Friday, July 16, 2010


For today’s marketers, new brand failures imply burning shame. But many in the past have learnt lessons and succeeded after the great tumble; the failures were worth it!

A whole generation of thoroughbreds has been evangelised to practice perfection. Getting it right, every time, has become a religion. Amelioration is the word for the present. It’s really not an age for failures – not for men, not for companies, and worse, not even for the most generic of brands. For marketers, failure of a brand means nothing less than blasphemy! But do such outcomes call for unforgivable sentences for the makers of brands? Granted, no brand failure is praiseworthy, but lessons on “how to succeed” that can be learnt from most brand failure tales are worth a read.

LESSON #1: Don’t kill an established brand simply to introduce a new one; brands take years to build and are invaluable.
The most classic example when it comes to failure of a brand is the case of the New Coke in 1985, which is quoted by some as the biggest brand collapse of all times. 100 years after Coke was launched, things had changed; competition had. There was Pepsi-Cola willing to fight Coke. By the time Roberto Goizueta became the CEO in 1981, Coke’s numero uno status had started appearing vulnerable. Coke was fast slipping and the prime reason was Pepsi- Cola. Pepsi had already proven to the world in the 1970s with its Pepsi Challenge, how blindfolded drinkers preferred the sweeter Pepsi-cola over Coke. It was only Coke’s superior distribution network that was keeping it ahead (for instance, there were still more Coke vending machines in US than Pepsi-Cola’s). Goizueta deciphered the problem to be the ‘product’ itself. He assumed that Coke would lose out to Pepsi soon because of its taste. That was 1984. A year later, the Atlanta-based giant decided to give to the world the ‘New Coke’, which was sweeter and closer to Pepsi- Cola in taste. Coca-cola conducted 200,000 taste tests in the pilot testing stage. The results made Goizueta smile. The research had proven how the New Coke was preferred over Pepsi-cola. Goizueta, drunk on the forecasted success of the New Coke, even decided to halt the production of the old Coke. Following the April 23, 1985, launch, a large percentage of Coke-drinkers in US decided to boycott the new product. A few days later, when the production of the old Coke was halted, this further angered the masses – a double blow! New Coke didn’t sell, and Goizueta was forced to get the old version back. “We have heard you,” confessed Goizueta on July 11, 1985. Even Donald Keough, the-then COO of Coca- Cola, publicly said, “All the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to the original Coca-Cola felt by so many people.”

So, what was wrong with the New Coke? To begin with, the 101 year-old ‘Old’ Coke defined American glory and the passion for it was what had kept the brand on its wheels despite its taste being inferior to its rival’s. Coca Cola’s top brass forgot in one instant that it takes eons to build a brand; and dramatic one-trick-ponies, like the New Coke, stood no chance in front of the Old Coke due to this outstanding brand value. Coca Cola in reality should have concentrated on the original brand’s perception and simply delivered what the consumers needed without trying to over-innovate. They should have not looked around for problems with the product when it didn’t have any – having an inferior taste is not an issue, having an inferior perception is; as Jack Trout, author of Differentiate or Die, writes, “Marketing is a battle of perceptions, not products.” Any attempt to foolhardily copy rivals is wrong. With New Coke, the company was simply trying to clone Pepsi-Cola. But what Goizueta got right is that he showed fearlessness when it came to reverting to the classic Coke. That helped establish a “New” bond between the brand and its consumers. Today, Coca-cola is the most valued brand on the planet, valued at $64.9 billion by Interbrand (as of 2009).

LESSON #2: Don’t over-innovate and provide to consumers features they do not desire.
The legendary Ford Motors also went through an expensive embarrassment, known to be the most hyped-up failure in the auto industry till date. ‘There has never been a car like the Edsel’ is what Ford promised through its ads. The publicity began an year before the Edsel was launched (in September 1957). To increase crowd curiousness, even dealers were strictly warned to keep the cars “under covers” till the time they were given the permission. Expectations were high. The pre-publicity initially showed promise and people rushed into Ford’s showrooms on the date of launch to catch a glimpse of the new model from Ford, which was supposed to be revolutionary – the footfalls touched 3 million in US, in just the first seven days post-launch! The model was supposedly an example of innovation in the car industry. It had a number of new features which were the first in the industry – a rather “different” front-end grille, self-adjusting brakes, an electronic hood release and an extremely advanced and powerful engine for a mid-segment car. It was meant to be a treat for auto-lovers.

The market however didn’t want the “new” features. The car disappointed the potential buyers, who in turn disappointed Ford. Edsel sold just 64,000 vehicles within a year of its launch, which spelled a big failure for the brand (as opposed to a sales target of 200,000 units). Henry Ford II tried harder, made more changes, innovated the model further and launched two new versions of the Edsel in 1959 and 1960. Result: sales fell further (the Edsel 1959 version sold 44,891 units, while the 1960 model sold a shameful 2,846 units). The Edsel had to be relegated to the grave. The last advertisement of the model was seen in November 1959, post which, Edsel was scrapped.

So what were the mistakes? With the new model, Ford offered too much to buyers, which automatically resulted in Edsel’s price tag shooting northwards – unreasonable for the sceptic buyers. There was inadequate market research conducted and Ford failed to understand what the customers really desired. Surprisingly, the company spent millions of dollars on collecting possible names for the new car before coming up with a ghastly pale one like Edsel (which was the name of Henry Ford II’s father!). Secondly, the company created a hype around an ‘untested’ product. Gayle Warnock, PR Director for the Edsel launch, said thus in a confession much later: “I learned that a company should never allow its spokespersons to build up enthusiasm for an unseen, unproven product.” Edsel also fell fl at on the “Style” differentiation front, and ignored visual appeal completely – a huge mistake, especially when we talk about cars. However, Ford learnt its lesson soon and made no mistake with the Mustang, which became one of the legendary trademarks of Ford. It was launched in 1964, and sold 500,000 units in just the fi rst year of its rollout. A better name, less experimentation with innovation, better looking (rather simple looking), and most importantly, it was affordable for the technology and style it offered.

LESSON #3: Providing the best quality product in the industry will get you nowhere, unless you remember Kotler’s basic ‘P’remises and accept that the ‘product’ makes up only one of the Ps in the marketing mix!
For this, a brilliant failure has been in the consumer electronics domain. In 1975, Sony developed a home video recording equipment for consumers, which ran on Betamax technology. It sold 30,000 units in US in the first year. Over the next two years, five companies, which were Sony’s rivals, released the Video Home System (VHS, initially patented by JVC). The sound and video quality of the VHS launched were inferior to that of the Betamax, but the convenience of use and wide availability made it a more attractive buy for the consumers. By 1987, VHS had captured 95% share of the US market. Sony finally withdrew the Betamax and announced plans to get into the VHS market in January 1988. The mistake that Sony made was that not only did it refuse to associate with any other electronic major (while JVC shared its VHS technology with others), it also refused to look beyond its product quality. Kotler didn’t make his millions for nothing. He proved long back that the product only accounts for that much. There are many more Ps that play significantly greater roles, if not more, than the quality of the product.

LESSON #4: Diversify yes, but with some transferred competencies; doing otherwise would be a sure shot failure.
McDonald’s learnt a lesson with the failure of its Arch Deluxe burger (which it marketed as the ‘Burger with the Grown-up Taste’) in 2001. The core concept was to bring-in “sophistication” into the brand, so that it could provide a burger which was not linked to kids. Even the ads showed children ignoring the product. Did McDonald’s succeed? Surely not. The exercise was one of the biggest disaster launches of Mc- Donald’s. And clearly because the global giant forgot to transfer competent strengths in their attempts to diversify. A saying goes that you can sell new products to your old target group, you can sell old products to your new target groups, but you simply cannot sell new products to new target groups that easily. McDonald’s forgot that its brand offerings stood for “simplicity and convenience” and not “sophistication”, and especially when for ages they had developed their competence in understanding the buying behaviour of kids. As I mentioned, diversification is great, provided there is some sense to it – in other words, a leveraged competence.

All the above examples were failures, but surely, lessons learnt. It doesn’t matter if any of your brands have failed. It’s not some hazard that has struck an adventure-seeking corporation for the first time. Your shareholders and employees know that there is as much chance for your new product to fail, as there is for a snowfall on a cold Christmas night in the Alps. Remember, Thomas Edison conducted over 10,000 experiments before he managed to invent the light bulb, which brought him much fame and wealth. It was also his first success, which ultimately led to what we know as the fourth-most valued brand on Earth today - GE (valued at $47.8 billion in 2009 as per Interbrand). Experiment. Fail. Learn. Experiment again. Don’t repeat your failure. Succeed! It’s that simple with a brand.