course materials

1. Tylenol Murders Case Study and Nursing Leadership
Tylenol Murders Case Study and Nursing LeadershipTylenol Murders Case Study and
Nursing LeadershipWinning Back Lost Customers Is a Costly ChallengePerhaps the most
famous case illustrating the enormous cost of winning back lost customers is that of the
“Tylenol Murders.” Tylenol Murders Case Study and Nursing Leadership. Seven people in
the Chicago area died suddenly after taking Tylenol capsules. An investigation revealed that
the capsules had been laced with cyanide, a deadly poison. When the story ran on the
nightly news programs, a nationwide panic ensued that caused Tylenol’s sales to plummet
overnight. Many business analysts predicted that Tylenol’s manufacturer, Johnson &
Johnson, would not survive the tragedy. Johnson & Johnson surprised the analysts by
undertaking one of the most successful campaigns in history to win back customers. It
worked, but the cost was huge. This case led not just Johnson & John-son but also all major
drug manufacturers to develop the tamperproof bottle. Having done so, Johnson & Johnson
undertook an intensive public relations campaign to win back the trust of its
customers.Discussion QuestionsDiscuss the following questions in class or outside of class
with your fellow students:1. If the Tylenol incident were to happen today and you were a
user of Tylenol, would Johnson & Johnson be able to win back your trust?2. What would it
take for Johnson & Johnson to win back your trust if one of the victims was a friend of
yours? Case Study 7-2, Winning Back Lost Customers is a Costly Challenge (Goetsch &
Davis, 2021, p. 110) Please use APA 7 guidelinesCUSTOMER SATISFACTION, RETENTION,
AND LOYALTYCHAPTER SEVENAfter completing this chapter, you should be able to: ?
Explain how to determine who a customer is. ? Describe the factors that apply when quality
is defined by the customer. ? Summarize the steps involved in identifying external customer
needs. ? Explain how to communicate with customers on a regular basis. ? Explain why it is
important to measure both customer satisfaction and customer retention. ? Explain why it is
important for organizations to understand the concept of customer-defined value. ?
Summarize the importance of customer retention. ? Identify the steps in establishing a
customer focus. ? Explain how to recognize a customer-driven organization. ? Define value
perception as it relates to customer loyalty. ? Explain the concept of customer loyalty. ?
Distinguish between customer loyalty and profitability. ? Describe how to convert
customers into innovation partners. ? Explain the strategies for customer loyalty and
retention. ? Explain the steps in the product innovation model for customer retention.
Tylenol Murders Case Study and Nursing Leadership? The customer must be the
organization’s top priority. The organization’s survival depends on the customer. ? Reliable

2. customers are the most important customers. A re-liable customer is one who buys
repeatedly from the same organization. Customers who are satisfied with the quality of
their purchases from an organization become reliable customers. Therefore, customer
satisfaction is essential. ? Customer satisfaction is ensured by producing high-quality
products. It must be renewed with every new purchase. This cannot be accomplished if
quality, even though it is high, is static. Satisfaction implies continual improvement.
Continual improvement is the only way to keep customers satisfied and loyal.If customer
satisfaction is the highest priority of a total quality organization, then it follows that such an
organization must have a customer focus. Traditional management practices that take the
management-by-results approach are inward looking. An organization with a customer
focus is outward looking.The key to establishing a customer focus is putting employees in
touch with customers and empowering those employees to act as necessary to satisfy the
customers. There are a number of ways to put employees in touch with customers. Actual
contact may be in person, by telephone, or through reviewing customer-provided data.
Identifying customer needs and communicating with customers are covered later in this
chapter. At this point, it is necessary to understand only that employee–customer
interaction is a critical element in establishing a customer focus.produce a level of feedback
equal to that gained from the nonverbal messages, impressions, and follow-up questions
that are a part of person-to-person interviews.Figure 7.3 is an example of an information-
gathering plan. Notice that it is structured for collecting information either face to face or by
telephone interviews.Gather the Information Before implementing the entire information-
gathering plan, it is a good idea to conduct a smaller pilot study involving just a few
customers. This will identify problems with the information-gathering methodology that
should be corrected before you proceed on a larger scale. After the methodology has been
appropriately refined, gather information in a timely manner .IDENTIFYING EXTERNAL
CUSTOMER NEEDS Historically, customers were excluded from the product development
process. When this approach is used, the organization producing the product is taking a
chance that it will satisfy the customer. In a competitive market-place that is global in scope,
such an approach can be disastrous. In a total quality setting, customer needs are identified
clearly as a normal part of product development. Peter Scholtes, Barbara Streibel, and Brian
Joiner recommend the six-step strategy for identifying customer needs that is described in
the following sections. The authors of this text recommend a seventh step involving Internet
researchSpeculate About Results Before gathering information about customer needs, it is a
good idea to spend some time speculating about what might be learned. Write down what
you think customers will say so that you can compare your expectations with what is
actually said. The purpose of this step is to help representatives of the organization
determine whether they are in touch with customer needs. Develop an Information-
Gathering Plan Information gathering should be systematically undertaken and well
organized. Before gathering information, develop a plan. Decide what types of information
are needed and who will be asked to provide it. Whenever possible, structure the plan so
that information is collected in face-to-face interviews. When personal visits are not
possible, use the telephone. Written surveys sent out through the mail cannot produce a
level of feedback equal to that gained from the nonverbal messages, impressions, and

3. follow-up questions that are a part of person-to-person interviews. Figure 7.3 is an example
of an information-gathering plan. Notice that it is structured for collecting information
either face to face or by telephone interviews.Gather the Information Before implementing
the entire information-gathering plan, it is a good idea to conduct a smaller pilot study
involving just a few customers. This will identify problems with the information-gathering
methodology that should be corrected before you proceed on a larger scale. After the
methodology has been appropriately refined, gather information in a timely manner.
Tylenol Murders Case Study and Nursing LeadershipAnalyze the Results Results should be
analyzed carefully and objectively. Do they match the speculated results from the first step?
How do they agree and disagree? What problems did customers identify? What strong
points? Were there trends? How many customers complained of the same problem? What
changes in the product or services relating to it were suggested? Check the Validity of
Conclusions Having drawn conclusions based on the information gathered, the next step is
to check the validity of those conclusions. Customers can be a valuable source of help. Select
several customers and share the conclusions with them. Do they agree with the
conclusions? Also share the conclusions with other people in the organization and get their
feedback. Adjust your conclusions as needed based on this external and internal
feedback.Take Action Based on the final conclusions, what changes need to be made? Which
of these changes are short term in nature, and which are long term? Which can be made
immediately, and which will require a longer time? Take any corrective action that can be
made immediately, and lay out a plan for com-pleting any that is long term in nature. Meet
with customers and let them know what is going to be done and when. Make sure that
changes are made, to the extent possible, in the same order of priority as that dictated by
customer needs.Internet Obtaining customer information has become much easier with the
advent of the World Wide Web. Most businesses now have extensive Web sites containing
volumes of information about themselves. This information can be obtained by going online
and accessing the Web site of the company in question. Careful scrutiny of a customer’s Web
site can reveal useful information about what is important to that customer. It can also
reveal who the key players are, who is in charge of what, and who the best contact might be
in a given situation .A word of caution is in order, however. There are ethi-cal issues to be
considered when using the Internet to obtain customer information. Only information
available for pub-lic consumption from the customer’s Web site should be used. In the age
of technology, Web surfers and computer hackers are sometimes able to access data about
customers that is not intended to be public. This type of information has value for the
hackers if they can sell it or use it in any other way for personal gain. Before deciding to use
the Internet as a source for customer knowledge, organizations should develop guidelines
for the ethical use of information obtained electronically. These guidelines should also
specify the types of information that will be pursued electronically and how to respond
when offered customer data that might have been obtained unethicallyIdentifying Internal
Customer Needs Identifying the needs of internal customers is a matter of ensuring that
employees who depend on one another as individuals, as well as departments that depend
on each other as units, communicate their needs to one another continually. Tylenol
Murders Case Study and Nursing Leadership. However, one should not assume that

4. communication will just happen. As important as it is, communication rarely just happens in
any setting. Rather, it must be encouraged and facilitated.Quality circles, self-managed
teams, cross- departmental teams, and improvement teams are all examples of mechanisms
for improving communication and, in turn, quality. These mechanisms facilitate
communication among internal customers and suppliers. However, they are not the only
mechanisms available. Communication that occurs over a cup of coffee in the break room or
during lunch can be equally effective. Training that promotes communication and helps
improve communication skills is also important (this is discussed in greater depth in
Chapter 11).Teamwork and how it can improve communication in Chapter 11). Teamwork
and how it can improve communication is discussed in Chapter 10.COMMUNICATING WITH
CUSTOMERS Continual communication with customers is essential in a competitive
marketplace. Establishing effective mecha-nisms for facilitating communication and using
them are critical strategies in establishing a customer focus. One of the main reasons
continual communication is required is that customer needs change, and at times, they can
change rapidly .Communication with customers must extend to both external and internal
customers. What applies on the outside also applies within the organization.
Communication with customers is sometimes misunderstood as one of the basic strategies
used in a total quality set-ting. It does not mean asking customers what new products
should be invented. Customers will not tell an organization what product to produce, but
they will tell the organization what they think of its products .All of the market research in
the world won’t spare the entrepreneur the anxiety of dealing with the inescapable. Tylenol
Murders Case Study and Nursing LeadershipQUALITY TIP Employees Treat Customers as
Management Treats Them It never ceases to amaze me. A company will have signs and
banners promoting customer satisfaction. Management will lecture employees at length on
the subject. But employees are perceptive. They watch managers. They know how the
managers treat customers, and that is how they, the employees, will treat customers.
Managers who want good customer service must set the example first and lecture
second.element of risk. However, having taken the risk to produce a product,
communicating with customers about that product can ensure that it gets the best possible
reception in the marketplace and that it changes as the needs of customers change. Know
Your Customer’s Operations As a supplier to other companies (customers), it is important
to know their operations. The more that is known about a customer’s operations, the easier
it will be to provide products that meet its needs. What does the customer do with our
product? How is it used? Is our product part of a larger assembly? Does the customer use
our product in the way we expect or in some different way? Does the customer modify our
product in any way? What processes does the customer use in working with our product?
Knowing the answers to questions such as these can help a supplier improve customer
satisfaction. The answers to these types of questions can lead to such benefits as the
following: ? Product enhancements. By knowing a customer’s operations, suppliers might
be able to modify their products to fit in better with the customer’s operations. They might
also be able to add attributes that will make the product even more attractive to the
customer. ? Improved productivity. By knowing a customer’s operations, suppliers might
be able to propose process modifications that will improve its productivity. ? Internal

5. improvements. By knowing a customer’s operations, suppliers might learn facts that lead to
internal improvements in quality, productivity, and design in their own organizations.
Customers don’t always use a product in the way a supplier assumes. By getting to know
customers and their operations, suppliers have not just made process and product
improvements; some have actually started new product lines. In any case, the better
suppliers know their customers’ operations, the better they can serve them. The better
suppliers serve their customers, the greater the likelihood of satisfied, long-term customers.
Using Customer Feedback to Make Design Improvements It is important for organizations
that compete in the global arena to collect customer input and feedback and use it to make
continual improvements to the design of their products. Quality function deployment is an
effective system for collecting customer input and factoring that input into the design
process. Building affinity diagrams is an effective method for organizing customer feedback
data so that it can be used to make ongoing design improvements. Quality Function
Deployment and Design Improvements It is important to know that a product will meet the
needs of customers before you put it into pro-duction. This is the main reason for
conducting the researchnecessary to identify customer needs and for communicating with
internal and external customers. Quality function deployment (QFD) was developed with
this in mind. QFD is an integrated approach to product development and quality in all
preproduction activities. It was introduced in the United States by Professor Y. Akao of the
University of Tamagawa as part of a paper he presented at a quality conference in Chicago.
QFD is actually a model for incorporating customer input and feedback into product
development. In effect, it establishes an operational structure for the concept of building in
quality. The philosophy underlying QFD is that even a perfectly manufactured product may
not satisfy the customer because it may be nothing more than a perfect example of what the
customer doesn’t want .QFD allows for the systematic incorporation of customer needs,
production capabilities and capacity, and all other relevant parameters into product
development. QFD consists of the following basic activities:2 ?? Deployment of customer
requirements (quality needs) ? Deployment of measurable quality characteristics ?
Determination of the correlation between quality needs and characteristics ? Assignment of
numerical values to each quality characteristic ? Integration of quality characteristics into
the product ? Detailed design, production, and quality control of the product QFD is
discussed in greater detail in Chapter 17. It is introduced here only to show that it can have
a positive role to play in making sure customer needs are satisfied or exceeded. Affinity
Diagrams and Design Improvements Feedback from customers comes in many forms, and
depend-ing on the size of the organization, there can be vast amounts of it to deal with.
However, if customer feedback can be collected, organized, and analyzed to identify
patterns and trends, it can be an invaluable resource for making continual improvements in
product design and the manufacturing process .The affinity diagram is a useful tool for
making sense out of large amounts of customer feedback that might come to an
organization in any number of forms (e.g., customer complaints, surveys, feedback or
comment cards, focus groups, and telephone discussions). Tylenol Murders Case Study and
Nursing Leadership. 3 The steps in develop-ing an affinity diagram are as follows:1. Form a
cross-functional team that includes representa-tives from all of the key functional areas in

6. the orga-nization (e.g., engineering, marketing, accounting, and customer service).2. Ask
the team to investigate the following question: What do our customers dislike the most
about our product?3. Study the data from all of the various customer feedback sources and
identify categories of complaints, com-ments, concerns, and issues expressed by
customers.Write all of the feedback categories identified on a flip-chart and post them on a
wall where everyone on the team can easily view them.5. Sort all of the categories into
related groups so that there are no duplicate categories.6. Develop header cards for each of
the categories remain-ing on the wall charts. Each card is headed by a sen-tence that
accurately and succinctly describes the type of problems for that category. Examples of
possible headers are as follows: a. Product is too difficult to assemble. b. Product does not
provide sufficient operating information. c. Product wears out too quickly.7. Using the
header cards, draw an affinity diagram. The affinity diagram is simply a table consisting of
each header, with the corresponding frequently given customer feedback for that header
listed under it. For ex-ample, assume the product is a piece of home exercise equipment.
Using the first header from above, one part of the affinity diagram might look like this
:Product is too difficult to assemble :a. Assembly instructions are confusing. b. Fasteners
require a special tool that is not provided.c. It takes at least three people to install the
pulleyUnder each header, the most frequently given feedback that corresponds with that
header is listed. With the customer feedback data organized, patterns and trends become
obvi-ous. Given this information in this type of format, design personnel know specifically
what they need to do to improve the design of the product. They can also see immediately if
changes in the manufacturing process, packaging process, or other key processes are
needed. CUSTOMER SATISFACTION PROCESS Customer focus is more than just sending out
surveys. Customer focus is part of a process that leads to continual improvements in the
organization that, in turn, result in cus-tomer satisfaction. Resources are limited;
consequently, they must be applied where they will do the most to improve customer
satisfaction and customer retention. The process described in the following list will help
meet all these goals: (1) identify your customers, (2) identify the product or service
attributes your customers value, (3) prioritize these attributes, (4) determine customer
satisfaction with the attributes, (5) tie customer feedback to your processes, (6) develop
metrics, (7) implement monitoring at the lowest levels, (8) put the most effort into high
value attributes that show customer satisfac-tion, (9) focus on process areas that have the
best opportunities for improvement, (10) continually update customer feedback and input,
(11) communicate continually with stakeholders concerning improvements and progress,
and concerning improvements and progress, and (12) ensure man-agement review of
metrics continually. Tylenol Murders Case Study and Nursing LeadershipCUSTOMER-
DEFINED VALUE It is important for organizations to understand how custom-ers define
value. The value of a product or service is the sum of a customer’s perceptions of the
following factors: ? Product or service quality ? Service provided by the organization ? The
organization’s personnel ? The organization’s image ? Selling price of the product or service
? Overall cost of the product or service All of these factors are important to customers. The
product or service must have the attributes customers want, and those attributes must be of
the quality expected. The cus-tomer’s interaction with the organization and how this inter-

7. action is measured are important. Just making a good product or service available is not
enough. Customer satisfaction will also be affected by how effectively, courteously, and
promptly customers are served. The appearance, knowledge, and attitudes of an
organization’s personnel also affect the level of satisfaction that customers experience.
Customers will build relationships with personnel in the organization who are
knowledgeable, professional in appearance, and positive. Such relationships promote
loyalty. On the other hand, no matter how satisfied customers are with a product or service,
if they don’t like an organization’s people, they are likely to defect to the competition. An
organization’s image is important to customers. Consequently, it is vital not just to have
quality products, service, and personnel but also to project an image that is consistent with
these quality characteristics. Think of the adage that one should “not just talk the talk but
walk the walk.” In establishing and nurturing an image, it is impor-tant to do both those
things. The key is that organizations must be concerned with both substance and
appearances. An organization’s image is defined by what customers believe to be true about
it. Selling price is important to customers, of course. It is the easiest characteristic to
compare. Tylenol Murders Case Study and Nursing Leadership. The point to under-stand
here is that customers have become so sophisticated that they no longer confuse selling
price and cost. In other words, they know the difference between cheap and inex-pensive. A
competitive selling price is a must in the modern workplace, but it should not be achieved
by sacrificing qual-ity or service. Most customers know that the selling price is just the
beginning of the actual cost of a product. Only when maintenance, upkeep, replacement
parts, warranty issues, and service are factored in does one know the product’s real cost.
Customers who don’t understand the difference between price and cost soon learn—the
hard way. The orga-nization that teaches this difficult lesson is not likely to retain its
customers. Whether customers are satisfied will depend on the sum of their perceptions
relative to all of these factors. The issue of customer satisfaction is complicated even more
bythe fact that different customers place a different priority on these factors. That fact
makes it even more critical that orga-nizations maintain close, personal, and continual
contact with their customers. Customer-Defined Value at Federal Express Federal Express is
one of the most successful package deliv-ery companies on the globe. Many businesspeople
think Federal Express sets the worldwide standard in customer service. One of the keys to
the success of this company is its commitment to customer-defined value. Part of the
operat-ing philosophy of Federal Express is that customers are the best judges of quality.In
order to capture customers’ input in a meaningful and useful manner, Federal Express
developed a system of Service Quality Indicators (SQIs). These indicators reflect the
customers’ views concerning their satisfaction with the performance of Federal Express.
The list of SQIs is as follows:1. Delivery on the right day but after the promised
time2. Delivery on the wrong day3. Unsuccessful trace of a package4. Customer
complaints5. Proof of performance is missing6. Missed pickups from customers7. Tylenol
Murders Case Study and Nursing LeadershipDamaged packages8. Lost
packages9. Unanswered calls from customers (not answered within 20 seconds) Federal
Express continually collects data for all of these criteria and uses the data to identify service
problems and their root causes. Of course, identifying the problems is just the first step.

8. Correcting them and eliminating the root causes follow quickly once a cause has been
identified. Customer Value Analysis What is it that customers want from our organization?
What is it about our products or services that customers value? A total quality organization
must know the answers to these questions. Organizations that don’t know what their
custom-ers value run the risk of wasting valuable resources and, in turn, improve the wrong
things. Tylenol Murders Case Study and Nursing Leadership. The process used to deter-
mine what is important to customers is called customer value analysis (CVA). The CVA
process consists of the fol-lowing five steps:1. Determine what attributes customers value
most. Ask customers to describe the attributes of the product or ser-vice. At this point, no
priority value is assigned to the attri-butes. This can be done using a written survey, a
telephone survey, one-on-one interviews, or focus groups.2. Rate the relative importance of
the attributes. Ask customers to prioritize the list of attributes identified in the first step.
The ranking should run from most impor-tant to least important.3. Assess your
organization’s performance relative to the prioritized list of attributes. Is the most im-
portant attribute on the list the strongest attribute of the product or service in question?
Ideally, the relative strength of the attributes of a given product or service will match the
priorities established by customers.4. Ask customers to rate all attributes of your prod-uct
or service against the same attributes of a com-petitor’s product or service. To consistently
beat the competition, an organization’s product or service must have more value for
customers on an attribute-by-attribute basis. By asking customers to rate at-tributes, the
organization can determine how they perceive the value, on a relative basis, of its product
or service attributes. This gives the organization the information it needs to improve the
attributes of its products or services in accordance with customer preferences.5. Repeat the
process periodically. Over time, cus-tomer preferences might change, as might the
attributes of competing products or services. Consequently, it is important to periodically
repeat the CVA process.Customer satisfaction is a fundamental cornerstone of total quality
(Figure 7.4). An organization develops a customer focus to be better able to satisfy its
customers. Consequently, forward-looking organizations use customer satisfaction data to
measure success. But measuring customer satisfac-tion alone is not enough. Another
important measure of suc-cess is customer retention .It is a fact that even satisfied
customers will some-times migrate to a competitor. The customer whose feed-back in a
customer satisfaction survey is very positive might, in reality, have migrated in spite of
being satisfied. Consequently, it makes more sense to measure customer retention than just
customer satisfaction. CustomerQUALITY CASE Delivering Quality and Value at Cargill Corn
Milling Cargill Corn Milling (CCM) of North America began operations in 1967 as part of its
parent firm Cargill Inc., a global provider of food, agriculture, and risk-management
products. CCM manufactures corn and sugar-based foods, including whole-grain corn meal,
corn oil, animal feed, ethanol, dextrose, and acidulants. CCM employs more than 2,300
personnel in 9 manufacturing plants and 11 distribution centers through-out the United
States. These personnel and facilities process more than 10,000 bushels of corn every day.
CCM is one of three Cargill business units to receive the Baldrige National Quality Award. By
putting customers at the heart of all decisions and ap-plying the other principles of total
quality, CCM has been able to become a world-class organization able to compete success-

9. fully on the global stage. Examples of how CCM applies the principles of total quality include
the following: ? Establishing and maintaining a team-based corporate cul-ture that
emphasizes effective communication, skill sharing, and leveraging of diverse ideas. This
culture led to more than $15 million in cost savings from ideas generated by
employees.Consistently maintaining an error-free delivery record of 99% or better. ?
Committing to achieving the world-class benchmark of a 98% operational reliability
effectiveness rate as established by the Society of Maintenance and Reliability Professionals
(CCM has achieved a 95% record to date). Tylenol Murders Case Study and Nursing
Leadership ? Committing to maintaining steady “per bushel” costs even as such factors as
energy and chemical costs have in-creased. CCM has achieved this goal by strictly applying
such tactics as real-time and predictive monitoring of equip-ment health, careful energy use,
and continual process im-provement. By applying the principles of total quality, CCM has
be-come the partner of choice for its customers worldwide while maintaining its
commitment to such corporate values as integ-rity, safety, customer focus, innovation,
talent development, collaboration, and community involvement. Source:
www.nist.gov.retention is a more accurate indicator of customer loyalty than is customer
satisfaction .It is important to understand this point. No one is saying that customer
satisfaction is not important. Customer satis-faction is critical, but it is a means to an end,
not an end in itself. The desired end is customer retention. Organizations should measure
success based on customer retention data rather than on customer satisfaction data. The
issue is not whether customers are satisfied with the organization’s products or services; it
is whether they are satisfied enough to be retained. Satisfied customers will sometimes
defect in spite of their satisfaction, if for no other reason than curi-osity about a competitor
or the everpresent lure of variety. How, then, can an organization go beyond just satisfying
its customers to retaining them? The short answer to this ques-tion is as follows:To retain
customers over the long term, organizations must turn them into partners and proactively
seek their input rather than waiting for and reacting to feedback provided after a problem
has occurred.The following strategies can help organizations go beyond just satisfying
customers to retaining them over the long term. These strategies will help organizations
opera-tionalize the philosophy of turning customers into partners.Be Proactive—Get Out in
Front of Customer ComplaintsBe Proactive—Get Out in Front of Customer Complaints
Many organizations make the mistake of relying solely on feed-back from customers to
identify problems; the most widely used mechanism in this area is the customer complaint
process. Feedback-based processes, although necessary and useful, have three glaring
weaknesses. First, they are activated by problems customers have already experienced.
Even if these problems are solved quickly, the customer who complains has already had a
negative experience with the organization. Such experiences are typically remembered—
even if only subcon