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 taking extra-strength Tylenol capsules. It was reported that an unknown suspect/s put 65 milligrams of deadly cyanide into Tylenol capsules, 10,000 more than what is necessary to kill a human. The tampering occurred once the product reached 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 (Mitchell 1989). They were removed from the shelves, infected with cyanide and returned to the shelves (Mitchell, 1989).
Client :Insight Studio
Date :20 Feb, 2018
Skills :Project Planning
Challenge & Solution
Once the connection was made between the Tylenol capsules and the reported deaths, 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.
Offer favorable coupons
In order 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. (Mitchell 1989)
Recover from stock crisis
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. (Mitchell 1989)
Restore the confidence on the product
Over 2250 sales people made presentations for the medical community to restore confidence on the product. (Mitchell 1989)
Following one of our guidelines 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 and a loss of more than $100 million dollars. (Lazare, Chicago Sun-Times 2002) Additionally, they halted all advertisement for the product.
Improve sales & operations & production planning
Determine the right inventory level
Optimize the supply chain for perfect order planning
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