shrewd advertising executives on Madison
Avenue was that the brand name would never recover.” Indeed, after the
deaths the nonaspirin drug's share of the $1.2 billion painkiller
market fell from 35% to 7%. In a poll, a majority of Tylenol users said
they probably would never return to the capsules.Against such odds, though, Johnson & Johnson and its McNeil Consumer
Products subsidiary, the manufacturer of Tylenol, seemed to do
everything right. Instead of becoming defensive about the deaths, the
company opened its doors and its checkbook. Chairman Burke appeared on
Donahue and 60 Minutes. The company fully dedicated itself to the
investigation, says Tyrone Fahner, who headed the probe during his
term as Illinois attorney general. Said he: “Anything we wanted from
them, we got. The president of the company called and asked if I
thought a reward might help. Before I could raise the possibility of
$20,000, he was asking if $100,000 would be enough.”Following the recall, which cost $50 million after taxes. Burke started
the campaign to relaunch the red-and-white capsules. In just ten weeks
the company managed to begin putting them back on store shelves in new,
triple-sealed packages. To break the ice with consumers, Johnson &
Johnson gave away 80 million $2.50 coupons redeemable toward any
Tylenol product.Even before the appearance of the repackaged capsules, Burke was host at
a pep rally for the company's 2,250 sales representatives. The theme:
“We're coming back.” Burke exhorted them to call on physicians and
pharmacists to aid the company in reassuring consumers. By the end of
the year, 1 million such calls had been made. Testimonial-style TV ads
were aired. In one, a woman professed her trust, saying, “My first
experience with Tylenol was in a hospital, after my son Christopher was
born. Since then it's become one of the things we can count on.”