Week 6 BOC: Tylenol Scare 1982

In the fall of 1982, seven people in Chicago, Illinois died after ingesting Tylenol capsules that were contaminated with cyanide. It resulted in their market value plummeting about 1 billion dollars. The tampering occurred once the product reached the shelves. They were removed from the shelves, infected with cyanide and returned to 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. Then four years later, the same incident occurred which called for immediate damage control. Although Johnson & Johnson knew they were not responsible for the tampering of the product, they assumed responsibility by ensuring public safety first and recalled all of their capsules from the market. In fact, in February of 1986, when a woman was reported dead from cyanide poisoning in Tylenol capsules, Johnson & Johnson permanently removed all of the capsules from the market. Johnson & Johnson removed 31 million bottles that were being sold nationwide and replaced all advertisements with alert warnings to protect their loyal customers. With all their products stripped from the shelves, they were able to begin reconstructing their brand image. Chairman of Johnson & Johnson, James Burke, made it clear to the company and public that they saftey of the consumer came first then the improvement of the product second. What set apart Johnson & Johnson's handling of the crisis from others? It placed consumers first by recalling 31 million bottles of Tylenol capsules from store shelves and offering replacement product in the safer tablet form free of charge. The new "tamper-proof" seal was introduced to the public along with caplets, instead of capsules. Also they invented a new pricing program and coupons for their loyal customers to apologize for their unfortunate events. Because Tylenol is considered a "medical drug," they reached out to the medical community to promote the saftey of the new packaging and caplet. It is because Johnson & Johnson acted quickly that established the trust between the company's shareholders and customers that allowed it to protect their brand till this day. 

http://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htm
http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html
http://www.mallenbaker.net/csr/crisis02.php