The Tylenol Crisis: How Effective Public Relations Saved Johnson & Johnson
TL;DR
$100M to recall 31M bottles when only a handful were poisoned. Costly signals prove commitment; cheap ones don't.
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The canonical crisis management case study. Documents how J&J's $100 million Tylenol recall became the textbook example of costly signaling in crisis response—proving trustworthiness through voluntary sacrifice. Essential for understanding why expensive signals are more credible than cheap ones.
Key Findings from Kaplan (1998)
- J&J voluntarily recalled 31 million bottles ($100M retail value) even though only Chicago-area bottles were contaminated
- Market share crashed from 35% to 7% immediately after the crisis
- Market share recovered to 35% within ~18 months through consistent costly signaling
- J&J invented tamper-evident packaging (glued box, plastic seal, foil cap) that became the industry standard
- The J&J Credo prioritizing customers over shareholders guided the decision to spend shareholder money on customer safety
- Kaplan notes J&J initially held off on full recall 'through the first weekend after the deaths'