Why Products and Services Succeed or Fail

Thousands of products fail every year, sliding into oblivion and costing American businesses billions of dollars in lost investments. Ideally, a new product or service needs a precise protocol, a statement that, before product development begins, identifies (1) a well-defined target market, (2) specific customers' needs, wants, and preferences, and (3) what the product will be and do. If more businesses developed precise protocols before new product launches, the following infamous product failures could have been avoided: Kellogg's Breakfast Mates, Colgate's Kitchen Entrees, Cocaine Energy Drink, or Clairol's Touch of Yogurt Shampoo.

Both marketing and non-marketing factors contribute to new-product failures. Using research results from several studies on new-product success and failure, we can identify critical marketing factorswhich sometimes overlapthat often separate new-product winners and losers. The most common reasons for new-product failures include (1) insignificant point of difference, (2) no economical access to buyers, (3) incomplete market and product protocol before product development starts, (4) not satisfying customer needs on critical factors, (5) bad timing, (6) poor product quality, (7) too little market attractiveness, and (8) poor execution of the marketing mix.

Read the case below and answer the questions that follow.

As hot coffee sales slumped in the late 1980s, the Pepsi-Cola Company noticed a new market trendthe morning consumption of caffeinated soda. Soft-drink manufacturers had only captured a small portion of the morning beverage market at this point, which included Coca-Cola's advertising campaign for a "Coca-Cola in the morning." Although Pepsi had not conducted significant market research into the phenomenon of morning soda consumption, they believed that young adults were driving the trend of drinking caffeinated, carbonated beverages for breakfast. Pepsi was eager to pounce on the opportunity to capitalize on this growing section of the morning beverage market.

In 1989, Pepsi elevated the morning cola game with the introduction of Pepsi AM. Clad in a new red, white, blue, and yellow can, Pepsi AM featured 28 percent more caffeine per ounce than regular Pepsi with the same Pepsi Cola flavor. In blind taste tests, most consumers could not differentiate between regular Pepsi and Pepsi AM. Pepsi marketing executives believed that the caffeinated and sweetened Pepsi AM would be a natural replacement for a morning cup of coffee, even though Pepsi AM had 77 percent less caffeine than tea or coffee.

Despite an increase in morning soda consumption and Pepsi's efforts to promote Pepsi AM as a morning beverage, consumers did not seem to want a "morning only" soda. Consumers seemed perfectly happy drinking existing cola drinks or coffee at breakfast. Pepsi also failed to recognize the social implications of drinking coffee. For most consumers, drinking a cold glass of soda was not the same as a sipping steaming cup of joe. Pepsi AM was pulled from the market in 1990 after it failed to achieve sales forecasts and goals.

Answer the questions to determine the likely cause of the product failure.

1.) The name Pepsi AM suggests to consumers that the beverage should be consumed ________.

only in the evening

only in the morning

any time of day

2.) Pepsi AM was perceived to be _________ regular Pepsi by most American consumers.

the same as

quite a bit different than

significantly different than

3.) Drinking a cup of coffee and drinking a can of Pepsi AM were perceived to be socially _________ by most Americans.

different

similar

unrelated

4.) Marketing research and taste testing was implemented in order to avoid a _________ mistake with Pepsi AM.

limited market attractiveness

bad timing

poor product quality

5.) The primary source of competition for Pepsi AM was likely ________.

Pepsi

Coke

coffee

Descriptions/Hints

Large Availability These products are available in a large number of selective outlets. Consumers will shop to find their preferred brand, but will accept substitutes.

Quick- Consumers usually purchase these products very quickly and with minimal shopping effort.

Fairly expensive- These products are fairly expensive, which causes consumers to compare price and quality as they select products.

Few stores- These products have very limited distribution. Consumers must make special efforts to seek out preferred brands; substitute, brands are not acceptable.

Unaware- Consumers are often unware of their need for these products until they become necessary.

Frequent- Consumers frequently purchase these products in order to replenish them as they are used.

Very expensive- These products are usually very expensive with uniqueness and brand equity stressed in marketing communications

Unwanted- Consumers often do not initially want to purchase these products, but may occasionally find a need for them.

Descriptions/Hints

Zest Bar Soap Produced by Procter & Gamble, Zest bar soap is widely available at many grocery stores and discount warehouses.

Maytag dishwasher The Maytag Jetclean dishwasher is fairly expensive at $650. It is available at a number of outlets to increase c consumer convenience and minimize substitution.

Hermes Birkin Bag The Hermes Birkin bag retails for approximately $9,000. Production and distribution are very limited, and consumers may wait years to buy this exclusive bag.

Sony Blu-ray Disc Player The Sony Blu-Ray Disc Player is available in a large number of retail outlets, including Best Buy and Target.

Royce Poplar Coffin Many consumers do not think about purchasing a coffin until one is needed for a love one or family member.

Goodyear Ultra Grip tires- Consumers may not think of purchasing winter tires, such as Goodyears Ultra Grip Winter tires, until they drive through or move to an area with snowy weather.

Patek Philippe Consumers who want to purchase a Swiss-made Patek Phillippe watch, priced at $200,000, perform an extensive search with extended decision time before buying.

Doritos Produced by Frito-Lay, these low-cost snacks are available in numerous locations, including convenience stores and vending machines.

Step 1-Roll over the items to read their descriptions. Then click and drag each consumer product de scription into the correct row. Large availability Quick Fairly expensive Few stores Type of Consumer Product onvenience Shopping Product Specialty Product Unsought Product Unaware Product Frequent Very expensive Unwanted