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A common misperception today is that retailers do not value attitudinal research. Among successful retailers nothing could be further from the truth. The current case study is of a major drug retailer basing the most significant strategic decision in its history on primary market research. CVS/pharmacy purchased a 400+ store chain, Peoples Drug. After renovating all sites and launching a promotional campaign, sales failed to grow at expected levels. A name change to CVS could have jeopardized what few gains had been made. A brand imagery study provided the necessary insight that helped make the name change a successful turning point.
IN 1990 cvs (at the time an 800 store drug chain located primarily in New England) acquired Peoples Drug, a chain of 400+ drug stores in the Washington, DC area.
In the subsequent three years CVS renovated every store in the Peoples chain. With the completion of this effort, a major eight-week promotional event was launched that was referred to internally as the Peoples' Celebration. These store renovations and an aggressive attempt to lift service levels produced only moderate sales results throughout the remainder of 1993.
In addition to lukewarm sales, major inefficiencies related to the operation and marketing of two separate names, CVS and Peoples Drug, were hindering profitability. However, changing the name was a very risky proposition, primarily because Peoples Drug was a 90-year-old "institution" in the DC area--quite literally a household name. Plus, the overabundance of, and distaste for, meaningless acronyms among consumers didn't make matters any better.
The name CVS had no positive associations in this market. Qualitative research revealed two salient top-of-mind associations among core customers--PMS and FDS. In addition, recent name change disasters in the drug industry (Osco/Sav-On) and in the local retail market (Hardee's/Roy Rogers) only added to senior management's apprehension.
So, before moving forward, a study was conducted to help understand how consumers would react to a name change from Peoples to CVS and, more importantly, how the name change could be positioned positively and communicated effectively.
The study was essentially designed as a …