February 26, 2014

Pharmacies, Cigarettes…and Radio?

Last month, Jon Coleman wrote on article entitled “Misreading PPM and What Drives Ratings.”  In it, he talked about the tension between in-the-moment performance and brand value.  Jon expressed concern that radio programmers and management are sometimes so overly focused on preventing in-the-moment tune-out that they don’t do the big bold things that drive loyalty (and regular tune-in) to the brand.  Sometimes the very things that cause short-term pain result in long-term gain.

We have been talking with our clients about this “in-the-moment/brand” tension for many years, particularly since the advent of PPM, and we have drawn parallels to industries outside of radio.  A few weeks ago, another great example made the news:  CVS/pharmacy will stop selling cigarettes and tobacco products in its more than 7,600 U.S. stores.

Short-term pain?  Yes.  It is estimated that CVS/pharmacy will lose $2 billion annually from tobacco shoppers.

Long-term gain?  I’d bet on it.  While there is certainly a moral case to be made for this move, the company is surely also hoping that the change sends a strong positive message to consumers about the CVS/pharmacy brand.  In explaining the move, it says:

“The sale of tobacco products is inconsistent with our purpose – helping people on their path to better health…By removing tobacco products from our retail shelves; we will better serve our patients, clients and health care providers while positioning CVS Caremark for future growth as a health care company.  Cigarettes and tobacco products have no place in a setting where health care is delivered.  This is the right thing to do.”

It’s the right thing to do, and it’s the right thing to do for business.  Short-term pain, long-term gain.  Is there a lesson for your station to take away from this?

2 thoughts on “Pharmacies, Cigarettes…and Radio?”

  1. Steve King

    Sorry to tell you, but comparison of CVS and radio is a bit incorrect. CVS’ altruists/loyalty efforts aren’t what they seem. They are getting a Governent subsidie for canceling their tobacco contracts. I sincerely doubt that radio stations are going to get kick backs from Uncle Sam.

    1. Jason Klein

      Agreed, my friend. However, to the point of the article, the stock market is a better reference for radio. Playing the short game is not a good strategy for long term success.

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