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This case study talks about how fairly large marketing mistakes of big brands leaded
to their devastation. If we come to seek examples there are many, yet here we have
picked up 3 known names, Kingfisher, Kodak and Nokia, whose stories are mere
enough to let you know the failure reasons.
1) The Rise, Dominance and Fall of
Kingfisher
About Kingfisher
In 2003, Kingfisher Airlines Limited was founded by Vijay Malllya as a premium and
world-class airline group. The airline was based in Bangalore India and had more
than 400 flights per day (Domestic & International). It used to be the most admired
name in Asia-Pacific region.
The Rise of Kingfisher Airlines
On its peak time, it was the 2nd largest airline, in terms of carrying the number of
passengers. The quality and comfortable service attracted many passengers in the
initial years. And, then the Kingfisher acquired Air Deccan in 2007.
In just 3 years after touching the skies, the first international Bengaluru-London flight
in 2008 was launched.
Marketing Strategy
They promoted the brand through all media channels like Radio, Television, Print,
Multiplexes, Malls and in their In-flight magazines too.
In just 2 years, the airlines achieved the aviation market share of 10%.
During 2007, they had the most aggressive expansion plans of all Indian
carriers.
In June 2007, their influence in the market was increased with the acquisition
of 26% shareholding of Air Deccan Airlines.
During February 2009, more than 900,000 passengers flew with Kingfisher
giving it the highest marketing share in India.
How Brand turned into Non-Performing
Asset?
By the end of the March 2008, company was under the debt of INR 934 cr
and net losses continued to widen in the following financial year.
Acquisition of Air Deccan marked the end of Kingfisher Airlines. By the year
2009-10, airlines accumulated the debt of over INR 7,000 cr as the losses continued
to pile up. 2010 was the year when it turned into a non-performing asset for banks.
In 2012, the airlines operations were shut down as the DGCA suspended its
flying license.
What Went Wrong?
Lack of Delegation.
Low-cost airline aviation airline, Air Deccan was treated as a step-child.
Unnecessary Burning of Fuel.
The major reason that the brand was grounded was that it wasn’t just into one
business and trying hands on more than one business. The founder was taking care
of different businesses personally without appointing proper CEOs and couldn’t
succeed in doing so. And, it’s pretty obvious that if two brands serve almost the
same service, then people would rather prefer the cheaper one.
It used to be the leader in its market whereas Samsung was nowhere to be seen.
But, Samsung made the move at the right time and gained the success.
They remained their focus on the Symbian series. Until 2011, company didn’t make
the leap of faith onto the Windows phone and due to their slow response they
suffered such demise.
Nokia got acquired by Microsoft in 2013.
And as we conclude, we look forward to the statement made by Stephen Elop,
Nokia’s CEO in his speech when Nokia got acquired by Microsoft that “we didn’t do
anything wrong, but somehow, we lost”. And, as far as the parameters on which
success is measured, he was right somewhere that they didn’t do anything wrong,
it’s just that they were unable to adapt the change at the right time and so, lost.
The unwillingness to embrace the needed marketing change when required was
probably the main cause that turned these brands down. One needs to think and act
holistically for growing the brand with time otherwise, if you don’t change, you will
definitely get removed from the competition.
Sustaining a startup is perhaps the most difficult phase for any
entrepreneur. While everyone advocates entrepreneurship as a shortcut to
mint money and get rich, the uncertainty and constant pressure to perform
is a huge responsibility even for the toughest of individuals. Hence, the
team at StartupTalky decided to analyze some of the unsuccessful
startups of India.
According to a 2019 report, more than 5 million startups are founded every
year. However, only 10%, i.e., 500,000 of these startups, succeed in the
long run.
Yumist
Dial-A-Celeb
Stayzilla
Roder
Turant Delivery
Finomena
MrNeeds
CardBack
Overcart
RoomsTonite
Doodhwala
Russsh
Koinex
DocTalk
LoanMeet
Yumist
Industry: Food Delivery
Serving home-cooked food is becoming a trend among today’s startups. An
example is that of several initiatives focusing on serving kitchen meals in
trains. Yumist was one suh venture. It was launched in 2014 to cover the
daily-meals segment in India, a largely untapped market. The founders
were Alok Jain and Abhimanyu Maheshwari who managed to raise nearly
$3 million in funding.
Reason for failure: A business model with a high burn rate that required
extensive capital beyond Yumist’s reach for achieving growth. Enough
funding was also not available to run the startup. So the startup had to shut
down. The Yumist case study is often mentioned when one talks about
the failed startups in India.
Dial-A-Celeb
Industry: App
Reason for failure: The major reason for Dial-A-Celeb's failure was that
celebrities were coming up with their own apps to interact with fans. This
trend resulted in immense competition for Dial-A-Celeb and a direct
impact on profitability. Dial-A-Celeb was shut in 2017. Know your rivals well
and also brace yourself for competition that may arise in the future.
Stayzilla
Industry: Real Estate
Reason for failure: Stayzilla was way ahead of its time when launched.
People were not ready for such Hi-Fi technology. However, the company
somehow managed for sometime on the funding it recieved. But when
people started becoming familiar with online booking, new competitors
emerged with better discounts and deals. Stayzilla was unable to provide
the same due to the unavailability of funds. Additionally, legal disputes
and a lack of focus on growing the business destroyed Stayzilla.
Roder
Industry: Logistics
Reason for failure: The inability to cope with customer acquisition costs
and not keeping up with the user retention rates. Moreover, increased
competition from experienced ventures like Ola and Uber added to Roder's
woes. Having a bigger competitor that is more aggressively funded makes
the entrepreneurs lose their zeal. And this is one of the major causes of
entrepreneurial failure.
Turant Delivery
Industry: Logistics
Finomena
Industry: Fintech
Students are the new target audience when it comes to offering small
loans. Acting on this, Finomena came out with an app that provided ‘EMI
without cards’. The aim was to allow students purchase mobile phones and
other electronics on a loan. In March 2016, Finomena raised its seeding
funding and then made quick strides before going down in 2018.
MrNeeds
Industry: Grocery Delivery
Industry: Fintech
Reason for failure: CardBack could not secure funds after 2014, and the
number of multiple cardholders in India was less than what the fintech
startup had expected. Hence, the main reason for CardBack's failure was
its over-expectation on market growth. The plan to shift the headquarters to
Singapore, where the multiple credit card culture is abound, also failed. The
failure to move to Singapore was the final nail in the coffin for CardBack.
Overcart
Industry: Re-Commerce
Overcart was the first Indian fintech player to provide a platform for
purchasing refurbished, over-stock, and pre-owned items. It was founded in
2012. People could buy and sell their electronic devices on the website.
Overcart received substantial angel investment; however, the company
failed to capitalize on it.
Reason for failure: Overcart did not seem to be very focused on its
business. Unsatisfactory services such as late delivery, poor quality of
purchased items, and bad customer services led to customer rebuke,
thereby causing Overcart to shut down in 2017.
RoomsTonite
Industry: Real Estate
Doodhwala
Industry: E-Commerce
Russsh
Russsh was founded in 2012 by Bharat Ahirwar. Russsh offered both first
mile and last mile on-demand delivery services to individuals and
businesses. The company claimed to have a database of over 50,000 loyal
clients and completed 500,000 transactions. However, on June 3rd, 2019,
the company announced its closure.
Reason for failure: The major reason for Russsh's failure was the lack of
funds. It was a self-funded startup and in the absence of enough funds,
Russsh was unable to resist the intense competition from its rivals. Bharat
Ahirwar also admitted that being a single founder venture and the absence
of a strong team were equally responsible for Russsh's shutdown.
Koinex
Reason for failure: Koinex suspended its services from 27th June 2019.
The cryptocurrency trading business has seen many ups and downs in
India and this instability affected Koinex. The founders stated the lack of a
clear regulatory framework for cryptocurrencies in India to be a major
deterrent that prevented them from running Koinex's operations smoothly.
DocTalk
Industry: Health-tech
The patients had to pay a subscription fee, whereas the doctors were
charged an initiation fee. In 2018, Doctalk pivoted to a new business model
wherein it built an electronic medical record (EMR) solution to help doctors
write digital prescriptions on customized prescription templates. The EMR
business was launched under a new brand name 'Pulse' and was sold to
the doctors as a tool that let them digitalize the entire consultation, and
share the same with the patients.
Reason for failure: Doctalk's pivot from its initial business model into the
electronic medical record solution (EMR) business was not successful; it is
often cited as the cause of DocTalk's closure by the company insiders.
LoanMeet
Industry: Fintech
P2P lending platform LoanMeet was started in 2015 by Ritesh Singh and
Sunil Kumar to help small businesses grow through ultra short term loans
(for 15, 20, or 30 days) for buying inventories. LoanMeet's services
included B2B marketplace financing, working capital financing, cash credit
line, and channel financing in the range of Rs 5,000 to 5 lakh for a period of
15 days to 9 months. The company claimed to have an average lending
ticket size of Rs 50,000 at around 18% interest rate.
The above mentioned examples shed light on major issues that are
responsible for the failure of nearly 90% of the emerging startups in India:
Panic doesn’t help in failure; relaxation and progressive thinking will prove
to be useful. Successful people have seen failures and have successfully
overcome all challenges.
Here are some tips to bounce back from your startup's failure:
Don’t think that life ends after a failure. Don’t spend time criticizing yourself
or anyone else, but feel proud of the takeaways from that failure. Keep in
touch with friends, family, and relatives to stay calm and relaxed in the time
of failure. Find a mentor or a group of experienced people. Learn from
them. Seek guidance and mental support from mentors and entrepreneurs
who have seen both success and failure.
A lot of lessons are learnt after hard times. Use these lessons to prepare
and prioritize. Make a survival plan. Startup founders are very comfortable
with planning and execution. Appoint suitable founders and workers to
assist you. Hard work always pays off, so work until you achieve success. If
your startup fails, create an excel sheet, and write down the skills in one
column and potential income from those skills in the second column. By
doing this simple exercise, one will get some clarity on how to keep the
business running for a few more months.
Don’t take any important decision at the time of failure because the mind is
depressed at such a time. Wait and then plan for the future. Take whatever
time is required to make up your mind but once he thought-process is in
place, do not go back to thinking about the failure. Great opportunities do
not come frequently. So wait for the right moment. It is better to wait for
several months for the right kind of work than to get stuck on the wrong
assignment.
Failure is not an end. It's the first step to success. Whether you are running
a startup or are planning to launch one, note down the mistakes discussed
in this post. Nothing hurts more than committing a mistake you were
already aware of. If this case study on the failure of some promising Indian
startups was useful to you, let us know in the comments.
According to a 2019 report, more than 5 million startups are founded every
year. However, only 10% of those startups succeed and the rest break
down.
Why do 90% startups fail or why do most of the Indian startups fail?
Today, India is one of the biggest markets. Got a product? Chances are that
there’s enough potential in this one country alone to make your sales and
profits skyrocket. Businesses in the West realize this colossal reach that India
has, and are always aching to invest and expand operations around our
thriving economy. In fact, the West has always looked at India and seen only
profits waiting to be reaped. Doesn’t this remind you of the East India
Company?
Just like them, many other foreign businesses have also fared terribly in the
country with some being forced to move out. This articles attempts to take a
look at some of the biggest conglomerates who entered the Indian
subcontinent but their aspirations soon came crashing down.
GENERAL MOTORS
One of the world’s largest car makers, General Motors (GM), re-entreated
India in 1994 (after leaving in 1954) as well. After 21 long years in the
country, the company decided to stop selling vehicles in India in 2017.
Reason? No profits, of course. During all these years, General Motors’ market
share never went up to double digits in India
Primarily, bad networking and several structuring issues were the reason
behind its shutting shop in India. The company was known to be struggling
with various management issues, which contributed hugely towards this
failure. In 21 years, GM India had 9 different CEOs with an average tenure of
only 2.5 years. Meanwhile, Maruti, for example, is still on their 5th CEO in
over 35 years of operations in India. CEOs at GM could never really focus on
building a strong network, presence, or any strategy, as internal conflicts and
problems continuously surrounded the brand.
NOKIA
The Finnish company Nokia reached its finishing point in 2014 when it was
sold to Microsoft. Although, the use of its name in technologies and branding
still continues, but the Nokia we knew is now no more. Having been the
industry leader for a long time almost all across the globe, Nokia’s sudden
nose-dip into failure was a mystery for many.
Nokia Corporation started with products like paper items, bicycle tires,
rubber boots and various other electronic items before getting into mobile
phones. For 14 years straight Nokia was the largest global mobile phone
maker.
Although the failure of Nokia was global, many argued that it started with
losing its grip in the Indian market. Rightly so, it seems, because Nokia was
the biggest name in India when it came to mobile technologies and also the
reason behind many firsts, in the country.
The first phone call through a cell phone in India was made on a Nokia
mobile in 1995. The first camera phone, business phone and even a torch
phone were all launched by Nokia in India. The invention of the ever-so-
popular Snake-game and the Sare-jahan-se-acha ringtone are both
accredited to them. So, basically, Nokia was everywhere and was the
definition of mobile phone in India.
The reason for their failure can accurately be summed in two A’s – Apple and
Android. Apple and Android crushed Nokia. Relying only on Symbian
operating systems, Nokia failed to adapt early to the software shift in the
market and concentrated only on producing better hardware. They also
overestimated the strength of their brand and assumed they will be able to
catch up quickly even if they started late. With Samsung expanding base in
India and investing heavy in Research & Development, and with the launch
of the iPhones and iOS, along with increasing purchasing power in the
country, it didn’t take time for the crowds to move on and forget about
Nokia.
However, tough times began for Kellogg’s in the 1990s. Market share fell as
competition increased, and therefore, Kellogg’s attempted to look beyond the
traditional markets of the USA and UK, and entered India in 1994, three
years after the opening of international trade barriers in the country. Their
top brand Corn Flakes was launched after a heavy investment in the country
and positivity ensued due to the huge market potential.
Cereal-eating was a new concept for India. For light breakfast, the
subcontinent relied mostly on a bowl of hot vegetables, of which there were
many brands in the country. Moreover, Kellogg’s was expensive. Other,
widely accepted alternatives were available in almost one third the price of
this foreign breakfast habit.
Without bowing down on the prices and with little to no research on the
market, more products like Wheat Flakes, Honey Crunch, All Bran, etc. were
introduced. As a result, the sales continued to go from decent to poor and
Kellogg’s became a one-off novelty purchase for many, with limited returning
customers.
Even the attempt to ‘Indianize’ the products with Masala variants didn’t work
out too well, and now Kellogg’s is trying to venture into the biscuits space.
All in all, in over 20 years, the ride is still going tough for this huge brand in
India, no where close to as good as they expected. Yet, optimism is high and
Kellogg’s is still willing to explore future prospects in the subcontinent.
KODAK
The American company Kodak was the pioneer in camera technology. Built
on the strong foundation of innovation and change, Kodak is rightly credited
for many inventions in the photography industry. It was always such a huge
name that it’s tagline ‘Kodak Moments’ was synonymous to having happy
times in life, and was used in events around the world.
The story of Kodak is as ironic as it gets. The first ever digital camera was
designed in 1975 by Steve Sasson. Where did Steve work? Yes, Kodak! When
Steve introduced his revolutionary technology to his bosses at the company,
their response was “that’s cute – but don’t tell anyone about it”, as reported
in The New York Times.
As Kodak was also one of the biggest producers in camera films, the
management saw this invention as a threat to that business. Result – no
marketing of this brand new invention. It wasn’t long before other
competitors like Sony, Fujifilm, Nikon got hold of the technology and
capitalized heavily on the opportunity. Kodak remained in denial and was
adamant to not go ahead with this filmless digital technology.
The world moved ahead, but Kodak failed due to its slowness in transition.
Regarding digital photography as the enemy, Kodak chose not to adapt to
the change that the market needed. It only got into digital photography
when it was too late. Failing to lead the way with the innovation, Kodak itself
gave to the world, the company announced bankruptcy in 2012 and exited
the image capturing business. Kodak Moment enough!?
WHAT ARE THE LESSONS WE CAN LEARN
FROM THEM?
1. Learn – Do your homework. Every business operates on some
rudimentary principles of operations; some general and some
industry specific. Failure to identify and abide by these can result in
fatal finishes. You can learn about everything that is required to
know about managing your business here.
2. Research and adapt – Market research and careful scrutiny of the
same is vital for any business and helps in assigning realistic goals
and making necessary changes. The importance of adapting in
accordance with the research cannot be emphasized enough.
3. Don’t underestimate (or overestimate) – Being truthful to your
company and its standing is the biggest gift you can give to it. From
the many examples above, you must realize that underestimating
your competition or overestimating your strengths are some of the
first anti-business practices. Kellogg’s underestimated its local
competition, Nokia overestimated its market stature. Results? Scroll
up to read, re-read, and re-re-read.