Product and brand failures occur on an ongoing basis to varying degrees within most product-based organisations. This is the negative aspect of the development and marketing process. In most cases, this “failure rate” syndrome ends up being a numbers game. There must be some ratio of successful products to each one that ends up being a failure. When this does not happen, the organisation is likely to fail, or at least experience financial difficulties that prohibit it from meeting profitability objectives. The primary goal is to learn from product and brand failures so that future product development, design, strategy and implementation will be more successful.
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 organization’s 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 realise 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 organisation 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 critic’s 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. Sony’s Beta format was a clearly superior product to VHS, but their decision to not enable the format to be standardised 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 fledging organisation in the courts to eliminate a future 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. These products were financial and market share successes:
- Asbestos-based building materials now recognised as a carcinogenic—Insulation, floor tile and “popcorn” ceiling materials produced by a number of manufacturers.
- Baby formula that provided insufficient nutrients for infants resulting in retardation—Nestle’s.
What successful products may be next? Frequent and high dosages of certain drugs such as Advil are suspected to correlate with liver damage. Extended use of electric blankets are suspected by some to increase the chance of cancer. The over-the-counter availability and high use of Sudafed is feared by some doctors and is currently under review by the U.S. Food and Drug Administration.
Product failures and the product life cycle
Most products experience some form of the product life cycle where they create that familiar—or a variant—form of the product life cycle based on time and sales volume or revenue. Most products experience the recognised life cycle stages including:
- Maturity (or saturation)
In some cases, product categories seem to be continuously in demand, while other products never find their niche. These products lack the recognised product life cycle curve.
Failure, fad, fashion or style?
It is important to distinguish a product failure from a product fad, style or a fashion cycle. The most radical product life cycle is that of a fad. Fads have a naturally short life cycle and in fact, are often predicted to experience rapid gain and rapid loss over a short period of time—a few years, months, or even weeks with online fads. One music critique expected “The Bay City Rollers” to rival the Beatles. Do you know who they are? And the pet rock lasted longer than it should have, making millions for its founders.
A “fashion” is what describes the accepted emulation of trends in several areas, such as clothing and home furnishings. The product life cycle of a “style” also appears in clothing as well as art, architecture, cars and other esthetic-based products. The “end” of these product life cycles does not denote failures, but marks the conclusion of an expected cycle that will be replaced and repeated by variations of other products that meet the same needs and perform the same functions.
The benefits of studying failures
Gaining a better understanding of product failures is important to help prevent future failures. Studying the history of product failures may generate some insight into the reason for those failures and create a list of factors that may increase the opportunity for success, but there are no guarantees.
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 senior management 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 priced—too 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 consumer’s behaviour 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.