Product Failure : Tylenol Experienced A Serious Crisis

In period five, we introduced the line extension Allright; a 12-Hr muli-symptom relief capsule. We decided this extension would be successful, as the allergy market is very small and had an entrenched competitor. Therefore, while we were aware of potential cannibalization, we believed that the targeted market (retirees, empty nesters, and young singles) would have sufficient demand for our product. We also reasoned that this target was far enough removed from Allround’s to gain additional market share without taking any from Allround. However, this was not the case, as cannibalization was a pressing issue. Market share was gained at the expense of Allround.

The competitors of our product would be Tylenol. The product was developed by McNeil Laboratories. The major ingredient in their medication is acetaminophen. The company was bought by Johnson & Johnson in 1959. They began advertising to many health professionals. They are a company that has many different brands of drugs that serve children up to adults. Their product is said to work by being able to elevate the body’s overall pain threshold so that an individual who takes this medication will feel less pain.

In order to discuss this case, it is also important to know about McNeil Consumer Healthcare, the subsidiary of Johnson & Johnson and the producers of famous medicine "Tylenol". Tylenol was their best selling product; it was very much trusted by their consumers and they also earned huge profits from its sales in United States.

How many of you have taken a tylenol pill. What if you died days after taking them, what about hours, minutes, seconds. This is what happened in Chicago 1982 after someone got tylenol pills and poisoned them with 100 to 10000 times the fatal dose. Seven people were killed and more poisoned bottles were found after this. One family and other individuals were found dead because of this. In total it ended up being seven dead. No one was ever convicted for the murders, but three people were suspects in the investigation.

When J&J realized that their Tylenol capsules caused the deaths of four Chicagoans, they immediately initiated a recall of all Tylenol products, and spread the news by any means possible. Cars with sirens and loudspeakers drove through the city and suburbs of Chicago, urging residents to throw away any Tylenol capsules they might have. Schools were contacted, and they instructed students to bring all Tylenol products to the school nurse. News flashes were initiated to warn people of the Tylenol danger as well, and all stores were instructed to remove Tylenol products from their shelves. Removing the products was a gutsy move, not only because it was dangerous to the company by recalling so much products, but there was also a fear that the killer

In October of 1982, Tylenol, the leading pain-killer medicine in the United States at the time, faced a tremendous crisis when seven people in Chicago were reported dead after

This happened on two occasions, the first in 1982 and the second in 1986. These episodes could have been devastating to the McNeil company by drastic decrease in consumption of the Tylenol products. The McNeil company rallied to the situation to counter this possible decrease in consumption. According to "Laurels: The National Business Hall of Fame", Tylenol's share in the one billion dollar analgesic market commanded thirty-five percent of the market before the 1982 incident. At the time of these episodes, consumer trust was damaged and market share decreased to seven percent. By February 1983, Tylenol had regained a twenty-four percent share of the market(Diary of an Amazing Comeback). In the 1990's, Tylenol again reached its thirty-five percent of the market which at this time accounted for a two billion dollar market(Laurels: The National Business Hall of Fame, Fortune). By regaining their share of the market, this demonstrated that the consumers had faith in the McNeil company's ability to produce safe and trustworthy products, i.e. Tylenol, for their comfort and happiness.

Tylenol, an over the counter prescription product from Johnson & Johnson, was one of the top brands in the analgesic market. Within the company, it was also a large income earner that commanded nearly 15% of the company’s total profits. That being the case, the 1982 crisis was not only a big blow to the brand, but also to the company as a whole. The crisis jeopardized the company’s existence; putting at risk a multi million investment which the investors had a lot of faith in. Irrespective of whether the crisis was due to malicious acts from ill motivated criminals or not, the company had to act swiftly to counter the legal issues which were ensuing and mitigate huge impending losses. It was really a trying moment for the top management of Johnson & Johnson and more so to the CEO, James Burke, who faced the toughest test of his managerial career during this time. Though the crisis was amicably solved, there were some legal issues that were imminent and some valuable lessons learnt from the episode.

Bristol-Myers decided to promote its Datril by differentiating it from Tylenol in some tactful manner. It was also a challenging task for the company as Tylenol did not have any potential weakness that could be highlighted to promote Datril. Thus, the problem statement for Bristol-Myers is to position and price the new aspirin drug brand in the presence of a strong market leader.

Consumers do not always evaluate prices objectively. Often a referenced price is a known and available price, like that of a competitor. Pricing Datril at par with Tylenol and advertising it as a new substitute with same features may have been a fraught tactic in a short-run test environment. Market penetration and share take time and is unknown. Additionally, a price war could have ensued with Tylenol due to cost differences especially in advertising.

– J&J presented an industry first — triple-safety-seal packing that included a glued outer box, a plastic seal over the bottle’s neck, and a foil seal over the bottle’s mouth. Tylenol released the tamper-resistant packaging just six months after the crisis occurred.

Towards the end of September of 1982, seven people died from a Tylenol product tampering on Chicago’s West Side. Before the events, Tylenol had over one hundred million users, and was a total frontrunner in the pain-killer industry. After the tragic events, Johnson & Johnson, parent company of McNeil Consumer Products Company which makes Tylenol, had to face the world and explain why their highly-trusted product was killing its consumers. (Markel, 2014)

In the early ‘80s the Johnson & Johnson company was a very successful brand. So successful, that some of their most popular brands were able to corner more than a third of their market. However, all of their accomplishments were threatened when a series of unfortunate murders tarnished one their most popular names: Tylenol.

After such a horrible crisis Tylenol began to build its brand back up. After removing the

James Burke who was ECO of Johnson & Johnson during the Tylenol tempering period in 1982. The crisis happened when some Tylenol capsules were adulterated with poison that caused deaths (Washington Post). During this crisis, he showed good examples of not only good management decision but ethical leadership as well.