Toms Main Case Study

CASE 3

TOM’S OF MAINE: AT TOM’S “DOING BUSINESS” MEANS “DOING GOOD”

Tom’s of Maine represents one of the first natural health care companies to distribute its products beyond the normal channels of health food stores. With its continued growth, the owners, Tom and Kate Chappell, still emphasize the values that got them started over three decades ago. In meeting the challenges they have encountered, the experiences of Tom and Kate Chappell provide considerable insight into how a small firm can stay true to its founding principles and continue to grow in a fiercely competitive environment.

Getting Tom’s of Maine Going

For its first 15 years, Tom’s of Maine looked a lot like many other new businesses. Tom and Kate Chappell had an idea they believed in and felt others would buy into as well. Based on this idea, and with financing from a small loan, the Chappells started the company in 1970. Like many business startups, the company’s first product was not successful. Its phosphate-free detergent was environmentally friendly but, according to Tom Chappell, “it didn’t clean so well.” (1) Consumers did appear to be interested in “green” or environmentally friendly products, however, and the fledgling company’s next products, toothpaste and soap, were more successful.

All Tom’s of Maine products were made with all-natural ingredients and were packaged using recycled materials whenever possible. New personal care products, including shampoo and deodorant, were developed while avoiding the controversial practice of animal testing. (2) This refusal caused Tom’s to wait seven years and spend about ten times the usual sum to get the American Dental Association’s seal of approval for its fluoride toothpastes.

In 1992, Tom’s deodorant accounted for 25 percent of its business. Chappell reformulated the product for ecological reasons (replacing petroleum with vegetable glycerin), but the new formulation “magnified the human bacteria that cause odor” in half...