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Customer-obsessed marketing

As CVS Goes Post-Digital, Walgreens Reverts to Pre-Digital

Jim Nail
Principal Analyst
December 18, 2017

For a case study on how marketing must break from past practices, one needn’t look further than two recent announcements, one from CVS and the other from Walgreens. One company is pushing the boundaries of retail healthcare; the other is looking back a century for its marketing ideas.

In this report, my colleague Shar VanBoskirk and I describe how past marketing practices are failing. We urge brands to become post-digital, where a brand’s central goal is to find and solve a problem the consumer faces, not merely create messaging or acquire new customers. We further propose that marketers could lead this transformation by breaking the old mass-marketing mindset and instead build a brand that is human, helpful, and handy.

CVS has been building a helpful brand since 2000, when it launched its first MinuteClinic to reflect its purpose statement of “helping people on their path to better health.” In 2014, CVS Caremark rebranded as CVS Health. Shortly thereafter, and true to its new name, it sacrificed $2 billion in revenue when it stopped selling tobacco products. CVS’ chief medical officer summarizes the decision succinctly:

“We know that tobacco kills 488,000 people a year in the US. How can you sell that kind of thing when you’re supposed to be emphasizing healthcare?”

All of this is background to CVS’s announcement of intent to acquire health insurance firm Aetna. On an investor call discussing the deal, Aetna’s CEO referenced the Genius Bar, Apple’s in-store customer support counter, saying, “I think this is the kind of idea we want to create in the stores.” As my colleague Kate McCarthy points out, CVS must still prove to anti-trust regulators that the merger will deliver this kind of “consumer good” and not simply create a bigger corporate entity. But Aetna’s quote indicates a vision of creating new and more convenient ways to deliver health information, products, and services.

Contrast this with Walgreens. CVS’ largest competitor announced that it is changing its tagline from “at the corner of happy and healthy” to “Walgreens. Trusted since 1901.” Walgreens called it a “multifaceted campaign” that “highlights the importance of care, trust, and accessibility to Walgreens customers.” The decision to evoke brand trust with an ad campaign that touts its heritage is a classic marketing trope, but is out of step with consumers who form their opinions based on brand experiences and are more likely to Google their own condition than ask their pharmacist. While building customer trust is always a laudable goal, basing this on a claim that predates the discovery of penicillin is an odd choice when the firm has more modern evidence of its care and accessibility: its successful connection of in-store and online experiences and a highly-rated mobile app.

What gives? I am forced to conclude that the marketing group is stuck in an outdated marketing mindset that is out of step with Walgreens’ corporate strategy of focusing on the needs of today’s customers. This is not unusual. The time has come for marketers to embrace a new Model for Modern Marketing that my colleague Shar has articulated. Shar, Laura Ramos, Melissa Parrish, and I will debut a new series of reports in early February on the steps marketers must take to break the mindset of traditional mass marketing and even the digital marketing mindset of the past 20 years.

In 1901, Charles Rudolph Walgreen modernized an industry where apprenticeships, rather than university education, were the path to becoming a pharmacist. Rather than hearken back to that time, Walgreens should engage with today’s consumers, touting its digital customer service innovations and approaches to solving consumers’ future health challenges.

P.S. A big thank you to my senior research associate Stephanie Liu for turning the kernel of the idea I had and fleshing it out with great research and a first draft!

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