It looks like the experts were wrong about Tylenol.
Immediately after seven deaths in Chicago were linked to cyanide-laced Tylenol capsules, marketing specialists and Wall Street analysts confidently predicted the rapid demise of the nation's largest-selling over-the-counter pain reliever.
The only marketing strategy for Tylenol, they said, was to cancel all advertising to reduce brand awareness, and hope that time would help diminish the grim connection that was planted in the consumer's mind on Sept. 30.
Now many analysts agree that Tylenol will regain its dominant position, although they differ on how long it will take the company to reach its old sales volume.
Last week, officials at Johnson & Johnson, the parent company of McNeil Consumer Products Co., which makes Tylenol, said its factories were working around the clock to meet the demand for Tylenol capsules in new tamper-resistant packaging.
"Initial orders have exceeded anything we anticipated," said Wayne K. Nelson, a Johnson & Johnson group chairman and former president of McNeil. "We're selling everything we can make, and by March or April, I think we'll be the No. 1 brand again."
While the merchandisers placing the orders may be issuing their decision on Tylenol, the consumer verdict is still out. Tylenol capsules -- which were removed from the market on Oct. 5 -- began returning to store shelves with tamper-resistant packaging on Dec. 7, and sales data are not yet available. But a recent survey indicates the public has not lost its confidence in the product name.
Based on a sample of food stores in four cities, Information Resources of Chicago found that purchases of Tylenol tablets, which fell below 7 percent of those for non-prescription analgesics after the capsules were withdrawn, climbed to 21.3 percent during the week of Nov. 15, and rose to about 30 percent after the company started a massive coupon-distribution program. (See chart.)
Before the poisonings, the survey showed Tylenol tablets with a 22 percent share of analgesic sales in food stores, and the capsules with another 24.7 percent, for a total of 46.7 percent. (Food stores account for about 50 percent of analgesic sales, drug stores for 39 percent, and mass merchandisers and others about 11 percent, according to an Information Resources official.)
Other studies had shown Tylenol products with a 37 percent market share in all types of stores before the Chicago poisonings, exceeding the combined sales of Anacin, Bufferin, Bayer and Excedrin.
"The conventional wisdom failed to recognize that this wasn't a product-specific issue," says Richard Stover, an analyst with Bache Halsey Stuart Shields. "The recent disclosure of a cyanide tampering case with Anacin-3 in California reinforces my belief that safety in packaging is really the key element in the consumer's mind.
"As consumers have received more and more information, their concern has shifted from Tylenol to the integrity of the packaging of most things. I think Tylenol will be No. 1 again by the end of January, and I think that by the end of 1983, the product may have an even higher market share than it did before."
If Tylenol does regain its dominant position in the market, J&J officials will deserve much of the credit for their response to the tragedy.
Group chairman Nelson, who recalls that the initial reaction to the crisis at J&J was shock, remarks that "this organization has responded beautifully to the crisis."
McNeil built Tylenol into a major brand in the 1960s by promoting the non-aspirin product exclusively to doctors. By 1972, the product had become the largest-selling pain reliever in the nation, without the aid of consumer advertising. In 1975, McNeil began advertising Tylenol, and last year the product contributed 7 percent of Johnson & Johnson's worldwide sales and almost 20 percent of its profits.
J&J first learned that Tylenol was somehow involved in several deaths in the Chicago area on Sept. 30, when the company received a phone call from a journalist. After confirming the situation, the company voluntarily withdrew all its capsules from Chicago.
On Oct. 5, after Tylenol capsules in California were found to contain poison, the company stopped distribution of Tylenol capsules and recalled 31 million bottles already shipped. The company put the cost of the recall at $100 million.
Meanwhile, a crisis management team was set up, and met twice daily until recently. (It still meets periodically.)
A 24-hour toll-free hotline was set up to answer questions from the public and arrange the exchange of Tylenol tablets for capsules. By last week the hotline had handled 290,000 calls.
The company sent mailgrams to retailers and medical professionals throughout the nation explaining the situation, and offered a $100,000 reward for information leading to the arrest of the individual or persons responsible for the poisonings.
Nelson, a member of the crisis management team, said one critical decision by the company was to cooperate fully with the press so that consumers and retailers would be alerted to the circumstances of the case as rapidly as possible. According to research done for the company in the weeks following the poisonings, an astounding 94 percent of the public knew of the Tylenol tragedy, Nelson said.
J&J also cooperated with the Food and Drug Administration by undertaking an analysis of the 31 million recalled Tylenol bottles. According to Nelson, "two or three bottles" returned from the Chicago area contained cyanide-laced capsules.
During the crisis, company officials say, they debated the questions of whether to stop making Tylenol in capsule form (and decided not to abandon it) and whether to add a new brand under another name (which has not yet been ruled out).
One of the key elements in the company's future marketing plans is based on an Oct. 15 letter from the FDA which concluded the contamination of the product took place either while the Tylenol was in transit or, most likely, after it was placed on the retailers' shelves. This reinforced what J&J officials already believed: that there was no tampering with the product while it was in their factories.
Even before the major producers of consumer drugs agreed to do so on Oct. 5, J&J launched a crash program to develop tamper-resistant packaging. Nelson concedes that "there never was a single word around here about tamper-resistant packaging before this tragedy."
In addition to launching a print campaign encouraging Tylenol capsule users to switch to tablets until the capsules were available in the new packaging, the company spent $2.8 million on a prime-time TV ad campaign in late October. In the commercials the company's medical director delivered a sober report and concluded with the message, "We want you to continue to trust Tylenol."
In November, the company launched a massive program to restore the confidence of medical professionals in Tylenol. More than 2,000 J&J representatives are taking part in this personal selling effort.
In an effort to get the product back on medicine cabinet shelves in homes, J&J distributed 40 million coupons worth $2.50 toward the purchase of a Tylenol product. Distribution of another batch of coupons starts today through 180 newspapers nationwide.
J&J will launch a new series of print ads in February and TV advertising will resume next month. While the final decision on the approach of the TV ads has not been made, commercials being tested revolve around the theme, "Tylenol -- you can trust our good name." The print ads will be used to explain the tamper-resistant packaging, a topic which J&J officials believe is too difficult to explain in a brief TV commercial.
A. G. Becker analyst David F. Saks says McNeil's costs from the Tylenol tragedy would have bankrupted the company if it weren't part of a larger corporation with the resources to try to rescue the product.
Saks had expected Tylenol sales this year to grow to $500 million, from $400 million in 1981. Since the poisonings, he has lowered his 1982 estimate to $400 million, and predicts sales next year of $300 million.
"By committing more that $100 million to protect the Tylenol franchise on top of their lost sales of another $100 million in three months, the company has earned a lot of respect, especially since consumers aren't being asked to pay for any of it," Saks says.
"One reason the consensus at the time of the poisoning was that J&J should keep quiet, act slowly, and possibly come out with a new brand, was that advertising people didn't anticipate the humanistic and socially responsive response J&J would make."