Wednesday, March 12, 2014

Worst Product Flops of All Time

Original source :
Posted : March 2014
Author : Thomas C. Frohlich

The larger the company, the greater its capacity for taking risks. While pouring millions of dollars into market research and advertising campaigns can lead to tremendous successes, such ventures can also be a formula for the most miserable failures. To identify some of the worst product flops of all time, 24/7 Wall St. reviewed products introduced after 1950 by America’s largest companies. To make the list, the company needed to make the Fortune 500 the year the product was released. 

Companies often launch new products in response to a competitor’s successful idea. But such products fail if they cannot measure up to the competition or capture consumers’ attention. Microsoft’s Zune was developed in response to successful Apple products. The Zune was harshly reviewed for technical problems consumers had with the device. It also lacked an easy-to-use music store. Other experiments, such as the McDonald’s Arch Deluxe and Pepsi Crystal, were reinventions of a company’s staple. While there were good reasons to introduce these new products, consumers rejected them almost immediately. In some cases, companies simply offered a bad product. Frito-Lay’s WOW! chips, for example, were very popular at first but ended up causing such unpleasant gastrointestinal problems that the product became completely unsalvageable. Some products may have just been ahead of their time. The Newton MessagePad was perhaps the first tablet marketed to consumers, introducing in the early 1990s an idea that became very popular only a decade and a half later. However, Apple had trouble convincing consumers of the value of mobile computing at the time.
These are the worst product flops of all time.

10. Arch Deluxe
Company: McDonald’s
Year released: 1996

Revenue yr. released: $9.8 billion
The Arch Deluxe was a quarter-pound burger McDonald’s released in 1996. The Arch Deluxe came with lettuce, onions, tomatoes, ketchup, and a mayonnaise-dijon mustard sauce on a potato bread roll. McDonald’s spent $100 million advertising the burger specifically to adults, considerably more than it had on its other burgers. Instead of showing satisfied adults, billboards and TV ads depicted children disgusted with the new burger. It appears that most adults, however, were not convinced they should want the burger simply because kids didn’t want it. The Arch Deluxe was also more expensive. It cost at least $2.29, compared with the Big Mac, which cost just $1.90 at the time. The burger’s failure was so monumental that McDonald’s completely reversed its strategy of introducing pricier items. In 1997, the company released a 55 cent Big Mac and tried other dramatic price cuts.

9. The Newton MessagePad
Company: Apple
Year released: 1993
Revenue yr. released: $6.3 billion
Apple’s Newton MessagePad was one of the first products to offer basic computing functions in a handheld device. Its technology was revolutionary for its time. The Newton was met with excitement and favorable reviews, noting its futuristic look and processing power. But the Newton failed to catch on, and was eventually discontinued in 1998. Steve Capps, head of product development at the time, explained that the Newton’s handwriting feature doomed the product. Handwriting recognition was meant to be the main selling point, but it didn’t work properly during the initial release. The device was also ridiculed in the news for essentially replacing an inexpensive paper notebook with a $700 computer.

8. Zune
Company: Microsoft
Year released: 2006
Revenue yr. released: $39.8 billion
Both the Zune and its upgraded sequel the Zune HD ultimately failed to compete with Apple’s already well-established iPod brand. Even without various performance issues plaguing the device - at the beginning of 2009, thousands of Zunes froze due to software glitches - the Zune would have had difficulty competing with the iPod. Shortly before its release, Wired Magazine argued that Microsoft’s PlayForSure digital music format would be clumsy due to unnecessary and poorly implemented security measures. There was also a sentiment among reviewers that the Zune could never be as cool as the iPod. With its initial $9 million ad campaign, according to NPD, Microsoft was able to capture only 10.8% of the relevant segment, versus Apple’s intimidating 86.1% market share as of 2006. After dismal results, Microsoft would nearly double its advertising investment, but without success. As a result, Microsoft’s Entertainment and Devices division lost $1.3 billion in 2006, and then a further $1.9 billion in 2007. Today, Microsoft has virtually abandoned the Zune MP3 player, as well as the Zune brand.

7. New Coke
Company: Coca-Cola
Year released: 1985
Revenue yr. released: $7.4 billion
For developers at Coca-Cola, reformulating the original Coke recipe may have made sense. In the early 1980s, the company’s market share was slipping and enthusiasm for the cola segment in general was also on the decline. Coke’s main competitor, Pepsi, had also successfully changed its formula multiple times to gain market share. In an effort to compete, Coca-Cola made its first recipe change to the original flavor in 99 years. The public backlash was nearly instantaneous. Consumers did not object to the new flavor so much as to the fact that the “classic” version was no longer available. According to the company’s website, protest groups popped up around the country. Seventy seven days later the company brought back the original Coke with the new name, “Coca-Cola Classic.” Despite the fact that the company lost more than $30 million in the new formula’s concentrate, and spent over $4 million on taste testing, the flop may have actually enhanced brand recognition and ultimately paid off in the long run. While soda sales have recently declined in the U.S., Coke led the carbonated beverage segment with a 42% market share as of 2012, according to Beverage Digest.

6. WOW! chips
Company: PepsiCo
Year released: 1998
Revenue yr. released: $11.5 billion
PepsiCo’s subsidiary Frito-Lay released WOW! chips in an effort to offer healthier and less fattening junk food. By using olestra, a fat substitute designed by Procter & Gamble, WOW! chips contained significantly less fat and calories. Initially, sales were exceptional, reaching $347 million in 1998 and making WOW! the best-selling potato chip brand that year. But olestra also had an unpleasant effect on the body. Diarrhea, incontinence, and cramping, were among the most common grievances, with some cases requiring hospitalization. PepsiCo dedicated a $35 million advertising budget to counteract negative opinion, but sales still declined dramatically in 1999 and 2000. Frito-Lay finally responded by renaming WOW! chips “light” in 2004. The company also avoided calling attention to its continued use of olestra. The absence of a warning label prompted a number of lawsuits. According to the Center for Science in the Public Interest, olestra’s approval for consumption was one of the FDA’s biggest blunders of all time.

5. Coors Rocky Mountain Sparkling Water
Company: Adolph Coors Company
Year released: 1990

Revenue yr. released: $1.8 billion
Coors has advertised its beer as “cold brewed with pure rocky mountain spring water” for decades. Apparently, this water has been used to brew Coors beer since 1873. In response to a trend towards moderate alcohol consumption and significant growth in the bottled water segment, the company decided to sell spring water - its first nonalcoholic beverage since Prohibition. While the decision benefited from the company’s existing bottling logistics and distribution, the Coors brand didn’t help sell bottled water. Coors Rocky Mountain Sparkling Water used a similar name and label to that of Coors beer, which may have confused and even spooked consumers. Anheuser-Busch, maker of Budweiser, also began criticizing Coors around that time for attributing superior quality to its mountain spring water, which Anheuser-Busch claimed was cut with water from Virginia. Coors cancelled its bottled water trademark in 1997.

4. Clairol Touch of Yogurt Shampoo
Company: Procter & Gamble
Year released: 1979
Revenue yr. released: $8.1 billion
Yogurt and other cultured dairy products may actually be beneficial for your hair. Like many companies, P&G began emphasizing the natural ingredients in its products in the 1970s to answer the overall “back to nature” movement of the time. It was common for many shampoos to contain a variety of natural ingredients, including honey, various herbs, and fruits. When Clairol, a subsidiary of P&G, released its Touch of Yogurt Shampoo in 1979, however, customers did not take to associating dairy with a hair product. The product was also confusing to some. There were a number of cases of people mistakenly eating it and getting sick as a result. Surprisingly, Touch of Yogurt was not Clairol’s first failed foray into milk-based hair products - three years earlier it had attempted to market a shampoo called the “Look of Buttermilk.” Both sold poorly and are no longer available in the U.S.

3. Crystal Pepsi
Company: PepsiCo
Year released: 1992
Revenue yr. released: $19.8 billion
In 1992, PepsiCo attempted to enter the then-flourishing “new-age beverages” market with its clear, caffeine-free Crystal Pepsi. The company promoted the product as a healthy and pure diet beverage. Its $40 million advertising campaign included permission to use Van Halen’s hit song Right Now in TV advertisements. Market tests at the time gave Crystal Pepsi such a positive outlook that Coca-Cola released Tab Clear to compete with it. While sales over the first year were a strong $470 million, many of the purchases were likely due to curiosity. Not only were consumers not convinced by Pepsi’s health angle, but many cola-drinkers expected a darker beverage. Also hurting Crystal Pepsi’s popularity: to many consumers it tasted just like original Pepsi.

2. TouchPad
Company: Hewlett Packard
Year released: 2011
Revenue yr. released: $126.0 billion
Introduced in July 2011, the TouchPad was Hewlett Packard’s attempt to compete with Apple’s iPad. With powerful video capability and impressive processing speeds, the TouchPad was widely anticipated to be among the only products that could give Apple a run for its money. Despite large scale press events and promotions, the HP TouchPad was a colossal failure and was discontinued almost immediately. As a result of the TouchPad’s failure, the company wrote off $885 million in assets and incurred an additional $755 million in costs to wind down its webOS operations, ending all work on the TouchPad’s failed operating system. Since then, HP has continued to struggle to maintain its edge in the PC market. The once-dominant PC company is in the midst of a multi-year turnaround plan. While the plan may have recently begun to bear fruit, investors remain cautious.

1. Edsel
Company: Ford
Year released: 1957
Revenue yr. released: $4.6 billion
Released on “E-Day - with “E” standing for experimental - the Edsel was Ford’s attempt to offer a higher-end, mid-sized vehicle for consumers looking to upgrade. The car was named after Edsel B. Ford, the company’s former president and Henry Ford’s only son, who died in 1943. The Edsel cost Ford at least $350 million, which in today’s dollars is equal to roughly $2.9 billion. Ford promoted the car aggressively with expensive teaser ads, which may have gone too far in raising consumer expectations. A Teletouch pushbutton transmission and the Edsel’s electronic controls in particular were said to be revolutionary. Unfortunately, the new features were unreliable. The car was also quite expensive, ranging from $2,500 for the Edsel Pacer 4-door sedan to $3,766 for the 2-door convertible. This may have been difficult during a steep economic downturn - sales were down in 1957 for many other car companies, including Buick, Mercury, Dodge, and Pontiac. After four model years Ford stopped producing the Edsel.

~Blog Admin~

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...