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MARKETING FAILURE AND

SOLUTIONS
Marketing Research

Abstract
Product and brand failures occur on an ongoing basis to varying degrees within most product-
based organizations. This is the negative aspect of the development and marketing process

Mohanrasu Govindan
Mohanrasu.govindan@flextronics.com

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Marketing Failure and Solutions 2015

Overview:
Product and brand failures occur on an ongoing basis to varying degrees within
most product-based organizations. This is the negative aspect of the development
and marketing process. In most cases, this failure rate syndrome ends up being a
numbers game.
Studying product failures allows those in the planning and implementation process
to learn from the mistakes of other product and brand failures. Each product failure
can be investigated from the perspective of what, if anything, might have been
done differently to produce and market a successful product rather than one that
failed. The ability to identify key signs in the product development process can be
critical. If the product should make it this far, assessing risk before the product is
marketed can save an organizations budget, and avoid the intangible costs of
exposing their failure to the market.

Defining product and brand failures


A product is a failure when its presence in the market leads to:
The withdrawal of the product from the market for any reason;
The inability of a product to realize the required market share to sustain its
presence in the market;
The inability of a product to achieve the anticipated life cycle as defined by
the organization due to any reason; or,
The ultimate failure of a product to achieve profitability.
Failures are not necessarily the result of substandard engineering, design or
marketing. Based on critics definitions, there are hundreds of bad movies that
have reached cult status and financial success while many good movies have
been box office bombs. Other premier products fail because of competitive actions.
Sonys Beta format was a clearly superior product to VHS, but their decision to not
enable the format to be standardized negatively impacted distribution and
availability, which resulted in a product failure. The Tucker was a superior vehicle
compared to what was on the market at the time. This failure was due to General
Motors burying the fledgling organization in the courts to eliminate a future
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competitor with a well-designed product posing a potential threat to their market


share. Apple has experienced a series of product failures, with consistent repetition
as they continue to fight for market share.
Product failures are not necessarily financial failures, although bankruptcy may be
the final result. Many financially successful products were later found to pose
health and safety risks.

Premature genius The Apple Newton:


The Newton Message Pad platform was an early personal digital assistant, an
ancient ancestor of the iOS platform used in the iPhone and the iPad, and the first
tablet platform developed by Apple. The Newtons life span was a brief one, with
development starting in 1987, launch in 1993 and cancellation in 1998. The product
was a huge financial disaster for Apple. Although the exact scale of the Newton
losses remains unconfirmed, some sources say that the company sunk a billion
dollars into the Newton and recouped only about one quarter of that amount in
sales. This is hardly surprising given that, even at the height of the devices
popularity, only an estimated 200,000 Newtons were in use.

Newton was intended to revolutionize personal computing. The end goal was to
create a tablet computer costing around the same price as a desktop computer,
opening up an entirely new market around personal digital assistant devices.
Among other features, the tablet would be the size of an opened magazine, have
cursive handwriting recognition and a special user interface. For most of its design
lifecycle Newton had a large-format screen, more internal memory, and an object-
oriented graphics kernel, but of the three sizes developed, the initial 1993 launch
product - the Message Pad - was a scaled down junior product.

One of the original motivating use cases for the Newton design was the Architect
Scenario, in which Newtons designers imagined a residential architect working
quickly with a client to sketch, clean up, and interactively modify a simple two-
dimensional home plan. Whilst the architect in this instance would certainly benefit
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from the Newtons features, Apple was hardly aiming at a large target market by
focusing on such a specific scenario.

Since the Newton was cancelled, industry speculation has identified a number of
reasons as to why the Apple Newton failed so badly. Principal among these is the
fact that Apple ignored certain customer needs as to the specifications of the
tablet.
The Apple Newton was: Too big. At around 4.5 x 7 inches, almost one inch thick and
weighing almost a pound, the Newton was really too large and heavy to be
considered pocketsize.
Too expensive. The Newton cost about $700 for the first model and as much as
$1,000 for later versions.
Cumbersome to use. It had software problems, notably, it operated too slowly;
certain actions, such as scrolling through notes, took too long and its handwriting
recognition was fairly inaccurate.
Pre-announced too early. The Newton was announced nearly two years before it
launched, creating unrealistic expectations for a transformational product, which
was then rushed out to gain an edge in a reckless public relations battle.
Seen as the pet project of then Apple CEO, John Sculley. In 1993, Sculley - who had
forced out Steve Jobs in 1985 was himself forced out, just when the Newton team
was getting ready to release their first product.
Premature. Though some competing products were put out just before it, including
the Amstrad Pen Pad, the Newton had no real market familiarity.
Although Apple had learned about key customer needs during market research, it
apparently ignored these when it came to developing the product, opting instead
to push ahead and beat its competitors to launch.
Newton Project Leader, Larry Tesler said, In the end, we cut corners and ignored
problems to try to meet a price range and a ship date that we had prematurely
announced to gain an edge in a reckless public relations battle.

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In 1995, three years before the Newton was cancelled, Palm Computing (then a
pision of U.S. Robotics) introduced some serious competition into the personal
digital assistant market. The company quickly dominated the handheld market with
the wildly popular Palm Pilots, which were smaller, cheaper and easier to use than
the cumbersome and costly Newton.
The original motivation of the Palm Pilots inventors was to create handwriting
recognition software for other devices but during the research process, they
realized they could create a competitive handheld computing device. By 1997, Palm
had a 66 percent share of the personal digital assistant market, Windows CE had
20 percent, and Newton just six percent (Dataquest).
The Apple Newton is said to have failed because it was ahead of its time and
because its launch was badly thought through. Although the technology was
forward thinking, it did not meet identified customer needs, was not able to adapt
to those needs and could not recover from being put onto the market before it
functioned properly. Despite this, Newtons existence has arguably had a significant
impact on the industry - much of the success of later Apple products such as the
iPod, iPhone and iPad, and even competitor devices like the Palm Pilot, is said to
have been built on the back of the Newtons development. Even the advertising of
the iPad clearly echoes that of the Newton.
However, unfortunately for Apple, it was the Palm Pilot that led to a real revolution
in handheld computing, not the Newton. Jeff Hawkins, one of the original creators
of the Palm Pilot, suggests that the devices commercial success has a lot to do with
responding to consumers needs. He maintained that it is important to make trade-
offs on what to put in and what not to put in, so that the product maintains the
correct balance of technological features, usability, and affordability. If Hawkins
had worked for Apple at the time, perhaps things would have turned out rather
differently. Having said this, Apple seems to have recovered quite well.

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Quadraphonic Sound Audio Device Failure:


New products do not always succeed, even if people agree that the world
would be a better place if they would. New technologies are not always taken
up by the mass-market, despite early claims of their superiority over the
status quo.

In the early 1970s, Quadraphonic sound failed to displace stereo sound as


the industry standard for playing audio recordings. This came as something
of a surprise, since the initial following of quad was huge and early take-up
of the technology was encouraging.

- Many analysts attribute the failure of quadraphonic sound to two facts:


o Firstly, there were still some concerns about the long-term potential
of quad, since early versions of quad were introduced somewhat
prematurely and led to dissatisfaction of the early influential
consumers;
o Secondly, and perhaps more importantly, there was uncertainty about
which of the several different incompatible versions of quadraphonic
sound would be the eventual industry standard.

The attempt to introduce quad technology resulted in enormous costs to both


consumers and producers because the existing coordination problem confused
customers. Joining the network requires a sunk investment (for consumers). If the
network does not grow adequately or, in the worst case, is abandoned, consumers
are trapped with an orphan technology. In other words, expected network
benefits will not be realized and consumers may be unwilling to join the network.
This problem is particularly severe where the successful diffusion of a product
depends on the availability of complementary products (records, in our case).
Confusion among the public about the nature, performance and operating
characteristics of quad and merits and demerits of matrix vs discrete technology,
prevented four channel of becoming the next step after stereo (disillusionment was
setting in by the end of 1974)

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Missing optimism from retailer side and insufficient promotional effort; Owing to
Quad wars instead of concentrated efforts to promote quad in general, system-
specific appeals were much less subject to free- riding inefficiencies
Collusive arrangement on promotion between rivals could have helped to clarify
the confusion and skepticism of the consumers towards the quad.
- Wrong entry point/strategy
- Poor advertising of advantages
- Lack of standardized technology among producers

Two possible reasons for failure:


1. The confusion of customers. The introduction of a competing, yet
incompatible technology confused both existing and potential customers as
well as suppliers of records (artists and record companies). Both
technologies were introduced too early (and prematurely), which
disappointed early customers. These are the customers who usually start off
the desired bandwagon effect. In addition, the introduction of the second
technology gave rise to uncertainty about which technology would become
industry standard. This also holds for artists and record companies, who
were mostly reluctant to switch because they didnt know which format to
produce (producing both would have been very costly).

2. The early success of the technology might have prevented long-term


success of the quadraphonic technology. Initially, the number of early
adopters was quite promising. However, the introduction of a second,
incompatible technology split the market and lowered expected future
benefits. This lead potential customers, whose main concern was the
availability of software (which was not given owing to the market splitting
between discrete and matrix) to abstain from switching to quadraphonic
sound. Rather, they stayed with the old stereo systems.

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Possible Solution: collusive arrangement on promotion between rivals could have


helped to clarify the confusion and skepticism of the consumers towards the quad.

Common reasons for product failures


In addition to a faulty concept or product design, some of the most common
reasons for product failures typically fall into one or more of these categories:

High level executive push of an idea that does not fit the targeted market.
Overestimated market size.
Incorrectly positioned product.
Ineffective promotion, including packaging message, which may have used
misleading or confusing marketing message about the product, its features,
or its use.
Not understanding the target market segment and the branding process that
would provide the most value for that segment.
Incorrectly pricedtoo high and too low.
Excessive research and/or product development costs.
Underestimating or not correctly understanding competitive activity or
retaliatory response.
Poor timing of distribution.
Misleading market research that did not accurately reflect the actual
consumers behavior for the targeted segment.
Conducted marketing research and ignored those findings.
Key channel partners were not involved, informed, or both.
Lower than anticipated margins.
Using these potential causes of a product or brand failure may help to avoid
committing those same errors. Learning from these lessons can be beneficial to
avoid some of these pitfalls and increase the chance for success when you launch
that next product or brand.

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