In 2014, CVS became the first national pharmacy to stop selling cigarettes. It showcases a shift in consumer thinking. CVS stands to lose profits of 2 billion dollars by doing this. The company took an ethical standpoint for its justification, and the chief medical officer stated that a “health care provider continuing to sell cigarettes was a glaring contradiction”. So why now?
It sounds like an ethical and socially conscious choice, but a for-profit corporation also an ethical obligation to its stakeholders to always be improving its bottom line. This means that CVS believes that this decision can be leveraged to somehow make up or increase the 1.5 billion dollars they have chosen to not spend.
This is a time where capitalism and health interests do not have to be in direct conflict with one another.
CVS has made this decision to gain a first-mover advantage and build distinctiveness by doing actions that brand them as a health-oriented pharmacy
CVS has also introduced a new revenue stream and customer acquisition funnel by beginning a quit smoking program. This decision was influenced two key trends. The first being that 7/10 smokers want to quit. The second was changes in the political sphere, as the Affordable Care Act meant that more Americans would gain health insurance. As such, retail clinics were expected to take a much larger role in illness treatment and prevention. Accenture predicted that “retail clinics would grow 20-30% each year for the next three years, driven by partnerships and referrals from hospital emergency room” and “a quarter of all emergency department visits could instead be handled by a retail and drop-in clinic.”
CVS’s decision is an excellent example of strategy, and it ties in well into our course discussions regarding incongruent and inauthentic messaging. Consumers will find a incongruence in going to a smoking cessation retail area when the company actively sells cigarettes just aisles away. This is a huge threat to CVS as the brand dissonance could result in customers leaving the company. As a result, the company had to choose whether cigarettes or a smoking cessation program would be more beneficial, and they chose the latter. This decision says a lot about just how much consumer perception towards smoking has changed, and shows the necessity for businesses to evolve with changing consumer preferences.
Sources:
https://www.chainstoreage.com/article/heres-what-consumers-think-about-cvs-ban-tobacco-products/
https://www.theatlantic.com/health/archive/2014/02/why-cvs-isnt-selling-cigarettes-anymore/283614/
https://www.theguardian.com/sustainable-business/2014/jun/18/cvs-stop-selling-cigarettes-tobacco-10-lessons-companies
“Consumer reactions to the decreased usage message: The role of elaborative processing” (Kate White & Chelsea Willness, Journal of Consumer Psychology, January 2009)
Images:
http://www.chaindrugreview.com/wp-content/uploads/2015/05/CVS-quit-smoking-sign_featured.jpg
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