Lying about your product is good for sales, at least at baby formula maker Mead Johnson (MJN). The notorious marketer of Enfamil lost yet another court ruling this week, this time in the federal appeals courts. It is the sixth legal ruling in which the company has been found misleading parents about the quality of Enfamil. Yet... sales are up.
A cynic with an MBA might conclude what many in the marketing/advertising business have known for years: Misleading advertising works. By the time you get found out in the courts, you've already made your sales. Consumers will remember the misleading message but they probably won't read the court filings that emerge years later. (That's not advice I'd follow, but there it is.)
In the case, Mead had advertised Enfamil as a boost to a baby's eye development. A 2008 mailer boasted:
It may be tempting to try a less expensive store brand, but only Enfamil LIPIL is clinically proven to improve brain and eye development.Store brands and Enfamil are identical. They get their ingredients from the same suppliers. Mead also used a picture of blurry duckling to suggest that your baby may lose her sight if you didn't pony up for Enfamil.
Mead lost a $13.5 million trial verdict on these issues previously, and was forced into settlements in 2001 and 2002 in two separate cases on the same issues. It also lost two rulings in the ad business's self-policing body, the National Advertising Division of the Council of Better Business Bureaus. And it ain't over yet: According to Mead's annual report, it faces eight class action lawsuits, all stemming from the Enfamil duckling of doom.
So surely, consumers should have shied away from Enfamil and bought the store brands from Walmart and Target, made by PBM, which brought the actions against Mead? Nope. Mead's sales -- which consist almost entirely of Enfamil products -- were up 11 percent to $3.1 billion last year. PBM's infant formula sales were up by a similar degree, but the company sells half as much formula as Mead.