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New Product Failure Overview and Analysis
Introduction
Failed start-ups are not unique to a competitive business environment. However, in case large brands suffer losses due to unreasonably designed projects, this causes significant resonance and serves as an example for other organizations. As such a failure, the case of Coca-Cola in 1985 will be considered, in particular, the market launch of an updated beverage called New Coke. Inadequate market research, the biased analysis of demand, and confidence in brand strength became the main reasons for the failure. To increase sales of the new product, manufacturers should have resorted to interacting with the target audience and introducing a test batch of New Coke to the market.
Product Failure Description
The case of New Coke is a prime example of a bad marketing decision. Taylor (2017) views this failure as one of the biggest mistakes in the history of the global Coca-Cola corporation and notes that its current management remembers and fears precedents. In 1985, Coca-Cola launched a new line of drinks under the same brand but with a new name and minor changes to the can design (Tanusondjaja, Trinh, & Romaniuk, 2016). Nevertheless, this decision caused a wide public response and turned out to be the most unsuccessful marketing step in the entire history of the corporation. Millions of dollars were spent on the creation of the new product, but in the end, the updated Coca-Cola did not stay on the market for three months. Consumers were extremely unhappy with the new product, and the management had to go back to the previous version of the drink in an emergency mode. This example of failure can be explained in terms of mistakes made in planning the product implementation and potentially efficient steps to take to avoid costs.
Reasons for the Failure
As one of the main reasons for the presented failure, one can call inadequate market control. According to Islam (2019), the lack of information from the target audience is a significant flaw if the introduction of a new product is planned for the general public. Another potential cause of failure is biased demand data. Islam (2019) mentions market equilibrium as one of the essential criteria for a successful business and notes that if the market is oversaturated with specific goods, demand will be low. Finally, Coca-Colas management confidence in the strength of its brand and its impact on consumers marketing habits is another reason for failure. As Tanusondjaja, Trinh, and Romaniuk (2016) remark, the image of goods is shaped by buyers, and the case of New Coke confirms the lack of interest in the product even of the well-known brand. These factors led to the failure of the new product in the American market.
Ways to Increase the Chances of Success
By following a distinctive promotion strategy, Coca-Colas management could have achieved a more successful marketing campaign. Birkinshaw and Haas (2016) note that prior engagement with target audiences could have increased the chances of positive consumer acceptance of the new beverage line. As another measure, a test batch of the product could have been presented instead of the total restructuring of production. Such a strategy, as Kotler and Keller (2015) argue, is a logical step to introduce new products to the public and avoid risks. By following these approaches, Coca-Colas managers could have reduced the likelihood of New Cokes failure.
Conclusion
The case of New Coke proves that an inadequate marketing campaign may lead to a new product failure, despite significant funds spent on advertising. The lack of target market analysis, poor customer engagement, and overconfidence in brand strength are the key causes of failure. Interaction with the public regarding a new beverage line and introducing a test batch to the market could have been potentially effective measures to avoid high costs and the failure.
References
Birkinshaw, J., & Haas, M. (2016). Increase your return on failure. Harvard Business Review, 94(5), 88-93.
Islam, M. T. (2019). Market failure: Reasons and its accomplishments. International Journal of Economics and Financial Research, 5(12), 276-281.
Kotler, P., & Keller, K. L. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson Education.
Tanusondjaja, A., Trinh, G., & Romaniuk, J. (2016). Exploring the past behaviour of new brand buyers. International Journal of Market Research, 58(5), 733-747.
Taylor, B. (2017). How Coca-Cola, Netflix, and Amazon learn from failure. Harvard Business Review, 10, 1-4.
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