Product Failure Evaluation

Presented By: Group 4

Mc Donald’s Arch Deluxe

Mc Donald’s

About Business began in 1940, with a restaurant opened by brothers Richard

and Maurice McDonald World's largest chain of hamburger fast food restaurants Serving around 68 million customers daily in 119 countries Operated by either a franchisee, an affiliate, or the corporation itself Speedy Service System Golden Arches

Reasons for Launch of Arch Deluxe: Introduction of a hamburger targeting grown-ups Restaurants getting increasing number of customer visits Increasing competition from Burger King, Starbucks, Taco Bell,

Wendy's, KFC

McDonalds Arch Deluxe

Launched in 1996 especially for adult consumers A part of strategy to expand the then existing consumer base to

adults A new line of burgers was created called as Deluxe line of

burgers, of which Arch Deluxe was the flagship product Marketed as the ‘Burger with the Grown-up Taste’; the idea

was to have a burger which wasn’t associated with children and to get rid of the child-centric image of the brand

Estimated cost of marketing campaign was $100 million Soon discontinued after failing to become popular despite a

massive marketing campaign One of the biggest failures of the Fast food industry

Reasons Behind Failure

Inappropriate Marketing Mix– Product

Positioned as a “sophisticated” product meant for adultsMcDonalds was known for its convenience and simplicity, not

sophisticationVery high calorie content (fat contents: 32 grams)

– PriceToo high for a burger at that time ($2.29)

– PromotionAdvertisements where kids (their top customers) were shown

shunning the products (calling it ‘yucky’) and saying they don’t understand it

The mascot Ronald was dropped for initial campaign.

Reasons Behind Failure

Faults in product development processCentralized branding and marketing decisionLack of a well defined cross-functional new product strategy; Insufficient involvement of critical departments during the

development and LaunchInsufficient roll-outs of the product before launchingOther successful products such as Big Mac, Hot Apple Pie,

Egg McMuffin and Filet O’ Fish came out from operators’ kitchens out in the field

Mismatch between the product development-process style and the business context

Reasons Behind Failure

Less appealing value propositionLacked a compelling consumer benefit Was a simple me-too itemNo favourable PODsServed merely to further fragment the product lineLack of resonating focus as compared to the

competitors’ products

Reasons Behind Failure

Other Reasons– Case of losing touch with the customers and straying away from

their successful strategy– Customer confusion: pushing the customers to think whereas

people bought McDonalds product in reflexive manner and not due to cognition

– Employed ‘compete on taste’ strategy but its customers liked McDonalds for friendliness, cleanliness, consistency and convenience

– Defining the business context – The company wrongly defined its customers as adults for this product

– McDonald's name was too strong as a value burger joint for anyone to take the "dining for adults" line seriously

Stage Gate DiagramTime Wasted

Crystal Pepsi

Pepsi

About Created and developed in 1893 Branding - 26th amongst top 100 global brands in ‘08 Distribution Channel Pepsi has a broader product line and outstanding reputation

Reasons for launch of Crystal Pepsi: Intense Competition PepsiCo is far away from leader Coca-cola in the international

market Broadening of Product Base and Growing Bottled Water market

Crystal Pepsi

In 1992, Pepsi came out with Crystal Pepsi- Clear Cola

They also produced a diet version – Diet Crystal Pepsi

Taste very different from PepsiWithout color, caffeine and preservatives but

added sugar1n 1994, Crystal Pepsi was re-launched as just

Crystal with addition of citrus flavor

Failure reasons

Insignificant point of difference During development stage, PepsiCo had tested 3,000

variations of formulas with 5,000 consumers in their company laboratories and malls taste-tested survey.

Incomplete market and product definition before product development starts

The clear color of Crystal Pepsi was to target health-conscious consumers. Crystal Pepsi contained 130 calories viz a viz 150 calories in regular Pepsi Cola in a 12 ounce serving

Failure reasons(Cont.)

Too Little market attractiveness

Failure reasons(Cont.)

• Poor Name Execution No pureness of taste “Crystal” name too ordinary to attract Generation – X Connection with Pepsi

• Launching a failed product

Stage Gate DiagramNot enough

emphasis on the idea

Nintendo Virtual Boy

• Japanese multinational consumer electronics company located in Kyoto, Japan.

• World's largest video game company by revenue• Founded on September 23, 1889[2] by Fusajiro Yamauchi• Extensive experience in the video game industry• First to introduce motion technology in video games• Reasons for Launch:• Slowdown of the Japanese, the US and European

economies• Short products lifecycle• Growing US games software market

Nintendo

Nintendo – Virtual Boy

• Introduced in November 14, 1994• Virtual Boy was a table-top video game console developed and

manufactured by Nintendo.• First video game console that was supposed to be capable of

displaying "true 3D graphics" out of the box.• Most video games use monocular cues to achieve the illusion

of three dimensions on a two-dimensional screen, The Virtual Boy creates an illusion of depth through the effect known as parallax.

• User looks into an eyepiece made of neoprene on the front of the machine, and then an eyeglass-style projector allows viewing of the monochromatic (in this case, red) image

Failure Reasons• Undefined Product Identity– Lies somewhere between a stationary gaming console and a

portable unit – VB was not backwards compatible with GB– Missed the opportunity to convert existing GB users

• Comparatively Poor Display – Using only a single color for display: red – Inferior technology to other options in terms of display

resolution • Lack of Killer App – At launch, Nintendo did not have the spectacular game that

could effectively showcase the full potentials of the VB.

Failure Reasons

• Negative Effects – Designed such that only one player can view the display at a

time – Challenging to have a collective play experience

• Isolating Gameplay Experience – Widely criticized for being uncomfortable to play – Reported to cause physiological effects such as motion

sickness and eyestrain • Difficult to Explain and Demonstrate– Challenging to advertise – Screenshots of games looked worse

• Focus on your brand values. If your values are ‘strong, masculine and very rugged,’ you shouldn’t be selling perfume or wine coolers. A range of baby clothes may also be a bad idea.

• Don’t alienate your core customers. For brands that inspire strong loyalty, the temptation is to test that loyalty to its limits by stretching the brand into other product categories. However, this is a dangerous strategy and can lead to what marketing experts refer to as ‘brand dilution’ – in otherwords, a watered-down brand.

• Remember that more is less. ‘When you study categories over a long period, you can see that adding more can weaken growth, not help it .The more you add, the more you risk undermining your basic differentiating idea, which is the essence of your brand.’

Stage Gate Diagram

Not much thought into user friendliness

Hype-creation failure in Launch

Harley Davidson Perfume

S

An iconic cult brand Harley Davidson (H-D), the American motorcycle manufacturer has a loyal brand following not only in the U.S. but also in many countries across the globe.

The motorcycle’s distinctive design and exhaust note has given rise to many loyal brand communities that are active in clubs, events, and even a museum.

Such is the power of the cult iconic brand that just licensing of the Harley-Davidson logo amounts to approx. 5% of the company’s net revenues.

In 2007, an Interbrand report suggested that the brand name ‘Harley-Davidson’ had a market value of $7.72 billion, which was 131 times more than the book value of $59 million.

Harley Davidson – Brand Values

• Freedom – Go wherever you want to, whenever you want to.• Authenticity – Noted for the tradition of heavy customization, Oldest

and quality name in manufacturing bikes.• Community Building– HOG has 1.4 million members, Ride Planner to

plan trips, H-D Photo Center for posting photos of memorable trips.• Rituals – Community festivals and monthly or annual rides/events

are conducted regularly, buttons and pins from an activity/event are worn on jackets.

• Masculinity – Unique sound of the exhaust, association with icons in films.

• Toughness – Rugged heavy design and look of the bikes.

World wide Revenue

$3.2 Billion

$767.3 mil-lion

$282.2 mil-lion

$4.3 billion 2009

motorcycles

parts & acce.

general merchan-dise

HARLEY-DAVIDSON, INC. NYSE: HOG Fact Sheet

Brand extensions

Merchandise• Helmet• Clothes (Jackets…) • Mugs• Collectibles….• Perfumes Beer Bars

• While motorbike apparel (Motorclothes® merchandise) and ornaments probably matched the Harley Davidson cult heritage brand, the company had lost focus.

• In the 1990s, it extended the brand too far. It introduced products like wine coolers, aftershave and perfumes. Even the loyal fans did not like the idea, as it did not resonate with the tough brand identity.

• The company was clearly not focusing on what it knew best – building strong bikes.

• However, Perfumes and wine coolers were eroding the mystery of the H-D brand. After strong criticism from the loyal customers, the company pulled of many inappropriate products

Harley Davidson perfume Failure

• Harley Davidson had fallen into the trap of thinking that more products equals more sales. And it usually does, at least in the short term.

• They moved away from their Loyal Customer base

or they misinterpreted their customer

• The Image of word “perfume” was completely opposite of image of Harley Davidson

Poor NPD Practices

STRATEGY– HD Perfume did not go hand in and with mission and

vision of Compnay– No NPD Goal :- They just want to sell more and more

and extend the brand– No Product mix appropriateness

RESEARCH– Market Research completely ignored in case of

perfume

Stage Gate Diagram

Thinking more products = more

sales

Lessons from Harley Davidson

• Focus on your brand values. If your values are ‘strong, masculine and very rugged,’ you shouldn’t be selling perfume or wine coolers. A range of baby clothes may also be a bad idea.

• Don’t alienate your core customers. For brands that inspire strong loyalty, the temptation is to test that loyalty to its limits by stretching the brand into other product categories. However, this is a dangerous strategy and can lead to what marketing experts refer to as ‘brand dilution’ – in otherwords, a watered-down brand.

• Remember that more is less. ‘When you study categories over a long period, you can see that adding more can weaken growth, not help it .The more you add, the more you risk undermining your basic differentiating idea, which is the essence of your brand.’

POOR NPD PRACTICES

McD ArchCrystal Pepsi

Harley Perfume

Nintedo Virtual Boy

StrategyDoes not fit with the mission Y N Y Y

No NPD Goals N N y NShort term tactical initiative N Y N Y

Uncear NPD Goals Y Y Y NNo Regard for mix Appropriateness Y Y Y N

No concern over types of NPD projects being developed Y N Y YNo Prioritization of NPD products N N Y N

No process undertaking protfolio mnagement N Y Y Y

ResearchCustomer involved in NPD process Y N Y N

Little market Research N Y Y YNo real evaluation of testing Y Y Y Y

No market study N Y Y Y

ProcessCriteria for evaluating NPD undefined N Y Y Y

Limited doccumentation regarding NPD N N Y NMinimal Testing Y Y Y Y

No NPD process exists N N Y NNo discipline in using company's NPD process N N Y Y

Project not reviewed at completion N Y Y YNPD circumvented management's approval N Y N N

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