Case studies are an excellent way to tell the world how valuable your marketing and branding actions can be. They go beyond mere testimonials by showing real-life examples of how business was able to successfully accomplish their goals. Our goal? Highlight success examples in a way that will make
your ideal potential customer becomes your client. This CVS rebranding case study target those examples.
Within five years, if you’re in the same business you are in now, you’re going to be out of business.
Peter Drucker
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With the advent of the Internet, the number of marketing options available to both budding and experienced entrepreneurs has become staggering.
Here is a recent case of rebranding a company built around a bold action. Which is the chicken and which is the egg? Read on to find out.
Background
CVS is the U.S.’s second-largest drug retailer and ranks #13 in Fortune 500 list in 2013. CVS has brought a new flavor to the pharmaceutical industry by creating an online pharmacy. It’s prescription drug sales account for 70% of its total revenue.
With over 7400 stores across the United States, people can easily find CVS almost anywhere in the country and experience the convenience this one-stop store offers.
Customers can also make their purchases including prescription online through its website www.cvs.com and have their orders delivered to their doors.
CVS has had a busy and exciting 2014 so far. First, in February, they decided that all tobacco sales would cease in their stores by Oct. 1. The response – from investors and in earned media – has been overwhelmingly positive.
“While there’s never a right time to walk away from $2 billion in revenue, this was the right time,” CVS President and Chief Executive Larry Merlo said in an interview. “Eliminating this obstacle will allow our company to grow over the long term.”
Here is how the CVS CEO describes his business:
Our company does a lot of different things, and at first glance, it may be difficult to see how they’re all related. We run retail stores and pharmacies. We operate retail health clinics. We administer prescription benefit plans. We sponsor and conduct health care research.
Everything we do is tied together by one important idea: we are committed to reinventing pharmacy for better health. Our unique combination of best-in-class businesses positions us to deliver on this promise in a way that no other company can.
Challenges in health care
There are many difficulties and opportunities in this market. For example, there’s the rising cost of health care and what amounts to a growing traffic jam of people waiting to access the health care system. By 2020, the country will be short an estimated 45,000 physicians.
These are troublesome roadblocks because what quickly gets lost in this scenario is preventive care. If health care becomes more expensive and harder to access, people can be rerouted off of their normal path. And many of these detours have dire consequences.
With these and an array of other challenges facing our customers, CVS realizes they need to be more than just a place where customers go to pick-up their prescriptions.
The problem
Looking to position itself as a more health-focused drugstore, CVS has a new corporate name and initiative to help its consumers quit smoking. The company announced that it is changing its name from CVS Caremark to CVS Health (though the store signage will still read CVS/pharmacy).
“We’ve changed our company name to CVS Health to reflect our purpose of helping people on their path to better health,” officials at the company formerly known as CVS Caremark Corp. stated last week.
CVS Health officials say the rebranding effort helps align the company for an expanded role in providing healthcare services beyond the traditional retail pharmacy business model.
The drug-store is banking on an image change. The company hopes that by becoming the first chain to stop selling tobacco, consumers will be convinced that its 7,700 pharmacies are go-to for their health and wellness needs. So a rebranding has been teed up, hasn’t it?
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Eliminating cigarettes and their ilk from its shelves represents a radical step forward, don’t you think? This offers a beautiful example of corporate authenticity. CVS is signaling a significant shift in its retail operations, from a primarily transactional model to a health service hybrid.
This model is focused on its customers’ quality of life. And they’re taking action to back up the rebranding strategy – imagine that! In fact, the action is the rebranding strategy.
The CVS brand is sending a clear signal about its commitment to helping consumers live healthier and better lives. Further, this decision to include wellness as a defining brand attribute will likely appeal to non-consumer stakeholders.
Stakeholders such as hospitals, health insurers, and physicians, who have become attractive partners in the retail pharmacy value chain.
CVS rebranding case study alternatives
So, how are they pulling it off?
First and foremost, CVS is displaying great courage with its business practices, and savvy instincts with its rebranding strategy.
Although sales of tobacco products at drugstores such as CVS only account for less than 4 percent of all tobacco sales, CVS must precisely follow up on this big strategic move with other marketing initiatives.
Initiatives that help maintain or increase the share of wallet among current CVS customers. Additionally, a demonstrable shift to brand values that reflect customer values could boost customer acquisition for CVS—attracting new clients or those switching from competitors.
CVS corporate strategy … results
It is unclear whether the move has yielded any financial benefits to the pharmacy chain. None of the other national pharmacy chains have followed CVS to drop cigarettes.
The company said in a statement that the new name reflects “its broader health care commitment and its expertise in driving the innovations needed to shape the future of health,” while CEO Larry Merlo told Forbes, “Changing the name catches up with what we have been doing.”
Reflecting on the big announcement from CVS—the elimination of tobacco products from its stores—my observations:
This move by CVS did more for the brand than ten years of promotion could ever do. Through a bonanza of PR and social media buzz, it’s receiving a dramatic shot of marketing buzz.
According to data sourced on Topsy.com, the announcement spawned over 100,000 Tweets, and even the President weighed in! Most significantly, it’s forging meaningful differentiation in the market segment.
Think about it. What did CVS stand for last week? Nothing too distinctive, right? Now today, there’s a new thought in the back of everyone’s mind: “CVS is a genuine advocate for my health.”
An outcome like that is every marketer’s dream, and CVS achieved it not by “saying” something to us, but by “doing” something for the world. This is the new success principle of modern marketing. Actions always speak much louder than words.
The bottom line
So, want to be a new brand hero like CVS?
First, it requires a statement of purpose – one that directs action and choices. The bolder, the better.
Then it takes courageous leadership from the top to implement that statement of purpose.
Marketing has never been a departmental activity; instead, it is one of two primary functions of the firm (the other is innovation). And this type of business decision making is the best marketing of all.
Hats off to CVS and its CEO for showing us the way.
