The Tylenon Cheers and Jeers Awards
by Jon Spoelstra

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Whenever there is a tragedy of major proportions, I think Tylenol.

I don‚t think I should take Tylenol. No, I think about those Tylenol executives that marketed their way out of a crisis. I ask myself, how would I respond to a present day tragedy?

The makers of Tylenol, Johnson & Johnson, became the textbook model on how to respond to a crisis. In 1982, seven people died taking Tylenol capsules laced with cyanide. At the time, Tylenol was the King Kong for over-the-counter painkillers with a 37% market share. All three networks made this tragedy the lead story. Many marketers thought Tylenol as a brand was dead in the water.

Here‚s what Tylenol did. Quickly, they recalled every bottle of Tylenol. That was approximately 31 million bottles with a retail value of over $100 million. This was, and still is, highly unusual for a large corporation facing a crisis. In other cases, companies put themselves first. Think Firestone.

Six weeks after the crisis, Tylenol was re-introduced with the nation‚s first tamper proof packaging. They flooded the country with $2.50-off coupons for any Tylenol product. They immediately grabbed a 24% market share, still the leader in the category.

The Tylenol tragedy may seem like small potatoes compared to September 11th, but let‚s see how companies responded to that mega-tragedy.

Three were brilliant. They win the Tylenol Cheer Award. C‚mon, stand up and cheer. More! More!

Three were stupid. Normally I wouldn‚t comment on stupid marketing. But, in this case, their stupidity ends up hurting you and me and every American. They win the Tylenol Jeer Award. C‚mon, stand up, cup your hands around your mouth, and boo, boo long and hard. Now that you‚ve cleared your lungs with all that cheering and booing, let‚s hoist a beer for the three Tylenol Cheer Award winners first:

1. Hoist one for General Motors. Here is an unlikely company to cheer for. When September 11th hit, who was in the mood to buy anything, let alone a car? Nobody, that‚s who. Responding in Tylenol speed<=just eight days after September‚s terrorist attacks<=GM introduced the zero-interest loan when purchasing a new car. How did they do? GM‚s sales dropped just 2.9% from the previous September! Just think, this was at a time when nobody wanted to buy a car! Ford and Chrysler got into the zero-interest game a little later and their September sales dropped about 10% and 28%.

2. Hoist one for Southwest Airlines and Alaska Airlines. The other two winners are, surprisingly, airlines. They did some highly outrageous things in response to September 11th:

• They didn`t reduce the number of their flights.
• They didn`t lay off any employees.
• They didn`t threaten that they were going to lose billions.
• They lowered ticket prices across the board.
• They made a profit for September.
• They accelerated their plans for growth.

The rest of the industry didn`t fare as well. The rest of the industry projected losses of $2.1 billion for September. The rest of the industry laid of over 100,000 employees, slashed the number of flights, were late in cutting ticket prices and put any thoughts of growth in deep freeze.

All three winners of the Tylenol Jeer portion of the awards go, not surprisingly, to the three major airlines, American, United and Delta. If it was just a case of the deer being caught in the headlights, we could say, "Shame on them. " But, their lack of response is costing all Americans. Besides laying off 100,000 employees, they caused 500,000 more Americans to lose their jobs in travel related industries. But, that‚s not the worst of it.

The worst of it is that the airline industry is too important to business. With their lack of responsive marketing, the big airlines have unwittingly alienated the business traveler. You could say, „big deal, but when American business isn‚t aggressive, it almost becomes a self-fulfilling prophecy to batten down the hatches. That‚s what they do in a recession, you know.

The biggest sin of the major airlines was a simple marketing one. They didn‚t want to change their marketing in a different economic climate. In the late 1990s, the big airlines had installed all those restrictions and penalties that applied mainly to the business flyer. It worked. They had record profits. Because the economy was so good, the business flyer paid exorbitant travel rates. However, in 2000, the economy stumbled. The airlines didn‚t change their marketing strategy˜it was gouge the business traveler as usual. That didn‚t work. 40% of their business travel disappeared. These vacant seats, however, were filled with low-paying leisure travelers. Then September 11th hit.

The severe restrictions and penalties still apply to the business traveler. As a result, the big airlines have cut back even further.

What type of restrictions and penalties, you may ask. Among other things, how about something simple like changing a ticket. When Aunt Millie travels, she doesn‚t make changes. When a businessperson travels, change is a way of life.

To make a slight change, there is at least $100 charge. But, there‚s more. If you change the day you‚re traveling, there could be what the airlines call a "buy up." I had this happen a week ago. I went to San Francisco on a Monday and was scheduled to come back to Portland on a Wednesday. I concluded my business Tuesday afternoon. I checked the United Airlines website to see if there were seats available on a Tuesday evening flight. Plenty of seats; two-thirds empty. At the airport, I was told that my desired change was a „buy up. I would have to pay the rate of buying a ticket that day, which became in my mind a $214 penalty.

"I could put you on a 6 a.m. flight tomorrow morning with no Œbuy up" the ticket agent told me.

„I want to go home tonight. How about all those empty seats on tonight‚s flight? I asked, „why not put me in one of those?

"Can`t do it," the ticket agent said, it`s against the rules.

This happened with a Tylenol Jeer Award airline where I hold their highest frequent flyer classification (over 100,000 miles per year and almost 2 million lifetime). Finally, I used 15,000 of those miles to get on that flight with all those empty seats.

"What about a credit for my return ticket I‚m not going to use?" I asked.

"Sorry, it`s against the rules."

"Well, do I get credit for the miles on that ticket that I paid for and didn`t use?"

"Sorry, you only get miles on flights you actually are on. It`s the rules."

Who writes these rules? Who could change these rules?

What about a rule that says, "You can fly round-trip anywhere in the country you want to for $500 (or less). The price is the same whether you book your flight three weeks in advance or on the same day you fly. You can change departure days or departure times with no cost. If you want to make a stopover in a third city, we‚re delighted and we‚ll charge you just $100 per 1,000 miles for any additional stopovers. Those are our new rules."

Do you think this rule will get businesses to push their video conferencing equipment into the corner? You better believe it. As one sales manager of 70 salespeople, whose travel budget was slashed by over 50% before September 11th, told me, "We`ve done video conferencing, we‚ve done all the electronic stuff, but there`s nothing like being there."

Is it fair to ask the major airlines to help pick up our economy? Well, we did give them $15 billion. With no restrictions, no "buy ups." This isn`t like the 1970s when Detroit only offered us the big gas-guzzler cars. There was an option then. Enter Toyota, Nissan and Honda. I can`t see Japan Air Lines coming over here like the Japanese car guys did. And besides, JAL wouldn`t be able to get gates at the airports. So, we`re stuck with the sluggish thinking Tylenol Jeer Award winners. The only option that I see is that we use the Internet to gather a big voice to force the airlines into thinking. It would be good for the big airlines (see Southwest Airlines and Alaska Airlines), it would be good to get help business get moving again, and ultimately it would be good for us as Americans.