Product Failure

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Information about Product Failure

Published on December 26, 2008

Author: varun23oct


Team Member’s : Team Member’s Varun Aggarwal Shashank Rana Preeti Kumari Rahul Yadav Sapna Rana Nitin Kumar Jyoti Chauhan Vijay Kundra Coco-Cola : Coco-Cola Trade name of a sweetened, carbonated drink, originally made with coca leaves and flavoured with cola nuts, and containing caramel and caffeine. Invented in 1886, Coca-Cola was sold in every state of the USA by 1895 and in nearly 200 countries by 2000. Product Failure : Product Failure 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. The launch of New Coke turned out to be a nightmare for Coca-Cola : The launch of New Coke turned out to be a nightmare for Coca-Cola New Coke lasted only 79 days and went down in history as one of America's greatest marketing failures. ‘We did not understand the deep emotions of so many of our customers for Coca-Cola.’ — DONALD R. KEOUGH Coca-Cola president Slide 5: 1985, after 99 years with essentially the same taste, Coca-Cola decided to switch to a new, high-fructose corn syrup, to make Coke taste sweeter and smoother--more like its arch rival, Pepsi.  This historic decision was preceded by a top-secret $4 million survey of 190,000 people, in which the new formula beat the old by 55 percent to 45 percent.  What Coca-cola apparently neglected to take into account was that many of the 45% who preferred old Coke did so passionately.  The 55% who voted for new Coke might have been able to live with the old formula, but many on the other side swore that they could not stomach new Coke. 1985, new Coke captured 15% of the entire soft drink market and Coke Classic 5.9% with Pepsi at 18.6%.  In 1986, new Coke collapsed to 2.3%, Coke Classic surged to 18.9%, and Pepsi helf firm at 18.5%. New Coke Cont… : Cont… 1985, new Coke captured 15% of the entire soft drink market and Coke Classic 5.9% with Pepsi at 18.6%.  In 1986, new Coke collapsed to 2.3%, Coke Classic surged to 18.9%, and Pepsi helf firm at 18.5%. A large public outcry ensued during the 79 days when old Coke was no longer on the shelves. Coca-Cola quickly reintroduced the "old" Coke when they realized market share was falling and christened it Classic Coke. Volume for the classic brand has risen 24 % since 1984, making it the No. 1 soft drink in the land since 1987. Consumers became even more loyal to the brand after it was temporarily taken away from them. Failure of Market research : Failure of Market research Before Coca-Cola launched 'New Coke' they had invested US$4,000,000 in market research and undertook 200,000 blind taste tests. In all these blind (unbranded) taste tests the New Coke outperformed both Pepsi and existing Coke.   These blind taste tests were the basis of the launch of 'New Coke' in 1985. The launch created a public outcry, with Coke receiving over 40,000 letters of complaint and over 6,000 calls a day to the company's '0800' phone number. After only 87 days the company responded to the public's demands and re-introduced the original Coke formula. Pepsi – Coke Taste Test : Pepsi – Coke Taste Test Some interesting history of this test: Taste test: New Coke vs. Coke Classic New Coke preferred to Coke Classic! New Coke was sweeter Most got it wrong (even if thought new) Changes Over Time Appears Coke Classic slowly morphed into New Coke… Pepsi – Coke Taste Test : Pepsi – Coke Taste Test Some interesting history of this test: New Coke Came Out People thought they hated it… Anger over changing the flavor… So Coke Classic came out Fun for me: New Coke vs. Coke Classic How had the Coca-Cola management got it so wrong? : How had the Coca-Cola management got it so wrong? • They had focused on the product, not the brand. • They had neglected the emotional value of 'Coke' to the American public. • They asked the wrong questions, so their research provide irrelevant information.As one Coca-Cola official said at the time "We betrayed a national trust". Why? Because they never thought to ask American consumers how they would feel about a change to Coke, whether or not they would want a 'New Coke'. Failure is the mother of innovation : Failure is the mother of innovation Success can only be achieved through repeated failure and introspection Success represents the 1% of your work that result from the 99% that is called failure Failure as a stepping stone These are the lessons: : These are the lessons: 1. Don't alienate your base. The 10% did not 'come round' - the converse happened - they showed the rest of the market how dissatisfied they 'should be' - the behavior caught on. Not difficult to imagine with a response like this: "At first I was numb. Then I was shocked. Then I started to yell and scream and run up and down." 2. Some things can't be measured by taste tests, opinion polls or questionnaires. 3. No matter how much better you can make it, change is resisted - more so when its consumption is ingrained in society. Instant tea has still not caught on. 4. There will always be risk. Interestingly no one at Coke was fired. Roger Enrico argues that it would send the wrong message: that risk-taking is punished. He may have been right, as today Coca-Cola is judged as the world's most valuable brand. Consumer Responses : Consumer Responses Reportedly, their attachment with the brand was so strong that one of them went to the extent of wishing his bones and ashes to be preserved in Coke cans after his death... Our Proposed Strategy : Our Proposed Strategy The sip test will give you one result and the home-use test will give you the exact opposite more attractive for drinking in volume, precisely because it is less sweet "flavor balance hypothesis" gradual changes of taste were not noticed by a significant number of tasters Recommendation and Conclusion : Recommendation and Conclusion The innovative leader encourages a culture of experimentation. You must teach people that each failure is a step along the road to success. To be truly agile, you must give people the freedom to innovate, the freedom to experiment, the freedom to succeed. That means you must give them the freedom to fail, too. Slide 16: QUESTIONS & ANSWERS QUESTIONS & ANSWERS Slide 17: Thank You!

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