Tag Archives: CVS

CVS Lives up to its Mission by Banning Cigarette Sales

Tobacco

While nearly every large public corporation has a mission statement that explains its values and direction, not every corporation lives up to its mission. This can be particularly difficult when social responsibility conflicts with profitability.

Case in point: CVS Pharmacy, the second largest pharmacy chain in the U.S.

Last year CVS stopped selling tobacco products, and declined to enter the growing e-cigarette market. A year after the move, CVS released research that it claims shows how its decision encouraged Americans to buy few cigarettes. In states where CVS has a 15% market share, there was an overall market drop of 1% in sales of cigarettes. While 1% might seem very small, it represents an estimated 95 million packs of cigarettes, or five fewer packs per smoker and a substantial contribution to the diseases associated with tobacco. Corresponding to the drop in cigarette sales, sales of nicotine patch products increased 4%.

The move cost the company an estimated $2 billion in revenue. There may a cost to social responsibility, but the gain benefits the larger society and shows us that mission is important to strategy.

Group Activities and Discussion Questions:

  1. Discuss the importance of mission and vision in the strategic planning of a company.
  2. Bring up CVS’ Web site and social responsibility statement: http://www.cvshealth.com/social-responsibility
  3. The CVS press release can be viewed at: http://www.cvshealth.com/content/cvs-health-marks-first-anniversary-tobacco-removal-new-data-decision’s-impact-extends
  4. How does the company’s action to quit selling tobacco products match its mission?
  5. Discuss the difficulty of taking potentially profit-reducing action in order to meet mission.
  6. Divide students into teams. Have each team select a company that interests them and have them locate the company’s mission and values statements. Do these companies match the statements?

Source: Bloomberg, Brandchannel.com, other news sources

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CVS Quits Tobacco

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People shop at drug stores and pharmacies primarily to get medical supplies, medications, and other products that impact their health in a positive manner. But walk into most drugstores and one will see a plethora of tobacco products being sold – a decidedly unhealthy product!

Publically acknowledging this discontinuity, CVS recently decided that it could no longer sell a product as unhealthy as cigarettes and tobacco products and still maintain its main premise of helping people. Yes, the second-largest pharmacy in the U.S. announced that it will stop selling cigarettes and tobacco in more than 7,600 stores by October 1, 2014, thereby becoming the first nationwide drugstore to eliminate the toxic products.

The move will not be cheap for CVS. Analysts estimate that tobacco sales contribute roughly $2 billion in annual revenue to the company. But it is a move that has been lauded for helping the company move into a more authentic and consistent direction, helping to reposition the company into a broader based health and services provider instead of just a dispensary for pills.

Group Activities and Discussion Questions:

  1. View the announcement on CVS’ Web site: http://info.cvscaremark.com/cvs-insights/cvs-quits
  2. Discuss why this is an important development in the drugstore industry? Will other companies follow CVS’ example? Why or why not?
  3. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  4. Divide students into teams and have each team develop a positioning map for CVS – both before the elimination of tobacco, and after the elimination of tobacco. How will the change help the company reposition?
  5. Have each team draw their map on the board.
  6. Debrief exercise.

Source:  New York Times, other news sources, 2/5/14

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