Blog | Greg Straface February 15th, 2017

CVS Health: From Drugstore to Healthcare Company

I recently attended a Boston AdClub event where I had the opportunity to listen to Norman de Greve, Chief Marketing Officer of CVS Health. He told the story of how then CVS Caremark made its shift from pharmacy marketer to healthcare company. This branding change was no easy task, but it had monumental impact on its brand, organization and consumers.

Prior to its branding change, CVS was just another drugstore marketer selling a range of items from soft drinks and makeup to pharmaceuticals and detergents, battling it out with the likes of Rite Aid, Walgreens and Duane Read. Over the course of time, though, CVS made some significant investments that initiated a shift to becoming a healthcare-focused company that included acquisitions.

In 2006 CVS acquired Minute Clinic, a network of walk-in medical clinics that are today located inside CVS locations and staffed by nurse practitioners and physician assistants who specialize in family healthcare. This specialty staff is trained to diagnose, treat and write prescriptions for common family illnesses such as strep throat and ear, eye, sinus, bladder and bronchial infections. Later the same year CVS merged with Caremark, a pharmacy benefits manager that would transform CVS from being primarily a retailer to becoming the nation’s leading manager of pharmacy benefits. With these early investments, CVS was starting its transformation to become a healthcare company.

On top of its major investments in MInuteClinic and Caremark, in September 2014 CVS made perhaps its boldest move ever, announcing they would be the first retail pharmacy to remove all tobacco from their stores. This was not an easy decision as the company was sacrificing approximately $2 billion in annual revenue from the sale of cigarettes. Yet CVS took this decision based not only on how much it cares about and values its customers, but also because of the organization’s renewed focus on being a healthcare company being front and center.

As Larry Merlo, President and CEO, communicated in a press release shortly after the announcement, "Ending the sale of cigarettes and tobacco products at CVS is the right thing for us to do for our customers and our company to help people on their path to better health. Put simply, the sale of tobacco products is inconsistent with our purpose." Merlo continued, "As the delivery of health care evolves with an emphasis on better health outcomes, reducing chronic disease and controlling costs, CVS Caremark is playing an expanded role in providing care through our pharmacists and nurse practitioners. The significant action we're taking today by removing tobacco products from our retail shelves further distinguishes us in how we are serving our patients, clients and health care providers and better positions us for continued growth in the evolving health care marketplace.”

Removing tobacco was a risky move for CVS as a brand and for the overall company. Over the years, many brands have taken seeming leaps of faith around brand change and adjustments that have backfired badly. Companies like Coca-Cola introducing its reformulated Coca-Cola, probably the most famous and biggest risk a consumer brand ever took, sparked some of the biggest angst from consumers a brand has ever seen. More recently, Tropicana changed their packaging, not realizing the backlash that its customers would have and how attached they were to their old design. With CVS, the risk could have prompted a monumental revenue loss. Yet as a new generation of more health-conscious consumers has evolved, the move was embraced by consumers and partners alike, and the risk CVS took to help people on their path to better health paid off.

As part of its shift from a pharmacy to healthcare organization, CVS also changed its name to CVS Health. This was to communicate its dedication, focus and commitment to providing better health to consumers. Additionally, as part of their rebranding and marketing efforts, CVS not only deployed an outward-facing campaign through a range of channels, including broadcast, social, and experiential, it also clearly had communicated the brand’s voice to its employees. This is a critical step toward having one organizational voice in the market.

As results go, between rebranding and removal of tobacco from retail, CVS saw a range of results. To begin with, 40% more influencers saw it as a leader in helping to improve overall health in 2015 compared with 2014. The company entered Fortune's Most, Admired Companies list at #27, and at No. 3 on Fast Company's Most Innovative Companies list. In addition, more than 600,000 people visited CVS's smoking cessation hub and 260,000 smokers sought advice from its pharmacy on quitting smoking. Finally, President Barack Obama applauded the initiative to remove tobacco from its stores noting “As one of the largest retailers and pharmacies in America, CVS sets a powerful example, and today’s decision will help advance my administration’s efforts to reduce tobacco-related deaths, cancer and heart disease, as well as bring down health care costs – ultimately saving lives and protecting untold numbers of families from pain and heartbreak for years to come.”

So, what can brands take away from CVS Health, its shift in the market and its branding evolution?

1. Live your values and take bold action. CVS made a bold decision to become a leading healthcare company and they needed to remove the biggest obstacle to their success – tobacco.

2. Show your customers you care. CVS initiated a range of programs to help customers take action to quit smoking, and the results showed.

3. Be different. If you’re going to stand out from your competitors, you need to make a bold statement. CVS couldn’t have made a bigger statement than giving up $2 billion in revenue.

4. Stand for your brand. You need to stand firmly behind what you believe in. If you do, your customer and partners will stand with you. In this case, having the President standing behind CVS was a huge success.

If you’re interested in learning more about how an agency like PJA Advertising and Marketing can help your organization brand for change like CVS Health, feel free to reach out to our team.

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