Huffpost Business

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Mark R. Kennedy Headshot

CVS Dropping Tobacco Can Benefit Both Its Bottom Line and Society

Posted: Updated:

GSPM Strategic Public Affairs Program Director Larry Parnell co-authored this piece

Society continues to place ever-higher standards of conduct upon corporations. Companies have also started to demand more of themselves and set the tone for others. CVS Caremark's decision to eliminate tobacco from its shelves is an example of just such behavior.

The well-executed move will benefit the company's bottom line as it broadens its appeal to consumers and begins to present itself as a health care provider rather than just a drugstore. Increased consumer expectations will put pressure on its competitors. Doing so also advances CVS Caremark's purpose to "help people on their path to better health."

As I introduced in my recent article in the Strategy and Leadership journal, Shapeholders, the political, regulatory, media, and activist agents in a firm's operating environment increasingly shape, constrain, or expand a firm's opportunities. Effective Shapeholder engagement is key to sustained commercial success. CVS understands that an essential first step is to be authentic. How can you be an authentic health care provider and sell tobacco?

This decision did not come lightly to CVS. It is foregoing $2 billion in sales. In order to make this pay off in the end, ot must communicate its action effectively with a wide range of actors.

In announcing this bold initiative, CVS had to consider many factors and the reactions of many key audiences. It had to make a strong case that this was a carefully considered, strategic decision.

Beyond justifying the short-term hit to revenue -- 2 percent of 2012 total sales (approximately $100 billion) -- it had to provide context for the decision; make a believable business case to support it and roll the news out to their internal and external audiences -- each of whom will be impacted by the change in course. Poor planning and execution of any of these steps would have lessened the positive impact and called the whole move into question. In short, a comprehensive, strategic public relations plan was required -- one that simultaneously addressed all of CVS's key audiences in a systematic and thoughtful manner.

It is a tall order to be sure, but one that the company handled very well. While we are not privy to the internal moves made to brief employees at the corporate and store levels, we can say from the externally available results that this was a huge communications success.

The company's communications team sought to get the message out through traditional and social media channels. At the start of the day's news cycle, CVS CEO Larry Merlo appeared on CBS News' This Morning, a popular morning news show looking for profile raising items. CVS made sure to share their plans with the White House, which issued a congratulatory message. The communications team set up a social media presence as well, including the hashtag #CVSquits, to share the news and engage with customers. On Facebook, the announcement was shared more than 150,000 times and "liked" by over 350,000 people. Taking a full spectrum approach allowed CVS's communications team to carry the day.

The importance of CVS's decision and its comprehensive communications strategy cannot be understated.

There are many that relish holding up examples of corporate greed and fraud to suggest that capitalism is broken and business must be increasingly constrained in what they are allowed to do. CVS's voluntary decision to stop selling an unhealthy product tells a different story, one of enlightened enterprises finding a route to commercial success by raising the bar for corporate responsibility. This win-win path leaves us all better off and should be both applauded and encouraged.

Hon. Mark R. Kennedy (@HonMarkKennedy) leads George Washington University's Graduate School of Political Management and is Chairman of the Economic Club of Minnesota. He previously served three terms in the U.S. House of Representatives and was Senior Vice President and Treasurer of Federated Department Stores (now Macy's).

Larry Parnell (@gwprmasters) is an Associate Professor and Program Director for the Masters in Strategic Public Relations at The George Washington University Graduate School of Political Management. Prior to coming to GW, Mr. Parnell was a senior corporate, political, and governmental communications executive.