Valuable Lessons From Product Failures

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Product failures, it seems, are inevitable. Steven Jobs, founder of Apple had a refreshingly candid philosophy about the issue: Fail big, fail fast and fail often.
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Indeed, some iconic and global brands are serial offenders, or perpetrators, depending upon your frame-of-mind.  No-one, no entity, product or service is immune.
 
The lessons learnt are invaluable, and accessible to all.  Sadly, too few business leaders and marketers are alert and aware of the circumstances, the causes and the often very expensive consequences.
 
Coca-Cola, justifiably, stands proud and conspicuous among the great brands, companies and marketing entities around the world.  A striking endorsement of its worth is the substantial shareholding retained in the parent company by the Warren Buffet-led Berkshire Hathaway group.
 
Its recent introduction of Coke Life, with stevia as a natural sweetener, has been, reportedly, less than stellar.
 
Sales in the first 5 weeks of trading throughout Australia achieved an estimated 7 million litres.  That pales against a similarly inspired new product development, Coca-Cola Vanilla, which reportedly, registered sales of 14 million litres in the same initial period.
 
Coke Zero was a success story, with a reported comparative 30 million litres in sales.
 
A corporate executive stated recently that Coke Life may achieve a 1-2% market share of the Australian cola sector.  The statement has the hallmark of a pre-emptive death notice.
 
What went wrong?
 
The global sales of soft drinks, cola in particular (which represents more than 80% of revenue in the sector throughout Australia) are declining.  Indeed, 2015 will be a benchmark year as the sales of bottled water exceed those of bottled soft drinks.
 
Those in the key market segment, 30-45 years of age, are increasingly sensitive to weight-gain and obesity. Artificial sweeteners are not appealing and recent academic research has concluded that consumption of artificial sweeteners over an extended period of time can increase its consumers’ girth.
 
Standard Coca-Cola has a long history of appealing to the younger, active youths.  They can and do readily “burn-off” the reported 12 teaspoons of sugar in each can of Cola.  For the more sedate consumers, that will require a 40-minute run ... calories are like that!
 
Thus, the potential lure of stevia, the new sweetener, is only a marginal factor in marketplace appeal.
 
Another issue is the green labelling.  Green is not a good merchandising colour for products that are consumed into the body.  The late Dame Anita Roddick, founder of Body Shop has a lot to answer for.  Her use of green did introduce an acceptance of the colour for products that are typically applied to the body, not ingested.
 
Green may also be acceptable for BP (British Petroleum) in its implicit and explicit positive message about the importance of ecological sustainability.
 
BEWARE LINE-EXTENSION
 
The success rates of line-extended products and services are declining.  It is important to be true to the market positioning of the product and the target marketing of primary consumers.
 
Colgate-Palmolive’s entry into the microwave-heated snack market was somewhat less than a resounding success.
 
It seems that was simply a “bridge too far” for consumers, who were happy to brush their teeth and to clean their crockery with Colgate and Palmolive products but not ingest such.  Gulp!
 
GET IT RIGHT
 
Good, relevant market research minimises risk and improves the prospect to attain the status of relevance.  It does not ensure success.
 
Projective research, in which respondents are asked to project their actions, buying patterns and behavioural traits, is of questionable value and accuracy.
 
Steven Jobs declared that is was not wise to ask people what is was that they most wanted, given that which they were not able to presently get.  He concluded most people didn’t know, had not thought about such, and didn’t have the answer.
 
It was his contention that entrepreneurs should develop products, services and applications, then “tell ‘em” and “sell ‘em”.
 
HISTORICAL RECALL
 
In 1975 Coca-Cola responded to the Pepsi-Challenge, in which consumers were invited, to nominate their preferred “blind-tested” cola drinks that they tasted from unlabelled thimbles.
 
Not surprisingly, over 75% nominated the Pepsi-Cola, with its higher sugar content (reportedly 14 teaspoons per can).
 
Coca-Cola rapidly introduced New Coke, with a higher sugar content.  It bombed.  Moreover, it was withdrawn from the market after just 79 days.
 
The key lesson learnt was that Coca-Cola and Pepsi-Cola are not typically consumed by the thimbleful.  A full can of New Coke was just too sweet for its target audience.
 
The traditional Coca-Cola recipe had been retained and branded Classic Coke.  Very appropriate - a classic case study on the need to manage and to meet consumer expectations.
 
Pepsi-Cola didn’t learn those valuable lessons.  It subsequently introduced Crystal- Pepsi which was a clear cola drink.  Consumers, it seems, knew that real cola drinks were never transparent.  The product stayed stuck to the retail shelves.
 
NO GUARANTEE
 
Success can be so fleeting. 
 
John Sculley was the Pepsi-Cola executive who led the Pepsi-Challenge campaign.  He was lauded internationally for his marketing and leadership brilliance.
 
Sculley was subsequently recruited to lead Apple.  He supposedly conducted a forensic strategic audit of the company.  A major weakness was identified ... Steve Jobs.
 
The founder was sacked.  Sales fell, so too did the company share price.  New products development dried up.
 
John Sculley soon joined the ranks of the unemployed.  After several years in the corporate wilderness Jobs returned to Apple.  It was a key factor in the introduction of iPads, iPods and iPhones.
 
On a platform of fail big, fail fast and fail often, Apple has become one of the world’s highest capitalised entities and a brand leader.
 
ASK THE RIGHT QUESTIONS
 
The probability of product/service failure can be lessened if one asks the right questions of the right people.
 
Arguably, the biggest marketing failure in Australia during the twentieth century was the product of extensive and intensive research.
 
Leyland, the British-based motor vehicle manufacturer, asked Australians what they least liked about their present motor vehicles.
 
The findings were resounding.  Put simply, the boot (trunk in the American vernacular) was not big enough.
 
Leyland promptly designed a big boot, attached an inadequate vehicle to it and launched the P76.
 
Alas, the company lost hundreds of millions of dollars, and is no more.
 
What questions were not asked included whether car owners would compromise aesthetics, leg room, space and power.  Clearly they would not, and did not.
 
Ironically, the few P76 sedans that remain in Australia command a hefty premium ... good for some quirky individuals, but not for a corporation seeking volume sales.

 

Barry Urquhart

www.marketingfocus.net.au


About

Barry Urquhart, MD Marketing Focus, Perth, is the author of Australia's top two selling books on customer service and is an internationally recognised authority on consumer behaviour and creative visual marketing.

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