Many of you already know that I am a graduate student at Georgetown. As a blog post this week, I am sharing with you a report I recently collaborated on with two other students. It’s about JUUL, a very successful line of vape pens. When we had to select a topic for this project, I proposed this company because I have teenagers! I was concerned about how often I have noticed vaping repeatedly mentioned in their various spheres of influence.
This paper took a couple of months to complete and includes a lot of facts. You may shudder and think it’s going to be boring, because we all know that facts can be boring, lol. But if you take the time to look through it, the subject is really interesting. And it is a subject that is relevant to anybody from about age 12 and up.
Project Title: A Comprehensive Framework to Address Reputational Crisis
The various crises in which JUUL is embroiled are a source of rapid change within the company and its business landscape. In the time we have been working on this project, changing developments have of necessity led to multiple updates and re-writes in order to provide current information. Accordingly, facts in this report are current as of December 10, 2019.
The early stages of JUUL date back more than a decade when two tech entrepreneurs, James Monsees and Adam Bowen, founded a “vaporizer” product they coined to become the “rationale future of smoking” (Brodwin, 2019). Sparked by raising nearly $1 million in venture capital, the company’s original branding, “Ploom,” had arrived in the tech entrepreneur capital of the U.S. – the San Francisco Bay Area (Brodwin, 2019). Fast-forward to 2017, the company experienced catalytic growth and venture capital investment, leading to year-over-year sales increases in the triple digits. The company’s value skyrocketed in 2016 after formally launching “JUUL” the year prior, with sales increasing by 700% over the previous year (Brodwin, 2019). JUUL has historically thrived on marketing its product to young people, who were ultimately the driver of their market dominance and multibillion-dollar valuation. In fact, it wasn’t long before JUUL became one of the highest-valued startups in the world (CB Insights, 2019).
Twelve years after its initial venture capital success and its peak valuation of nearly $40 billion, the company is facing dire reputational and financial crises. A new Time feature scathingly notes: “To a remarkable degree, a single company is front and center in one of the biggest public health crises facing the country: the sharp rise in vaping among teenagers and young adults.” (Brodwin, 2019; Ducharme & Li, 2019).
Situation Analysis: Current Reputational Crisis
JUUL and competitor brands have been at the center of the nation’s vaping health crisis, which has claimed at least two dozen lives (to date) in lung-related illnesses and prompted urgent action from the CDC, FDA, state and regional health providers (Walley, et al., 2019; Statt, 2019; CDC, 2019). Even prior to what is becoming one of the most prominent public health crises in recent memory, the vaping industry has demonstrated poor reputation of catering its marketing efforts to young people. An egregious number of high school and middle school students have tried vaping products, with half of middle school-aged students reporting having tried vaping at least once, and more than 12% of high school students reporting they’ve vaped for at least a 30-day period in their lifetime (MMWR & CDC, 2018).
Teens and young people appear the most vulnerable to a newly identified illness linked to the product, “EVALI” (An acronym for vaping-associated illness), which researchers have determined is caused (at least in part) by Vitamin E acetate as a driver for many vaping-related illnesses (Raven, 2019). However, research remains inconclusive, and other chemicals may also be contributing to the existing public health vaping crisis responsible for making thousands of Americans sick and leading to a number of fatalities (Raven, 2019). It is also unclear if JUUL’s products include this ingredient, potentially serving as an opportunity for JUUL to distance itself from the vaping crisis.
JUUL must take action to better educate its consumers on associated health risks and be proactive to ensure their products are reserved exclusively for adults 21 years and older. The company has already demonstrated it takes this matter seriously by prominently featuring a “youth prevention” strategy on its website, though more action can be taken to align the brand in a proactive response to the nation’s vaping crisis (JUUL Labs, 2019).
Why Consultants Are Required for JUUL?
Consultants bring a level of objectivity that often cannot be found within internal organizational teams. JUUL can benefit from the utilization of outside consultants to determine the best way to position the company to serve appropriately informed, adult consumers, much as adult beverage manufacturers and distributors do so seriously. Additionally, on the heels of a PR crisis amidst the vape industry’s booming success outside consultants can help the organization address communications, advertising, and public relations strategies that can shift the business narrative – while relaying messages to informed consumers.
C-Suite Shakeup at JUUL
JUUL has experienced dramatic changes in the last couple of months in its C-suite. In December 2018, tobacco giant Altria, invested $12.8 billion in JUUL. Altria took a 35% stake in the e-cigarette maker that valued it at $38 billion, as Altria begin to adjust its company focus to rely less on traditional cigarettes. (LaVito, 2018). In September 2019, JUUL CEO Kevin Burns announced his resignation. As point man for the company, the mounting woes of the business undoubtedly landed at his feet — but with former Altria executive K.C. Crosthwaite immediately stepping in to replace him, it seems clear the tobacco giant was holding the door open for Burns to leave. With its own man in place, Altria can more aggressively try to salvage its significant stake in the e-cig maker.
Several other top executives have also left the company, including Chief Administrative Officer Ashley Gould, Chief Financial Officer Tim Danaher, Chief Marketing Officer Craig Brommers, and Senior Vice-President of Advanced Technologies, David Foster, are also gone from JUUL.
“We would not be where we are as a company today without the extraordinary efforts of a few individuals who have asked to transition out of the company. I want to make sure to specifically thank each of them,” Crosthwaite, a former Altria executive, said in an email sent to employees.
JUUL appointed Guy Cartwright as its new CFO, a JUUL spokesman confirmed to CNBC. Cartwright joined the company in July as transformation and operations officer, according to his LinkedIn profile.
JUUL has eliminated the chief marketing officer position, according to the spokesman. It was not immediately clear whether JUUL would fill Gould’s and Foster’s positions. Co-founders James Monsees and Adam Bowen, who formerly held the positions of chief product officer and chief technology officer, respectively, will join a newly formed founders’ office, where they will advise Crosthwaite.
In the past year, San Francisco-based JUUL Labs has rapidly overtaken the U.S. e-cigarette market. Sales have skyrocketed nearly 800%, helping JUUL capture a 71% share of the market, according to Nielsen data. JUUL’s rise has attracted venture funds and given it a stunning $15 billion valuation. Other reports indicate JUUL is now reportedly holding nearly 75% of the market share in the US e-cigarette market. (Technavio, 2019).
JUUL was formed as a result of a spin-off from PAX Labs in 2017. JUUL is a private company—its shares are not publicly traded. The company made headlines in the summer of 2018 by amassing enough investor interest to become the fastest ever decacorn, or a private company with over a $10 billion valuation. Later in 2018, JUUL more than doubled its private valuation from $16 billion to $38 billion as a result of a $12.8 billion investment from Altria (NYSE: MO). But this explosive growth has drawn scrutiny. The company faces lawsuits and increasing FDA regulation, together which threaten its future.
Large investors are now looking to dump positions in JUUL, which lost more than 1/3 of its private market value, Philanthropies typically ask funds not to back companies that promote tobacco, firearms, or other things that could be considered vices. The philanthropic Lyndhurst Foundation, hedge fund Tiger Global Management, a hedge fund, and philanthropist Hillman Foundation are major private shareholders. The latter supports a cancer center bearing its name in Pittsburgh, and the Community Foundation of Greater Chattanooga. A spokesman for Chattanooga’s Community Foundation, says board members are “actively discussing” the JUUL holding after learning about it from Bloomberg. He declined to comment further. (Chapman, 2019). This is the type of negative rumbling these three organizations are dealing with as a result of the legal and regulatory struggles facing JUUL.
JUUL is held in large institutional portfolios. For example, JUUL was in the Fidelity’s fund top 10 holdings at the end of July, sandwiched between Visa Inc (V.N) and Salesforce.com Inc (CRM.N). (Kerber, 2019). JUUL stake has become risky but managers may be tempted by the chance to deliver outsize returns to help beat their benchmark and rival index funds. This is an example of how people do not own individual shares in JUUL, but may unwittingly have 401k and various mutual funds invested in the company.
Tobacco giant Altria (NYSE:MO) is trying to salvage whatever value remains in its $13 billion investment in JUUL Lab. The serious downturn of JUUL was a contributing reason Philip Morris International decided to back out of negotiations to merge with Altria. (Duprey, 2019).
JUUL projects its 2019 global sales at $3.4 billion, according to the Wall Street Journal. In the same article, JUUL reportedly started an IPO process before the Altria funding. The IPO process comes with intensive regulatory oversight. The FDA has been concerned with an uptick in teenage nicotine use and has even considered banning devices like JUUL’s outright if such usage increases. For an IPO to be at all possible, JUUL will need to demonstrate to investors it can maintain its brand position while balancing the concerns of regulators. Although there has been no causal relationship linking the rising incidence of lung illness and a dozen deaths to vaping, something the Food & Drug Administration itself acknowledges, it was the agency’s public solicitation for any illness related to vaping, no matter how tangential, that caused the number of reports to spike.
Attempting reorganization, JUUL intends to eliminate about 650 jobs, or about 15% of its total head count, by the end of the year. (LaVito, 2019). Before the cuts, JUUL had about 4,100 employees. (Setty, 2019). It is slashing a billion dollars in costs. This is part of a broader reorganization plan aimed at repairing the company’s relationship with regulators. JUUL will also cut its marketing budget and invest in ways to limit underage vaping.
Core Problems and Consulting Strategy
Problem / Opportunity #1: Addressing JUUL’s Marketing and Social Media Practices – Retargeting to Rebuild
Advertising and marketing are key drivers of the sales funnel, often placing brands right in the hands and/or at the fingertips of their idea consumer. Increased technology and consumer data have allowed companies to hyper-target their key publics and ensure their messaging is both delivered and digested by their core audiences.
For these reasons, e-cigarette company JUUL Labs Inc. spent over $100M on advertising both in broadcast, print, and online in the first half of 2019 – running over 10K advertisements on broadcast television alone. (Oster, 2019) Like other e-cigarette companies, JUUL circumvented the laws that make it illegal to run advertisements for cigarettes, due to associated risk, placing advertisements that spotlighted young adults. Its advertisements made JUULing look both safe and cool; playing into the longstanding admiration that teens have for big brother and sister figures. (Oster, 2019)
Amidst recent investigations and congressional hearings, reports have revealed that JUUL spent $200K on influencer marketing through their former brand ambassador program – curating campaigns that engaged “age appropriate” influencers whose audiences, however, were not, with some audiences as young as 13 years-old. (Woods, 2019) Additionally, the company’s Instagram account which boasted over a quarter million followers often re-shared user generated content from teens – later stating that they were “unaware of users ages” and had they known they wouldn’t have re-shared their content, as it’s against their social media policy.
JUUL simultaneously built an affiliate program that the company claims weren’t geared towards teens. However, the program provided discount codes and rewards to those who referred friends and redeemed special offers via social media, naturally appealing to teen smokers who make up 3.6 million that use e-cigarettes. (Chaykowski, 2019) The company’s full-page advertisements in publications like Vice,“the #1 youth media company,” further escalated consumer concern over its marketing mis-management, deceitful practices, and organizational ethics.
With teen illnesses in the hundreds and over 18 deaths as a result of JUULing, the CDC, FDA, Congress, and the world are wondering why JUUL advertised their product as “totally safe,” especially to such a vulnerable audience. Still under fire and with plans to cut $1B in its marketing budget, the company has the opportunity to develop a new approach to digital media, social media, and advertising that’s data-driven, research-backed, and honest in every way. (Valinsky, 2019)
Solution (includes strategies, tactics, and cost)
A 2019 Forbes article stated, “Reputations aren’t built (rebuilt) overnight. They are built through consistent and memorable impressions.”
JUUL’s newfound approach to marketing should incorporate an executive visibility campaign, revitalized social media strategy and a brand lift marketing campaign to transform public perceptions through authentic, honest, and consistent touchpoints. Although new CEO K.C. Crosthwaite has worked in the tobacco industry for over 20-years he should be presented as a knowledgeable and responsible voice. Through the development of a robust Twitter and LinkedIn presence, JUUL can support K.C. in producing a Q&A video series where he is forthcoming and open about the many changes JUUL is undergoing and the new steps they are taking under his leadership. This video content series will provide an opportunity for K.C. to speak on company goals, health reports, responsible use, and share news on community partnerships to reach their adult target audience; also generating more positive and neutral media coverage. K.C.’s executive strategy should also include media assets and content that allows audiences to get to know him personally, as a relatable consumer, parent, and health-conscious individual. K.C’s visibility efforts should also place him at the center of community listening sessions and standing behind CSR initiatives that align with the company mission. (Davis, 2018)
While JUUL has shut down its social channels across platforms, they can be used as a powerful tool to share new brand messaging and livery with consumers to rebuild trust. Through social media campaigns “JUUL Responsibly” and “#JUULCanTrustUs” – the company can showcase new livery with images of adult consumers in business suits, family settings, vacations, bars, and within adult settings using #JUULResponsibly. #JUULCanTrust us acknowledges the obvious and provides consumers with brutally honest information about their product, its purpose, health risk, health and lifestyle benefits and reasons to believe – making all information readily accessible and in your face.
A research-based and targeted social media approach can allow JUUL to use society’s biggest marketing asset and still stay in line with a tighter budget. With Facebook use skewing higher amongst adults over 30 years-old and adoption rates continuing to fall for teens, re-establishing their platform on this network could prove beneficial. Complementary to this, LinkedIn use is highest amongst adults 25-49, also making it a good choice for social engagement and reaching a key “business professional” audience for the company. (Marketing Charts, 2019) Relaunching the company pages on these platforms will allow JUUL to create content, engage in new and valuable conversations and curate a culture of transparency that showcases its refreshed branding and messaging while touching the right consumers.
In lieu of the budget cuts in JUUL’s marketing, many of their marketing solutions can produce sustainable results without a comprehensive media budget – specifically targeted towards digital advertising and platforms. To activate each of these campaigns, JUUL should align with an outside agency to provide a fresh and objective approach to marketing and messaging. A scope of work for a digital marketing agency to lead strategy development, produce creative, and manage these assets would start at $100K. In addition to this, JUUL should hire a media agency to support both the executive and company social revamp with paid support behind online content and post which could also begin at $18K. The company will also need to allocate at least $500K for its ad spend over a 6-month time period. JUUL should allocate at least $2M to sustain digital marketing efforts, as these campaigns will need to continue overtime and evolve as public engagement and trust increases.
ROI should be measured in increments of 6-months through social listening tools like Hootsuite or Agorapusle, reviewing brand mentions, sentiment, engagement, and use of campaign hashtags. Media monitoring tools like Cision can support reviewing public perception and shifts in brand news coverage (digital, print, and broadcast). Monitoring sentiment, volume, and increased reach of K.C. Crosthwaite’s social account, chatter and media mentions can prove how effective executive communications tactics are working to increase trust and generate positive press. Analyzing demographic data of those engaging with content on JUUL’s reinstated social accounts can also provide valuable information about audience targeting and provide quality control to ensure the brand is reaching its intended audience.
Problem / Opportunity #2: Implementing Comprehensive Crisis Response Strategy through SCCT and Vaping Cessation Co-Branded Campaign
Crisis Response to date: JUUL’s Response
The company has taken action to being lambasted for marketing its product to young people, twice in recent weeks releasing landmark changes to how JUUL products would be marketed. This also resulted in suspending all broadcast, print and digital advertising in the U.S.; in addition to the suspension of all non-tobacco, non-menthol-based flavor (Mango, Crème, Fruit, Cucumber) products (JUUL Labs, 2019). Strategies for addressing marketing, advertising and social media practices were addressed in the previous section of this report.
In rapid-response to data released on the 2019 National Youth Tobacco Survey (NYTS) in early November 2019, JUUL took further action by ceasing the sale of mint JUULpods (JUUL Labs, 2019). The NYTS released the most shocking data on teen vaping use to date, finding 5 million youth currently use e-cigarettes and more than 1.6 million use the product frequently (U.S. Food and Drug Administration, 2019). Hence, the company has taken action that appropriates a form of accountability and/or responsibility, though they have lagged behind in communications or building action around a strategic reputational rebuild.
Forms of crisis response: (Austin & Jin, 2018):
- Denial – Attack the accuser and deny responsibility for the crisis at hand.
- Diminish – Minimize organizational responsibility by denying the intention to do harm.
- Rebuild – Accountability, public apologies, compensatory action (financial, material, other forms of acknowledging organizational responsibility).
- Bolstering – reminding stakeholders of organizational success/positive impact, praise key stakeholder for support during reputational crisis, “victimage” – positioning the organization as victim of an existing crisis.
Additionally, new research has evaluated the relationship of corporate social responsibility in mitigating the impact of crisis attribution and responsibility, even when the nature of crisis is immediate and pervasive (Chang-Dae & Kim, 2019). JUUL can work toward mitigating its reputational threat through developing comprehensive social responsibility programming with a goal of eradicating vaping in U.S. adults under age 21.
Proposed Solution #2: With the principles of situational crisis communications theory and reputational rebuild in mind: Forge Nationally-branded Partnership(s) to develop a comprehensive vaping cessation campaign in middle schools, high schools and Universities in the nation’s 10 most prevalent vaping markets. There is no doubt this age demographic is the highest utilizers of vaping, and also the most adversely impacted in terms of health consequences and vulnerability to addiction.
Target Audience: U.S. students and young adults ages 13 – 20. (Middle school students, high school students, college students under 21) in 10 most prevalent vaping markets (Galvin, 2019).
Objective: Develop educational tools, resources and a vaping cessation campaign strategy that educates at least 5 million U.S. students on the dangers of vaping by December 2020. This number isn’t coincidental, as it also marks a commensurate total of U.S. young people who currently vape (U.S. Food and Drug Administration, 2019).
Strategy: Launch nationally-relevant vaping cessation campaign: “From 5 Million to None.”
Tactic 1: Forge nationally-relevant co-branded strategic partnerships to launch campaign effective January 2020.
- Develop strategic public opinion partnership with Gallup Education (Gallup, n.d.)
- Tobacco Free vaping cessation resources (Tobacco Free Kids, n.d.).
- American Lung Association “helping teens quit.” (American Lung Association, n.d.)
Tactic 2: Pilot 90-day comprehensive vaping cessation campaign in partnership with public schools and university systems, “From 5 Million to None,” in the nation’s 10 most prevalent vaping markets by state (Galvin, 2019)
Key: (high school vape %; young adult vape % ages 18-24. Data rounded to nearest half integer) (Galvin, 2019)
Calculating students vulnerable to “high risk” vaping exposure (grades 7-12): Aggregate total of K-12 (13 grade levels) student population x 6/13 (.46). For the purposes of this analysis, aggregate totals of the student body by state were pulled from 2020 estimates on the National Center for Education Statistics database. These students then would be introduced to the #5MilliontoNone campaign implemented by contract-based public health professionals trained as “Campaign Implementation Managers” to execute 6-month contracts (NCES, 2013).
Estimated Student Reach for #5MillionToNone
Public School students
|Aggregate Estimated Student Reach (.46)||Statewide Campaign Implementation Manages required|
Campaign Implementation Managers and Resources (Determined by State Student Population – 6-month Contract):
< 250,000 Students: 1 statewide campaign and training director
250,000 – 500,000 Students: 2 statewide campaign and training directors
500,000 – 750,000 Students: 3-4 campaign and training directors by region
750,000+: 5 campaign and training directors
College/University Engagement Managers (6-month Contract):
Under 50,000 students enrolled in public community college or university system: 2 campaign and training directors
51,000 – 100,000: 1 campaign and training directors
101,000-200,000: 2 campaign and training directors
200,001 +: 3 campaign and training directors
Campaign Training Directors Required: 23
Community Colleges / Universities by state:
- Arkansas: Approximately 108,500 Undergraduate Students (Herzog, 2018)
- Colorado: Approximately 252,000 Undergraduate Students (Colorado Department of Higher Education, 2015)
- Indiana: Approximately 250,000 Undergraduate Students (Ballotpedia, n.d.)
- Kentucky: Approximately 244,000 Undergraduate Students (Kentucky Council on Postsecondary Education, 2016)
- Nevada: Approximately 64,000 students (Ballotpedia, n.d.)
- Ohio: Approximately 328,000 students (Ohio Department of Higher Education, 2017)
- Oklahoma: Approximately 222,000 Students (Oklahoma Department of Higher Education, 2017)
- Tennessee: Approximately 222,000 students (Tennessee Higher Education Commission, 2018).
- West Virginia: Approximately 64,000 students (West Virginia Higher Education Policy Commission, 2016)
- Wyoming: Approximately 25,000 students (Ballotpedia, n.)
Aggregate total college students (Approximate Value): 1,779,500
Anticipated Students Impacted
Middle School/High School Students (3,833,182) + 1,779,500 = 5,612,682
- Education materials development: $500,000
- Campaign Implementation, logistics, execution: $2,000,000
- Public Opinion partnership (Research Design, Data Validation, Report): $1,000,000
- Project-based employment for 46 campaign training directors ($50,000/director): $2,300,000
- Training costs associated with project-based employees to public school and university systems: $5,000,000
Net Total Costs: $10,800,000
- Partner with public opinion research or polling entity (e.g., Gallup) to track sentiment for students and young people ages 13-20 on the perception of vaping pre and post 90-day educational programming, along with one-year follow-up).
- Monitor JUUL valuation during campaign and post campaign (90 days each) against drop in valuation during reputational crisis (Fall 2019).
- Track earned media, coverage volume and media sentiment pre-campaign, during campaign and post campaign to measure whether social responsibility has positively impacted public perception.
- Based on post campaign assessment, determine the feasibility to roll-out campaign across forty remaining U.S. states.
NET ROI: Protecting JUUL’s reputational asset can prove invaluable for the brand, though the pervasiveness of the crisis makes it clear that measuring Net ROI on crisis response strategies/tactics prove difficult to measure. Crisis management and protecting reputational assets can prove invaluable for the brand. Evidence suggests that the public health crisis has damaged the company in myriad ways, resulting in a multi-billion loss of valuation. At this juncture, JUUL’s ROI would be to measure its social responsibility efforts in real-time against valuation metrics as of the drafting of this plan ($24 billion as of October) (Ducharme, 2019). The company would need to identify a baseline valuation and address its financial implications head-on, which will be evaluated in Problem/Opportunity #3.
ROI Formula [Reputational Assets (sentiment analysis – positive/negative press change +/-) + Valuation] – % change in valuation over 6-month period compared to company’s reputational crisis of fall 2019.
Problem / Opportunity #3: JUUL cannot successfully complete mandated SEC filings and find IPO underwriters while under siege by new lawsuit filings and ever increasing regulatory scrutiny. Without the potential to develop an IPO, JUUL will potentially become financially stagnant.
Proposed Solution #3. There are alternatives for companies that are looking for some of the benefits of an IPO, but feel an IPO is not their best move at present.
Target Audience: Adults (ages 30 to 75) who comprise potential interested parties in joint ventures, strategic alliances, private placements, reverse IPO, or other arrangements for additional capital.
Objective: Seek to implement an IPO alternative by December 2020.
Strategy: Identify IPO alternatives that best fit with the complicated legal and regulatory landscape in which JUUL must currently operate.
Any IPO alternative would undoubtedly require the agreement of Atria, which currently holds approximately a 35% stake in JUUL. Altria Group devalued its investment in JUUL by $4.5 billion, a move that reflects deepening turmoil in the e-cigarette industry. (Robertson, 2019). Potential IPO alternatives include:
- Joint ventures: A joint venture (JV) is formed when two companies agree to share resources to accomplish a particular task. The JV is a separate entity from the participants’ other businesses. Both parties agree to share all JV related profits, losses, assets, liabilities, and costs.
- Strategic alliances: A strategic alliance is two entities working toward a common goal, but there is no separate entity formed. The collaboration between the two companies may be less structured or less permanent than in a JV.
- Private placements: Private placement is the sale of equity or debt to a small number of private investors. It is similar to an IPO in selling shares to individuals outside of the company. But, it involves fewer people, is not subject to the same SEC regulation as a public offering, and can be structured as equity or debt. Private placement requires less effort, costs less money, and is quicker than an IPO,
- Reverse IPO: A reverse IPO is when a private company acquires a public company, or is acquired by a public-shell company; as such the private company becomes a public company without a traditional IPO. A reverse merger enables a private company to gain access to the stock market and to raise capital by selling public shares.
- Minor equity sales to acquire capital: Some firms make strategic investments in up-and-coming companies but do not want to own a controlling share in their investments. Firms looking for less than controlling shares are an opportunity for JUUL to raise additional capital by selling equity.
Tactic 1: Invite identifies interested parties to take part in a private placement offering of JUUL equity securities.
Tactic 2: Pitch a deal to a private equity firm to spread risk and demonstrate to the SEC that JUUL is a solid long-term entity.
Anticipated Costs: Costs are primarily research, legal preparation and future percentages in JUUL revenues.
JUUL will require multiple research studies to explore these various options. “Quantitative studies fielded in the U.S. usually cost between $15,000 and $35,000 for consumer research.” (Vernon, 2019). At $35,000 each, multiplied by 5 research studies per tactic, equals $175,000 per tactic, and $350,000 for both tactics. $500,000 should be allocated for overruns.
Jerry Masoudi is Chief Legal Officer for JUUL. He has 25 years of experience practicing law in major firms, in-house, and in the federal government. Masoud was Chief Counsel of the FDA and as the General Counsel of Celgene Corporation. (JUUL, 2019). He is located in the JUUL Washington, DC office, which is advantageous when dealing with legislative issues and regulatory matters. Despite having a full legal department, JUUL will need attorneys to handle court related issues in all states where legal proceedings are brought against the company. High-end legal representation is not cheap, and JUUL needs the best they can get. They will have to allocate $10,000,000 for outside legal fees at least to start, with the awareness that more could ultimately be required. This figure does not include the cost of any legal settlements that may result.
ROI: The ROI is a smoother path toward an IPO IN 3 – 5 years, achieved through positive publicity and improved credibility, and increase liquidity to assist with legal challenges and preparation of necessary filings.
ROI for JUUL is multi-prong. There will be a sales goal, reputational objectives, and a net promoter score. Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and is claimed to be correlated with revenue growth. “NPS has been widely adopted with more than two thirds of Fortune 1000 companies using the metric.” (Wikipedia, 2019).
The Net Promoter Score is calculated based on responses to a single question: How likely is it that you would recommend our company/product/service to a friend or colleague? The scoring for this answer is most often based on a 0 to 10 scale. (Windels, 2016). Net Promoter Score (NPS) measures the loyalty that exists between a company and its customers. NPS can be as low as -100 or as high as +100.
A positive score means the company has more promoters willing to recommend it than detractors. -100 means that every one of your customers is a detractor. On the other end of the spectrum, +100 means that everybody is a promoter. (Yan, 2019). NPS is an indication of a company’s health and whether it is improving or declining. JUUL has no published NPS score. Given all of its negative publicity and proliferation of lawsuits, it seems safe to say that the NPS score for JUUL is currently not favorable. It should strive for a score of +25 and then hopefully be able to build up from there.
JUUL’s reputational crisis is clearly one of the most significant of our time. Without immediate action across the three recommended problem/opportunity strategies advanced in this strategic consulting plan, JUUL could be en route to financial and brand collapse. It must infuse immediate reputational rebuild strategies, and leverage the power and pervasiveness of digital media rather than distancing itself from a crisis that has permeated the psyche of our nation and beyond. There is perhaps no greater threat to organizational sustainability than its financial threats to funding and valuation, as outlined in detail within problem/opportunity #3.
Ultimately, none of these three actions taken independently would be sufficient to sustain JUUL’s existence. The time for action is now, and the strategic consultants involved in crafting this plan have determined that all actions – in aggregate – must be approached with urgency and decisiveness. JUUL must navigate the turbulent times the company is facing by implementing strategic decision making to handle shorter-term crises and longer-term goals.
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