The Johnson & Johnson Tylenol Crisis Prepared By:

Arnab Chatterjee (19008)

Praveen Naraynan (19025), Varun Nayar (19103), Manik Mondal (19114) & Sphoorthy B.(19120)

Tylenol Case Analysis: Background

• In the mid 1950’s Tylenol became a needed and popular substitute for aspirin for such conditions as flu and chicken pox, since aspirin was related to Reyes Syndrome (liver degeneration, brain edema, 20-30% fatality). • McNeil, Johnson & Johnson subsidiaries has a painkiller called Tylenol. • Large market: 100 million s, 17-18 per cent net earnings of Johnson & Johnson is generated by Tylenol, 37% market share of painkillers, outselling other top analgesics combined • Tylenol became a product trusted by physicians and families alike. • On 30 Sept 1982 CEO of McNeil receive a shocking news of seven people death after taking cyanide laced capsules.

The Crisis Begins… • September 1982 Extra Strength Tylenol bottles of at least 6 pharmacies and food stores were opened, & capsules were filled with cyanide (fatal dose). • 7 people died in the Chicago area. • Poisoned capsules were from four manufacturing lots and they were taken from different pharmacies over a period of week or even month. • The publicity about the cyanide laced capsules created a nationwide panic. • With the expansion of 24 hour electronic media people were bombarded with more and more news on the subject. • Johnson & Johnson received 1411 telephone calls within the 10 days of crisis.

The Crisis Continues… • Police drove through streets with loudspeaker warnings.

• Chicago hospital received more than 700 calls in one day. • Immediate stories in major magazines and newspapers. • Over 100,000 separate news stories ran in US papers.

• Hundreds of hours of national and local TV coverage. • More than 90% of Americans had heard of the Chicago deaths. • Widest coverage since Kennedy assassination & Viet Nam War. • Copycat tampering– 270 reported incidents (36 true as reported by FDA). • J&J stock fell 7 points. • Market share dropped from 37% of pain-reliever market to 7%; from $400 million in annual revenue to $70.

Communication Strategy • CEO James Burke alerts about the danger & assigns team to discover the source: • Formed 7-member strategy team. • Efforts to stop the killings. • Finding reasons for the killings. • Provide protection & assistance to people • How to save customers? And how to save the product? • Withdrawal from Chicago and surrounding areas. • Withdrawal from USA.

Johnson & Johnson’s Response • Johnson & Johnson ordered the recall of 264,000 bottles of Tylenol and cooperated with the news media and authorities to keep the public well informed. • J & J d that individuals should not consume Tylenol products. • Offered to exchange capsules that had already been purchased. • J & J posted a $100,000 reward for capture and conviction of the “Tylenol killer”.

The ―stage‖ approach: Segmenting complex processes • Stages refer to relatively distinctive segments of a more complex or lengthy process • Stages are differentiated by identifying the beginning or end of some important event, reaction, or process

• Stages enable the to communicate clearly about change over time, adapt interventions to what is needed at each stage, & monitor progress across stages. • Stages also imply development from one stage to another; this enables changing outcomes at a later stage by intervening at an earlier one

The 4 C’s • When the Johnson & Johnson Company faced the Tylenol poisonings in 1982 they applied the Four C’s quite effectively. They relied on the value and strength of their culture credo which also identified the stakeholders. • • • • •

Four responsibilities: To the customers To the employees To the communities they serve To the stockholders

Initial Response– Phase 1 Crisis response • Immediate alert to consumers not to use any type Tylenol product or resume use until extent determined • Live TV satellite feed of press conferences; media exposure via 60 Minutes, Donahue, etc.

• 800# Hotline for customers (30,000 calls in Oct-Nov). • Toll-free phone for news organizations; pre-taped messages and updated statements for distribution. • Strict production. • Withdrew bottles from Chicago area; ordered recall of more than 31 million bottles nationally at a cost of over $100 million (against FDA & FBI).

Initial Response– Phase 1 Crisis response… • It temporarily ceased all production of capsules. • High public profile and repeated reassurance by Burke.

• Working relationship with law enforcement agencies. • Notification of health professionals nationwide & FDA.

Initial Response—Phase 2, PR Rebound • Five-Point Plan

1. Replaced them with tamper-resistant caplets (triple safety seal within 6 months) 2. Incentives: free replacement of caplets for capsules, special coupons ($2.50 off) easily obtained

3. New pricing program: discounts up to 25% 4. New advertising program: national 1 minute commercial, News & talk shows, 5. New presentations by 2250 sales personnel made to medical stakeholders • positive press articles regarding J&J, products, & safety • indications of regaining market share • held up as positive example of ethics & responsibility • 450,000 e-mail messages

Strategies • Forgiveness: win forgiveness from stakeholders and create acceptance for the crisis. • Sympathy: portray organization as unfair victim of attack by outside persons; willing to accept losses. • Remediation: offer compensation for victims and families (counseling & financial assistance).

• Rectification: take action to reduce recurrence (triple sealed & increased random inspection). • Effective leadership: clear, visible, consistent role-modeled message from beginning by CEO.

The Impact of Strategy • Many believed  Not everyone was convinced  Business might suffer  Panic in the industry  No future for the product

• But in reality  Public Relation experts  Competitors

Employee Response • Strong family-oriented culture, ―we care about our employees‖

• Open and current communication with employees; 4 video programs on the unfolding process • Emphasizing plant workers were innocent • CEO speech in a week to employees, ―We’re coming back‖ (wearing buttons) • Idle employees given tasks to keep involved & reduce rumoring and boredom • Indications of market recovery bolster spirits • Congruence and consistency in demonstrating the Credo

Consequences • J&J showed that they were not willing to risk public safety even at excessive cost • J&J was viewed as a co-victim of the crime • Stakeholder involvement and relationships is essential • One must anticipate and prepared for crises; expect the unexpected • Cynicism: Be aware that 75% of people don’t believe companies take responsibility for crises or tell the truth • ―No matter what you do in the beginning, in the end you will have to tell the truth‖ • React fast, openly and decisively • 1983 Tylenol Bill by Congress made malicious tampering of consumer products a federal offense • 1989 federal legislation to make consumer products tamper resistant

Lessons Learned • Report your own bad news– don’t wait for reporters to root it out. • Speak with one voice. • Gather facts and disseminate from one info center. • Be accessible to the media so they won’t go to other sources. • Target communications to those most affected by the crisis, and can affect the media. • If you can’t discuss something, explain why.

• Provide evidence for your statements.

Strategy to Win Back Public Trust • Public Announcements were made. • Immediate product recall. • Establishing Relationship with Police, FBI and the food and drug istration. • Triple-seal Temper resistant Packaging.

• Price off Coupons. • New Pricing Program.

• Restoration of confidence

The Success of the Comeback Trail • Public Interest is at heart. • Experts Opinion on the Tylenol Crisis.

• Realistic Approach. • Setting an example.

Reasons for Success • Provided counseling and financial assistance. • Triple sealed packaging, temper free sealing and the random inspection. • Pull the Tylenol product across the country. • Communicating with public during crisis. • Making public safety the company’s number one priority and concern. • Leadership acted commendably during the crisis • Media usage. • Portrayed the company as an unfair victim of a hostile act of an outsider. • Showed Johnson and Johnson taking positive corrective action to help the victims’ families.

Work cited • •

• • • • • • • • • • • • •

"Tylenol Figure Is Convicted". The New York Times. Associated Press. 1984-01-15. http://www.nytimes.com/1984/01/15/us/tylenol-figure-is-convicted.html?sec=health. "Tragedy in Winnetka: the answers are few". Milwaukee Sentinel. 25 May 1988. http://news.google.ca/newspapers?id=mNkVAAAAIBAJ&sjid=8RIEAAAAIBAJ&pg=3227,6319355&dq=tylen ol+laurie+dann&hl=en. Kaplan, Tamara. "The Tylenol Crisis: How Effective Public Relations Saved Johnson & Johnson". The Pennsylvania State University. http://www.aerobiologicalengineering.com/wxk116/TylenolMurders/crisis.html. Atkinson, Rick. "The Tylenol Nightmare: How a Corporate Giant Fought Back." The Kansas City Times. November 12, 1982. Beck, Melinda, Mary Hagar, Ron LaBreque, Sylvester Monroe, Linda Prout. "The Tylenol Scare." Newsweek. October 11, 1982. Broom, Glen M., Allen H. Center, Scott M. Cutlip. Effective Public Relations, Seventh Edition. PrenticeHall Inc. 1994. Church, George J. "Copycats are on the Prowl." Time. November 8, 1982. Foster, Lawrence G. "The Johnson & Johnson Credo and the Tylenol Crisis." New Jersey Bell Journal. Volume 6, Number 1. 1983. Giges, Nancy. "New Tylenol Package in National Press Debut." Advertising Age Magazine. November 15, 1982. Goodman, Howard. "PR Effort Launches New Tylenol Package." The Kansas City Times. November 12, 1982. Johnson & Johnson. 'The Comeback." A Special Report From the Editors of Worldwide Publication of Johnson & Johnson Corporate Public Relations. 1982. Knight, Jerry. "Tylenol's Maker Shows How to Respond to Crisis." The Washington Post. October 11, 1982. Lewin, Tamar. "Tylenol Posts an Apparent Recovery." New York Times. December, 24, 1982. Tifft, Susan. "Poison Madness in the Midwest." Time. October 11, 1982. "Tylenol Murders." http://www.aerobiologicalengineering.com/wxk116/TyelenolMurders/