As it turns out, people like their fries fatty.
Last month, Burger King Worldwide Inc. announced that its lower fat, lower calorie Satisfries (marketed as Gratifries in Canada) would be dropped from U.S. menus less than a year after a high-profile launch designed to appeal to health-conscious consumers.
But the deep-fried flop should not come as a surprise. The vast majority of new product launches end up failing.
In fact, 72 per cent of new products are failures, according to a global study released by Bonn, Germany-based marketing consultancy Simon-Kucher & Partners. The firm surveyed 1,615 managers in 40 countries. It found that most newly launched products fail to meet their profit targets "because companies neglect or ignore essential pricing and marketing activities in their new product development processes."
The survey identified a few common practices that differentiate failures from successful products. For example, successful companies were much more likely to analyze the pricing and marketing strategy for a product earlier in the development process, as opposed to closer to launch. The best were also more likely to set aside a budget for research to measure customer demand for the product, as well as what people are willing to pay for it.
That may seem obvious, but even large companies can neglect this kind of rigour in their product development process. And even the best advertising strategy cannot save a weak product concept.
"It's really shocking.… So many products are launched that haven't established basic things, such as research into the need of the product, the efficacy of the product, testing the product with consumers," said Joan Schneider, chief executive and founder of Boston-based public relations firm Schneider Associates, who studies product launches and consults with businesses on the subject. "… Big companies too. They come up with an idea in their R&D department, and they think it's a good idea. But does anybody else?"
Ms. Schneider's firm publishes an annual study of the most memorable new products launched each year. But even among the highest-ranking products – those that had made a positive emotional connection with the consumers surveyed – many routinely fail, she said.
In the 2013 report, for example, Burger King's Satisfries was tied for fourth place.
What's more, the most memorable launches are often not truly new products at all. The top spot in 2013 was held by the updated Windows 8 operating system. Number two was the relaunch of Twinkies. The iPhone 5C came in third.
"Look at Apple's launch the other day," Ms. Schneider said. "There have been smart watches before. The Apple 6, it's just a product improvement. Marketing makes it seem like a new product."
Marketing truly new or revolutionary products, on the other hand, is tough. Consumers do not readily embrace change. Ms. Schneider quotes the consultant Jack Trout, who found that 85 per cent of the household items that American families purchase are the same brands they buy every time – roughly 150 items over all. Trying to squeeze into the remaining 15 per cent, or even to convince consumers of a new need, is not easy.
And it takes a long time. People typically look at six pieces of research, including product reviews, news stories, or opinions of friends and family, before they buy. Even some companies that spend heavily on a six-month launch cycle do not keep it up long enough to truly make a dent.
If anything, 72 per cent might actually be a low estimate for failure, industry observers say. Some conventional wisdom has it as high as 90 per cent of products that don't make the cut.
Technology has also changed the game. For one thing, consumers are able to do more research, more easily, before they buy.
And it has presented new ways of launching products as well. Kickstarter has allowed startups with very small marketing budgets to ask people in real time whether they would pay money for a new idea. Branding expert David Placek said he is surprised that larger companies have not jumped on this trend as much as they could, launching a kind of Kickstarter for beauty products, for example.
Mr. Placek has overseen thousands of new product launches. His San Francisco-based company, Lexicon Branding, helps to come up with names for new products. Their work includes Swiffer, Febreze and BlackBerry. He has learned to recognize the red flags of products that fail later on, after they are out of his hands.
"When we get a brief from the client, and it says something like, 'this will empower, say, women with kids, 30 to 45 years old.' Products really don't do that. We look at that and say, 'Ugh, here comes another empowered product,'" Mr. Placek said. "Or when we see a brand positioning statement that just goes on and on."
The idea of the elevator pitch applies to branding, he said.
"When you can explain something to someone in one or two lines, and the person concludes that it is something new, different, or for me, then you know you have something," Mr. Placek said. "Think of the iPod: one thousand songs in your pocket."
Sometimes, product failures have nothing to do with marketing. It can be very simple.
"In the nineties, for General Mills, we named a product called Triples cereal. Wheat, oat and rice," he recalled. His team had a feeling it wouldn't last. "The cereal just did not taste good."
AVOID FAILURE WITH FORWARD THINKING
Product launch failures can be avoided with a bit of forward thinking, argues consultant Joan Schneider – some of it pitiably simple – but many companies still don't manage to get it right.
She asks 11 questions of businesses that come to her to consult on marketing a new product:
1. Is there a market for the product?
2. Can you own the name?
3. Do you have data that prove the idea has merit?
4. Do you have a credible, knowledgeable spokesperson who can talk about the product?
5. Have consumers or customers used the product and will they talk about their experience (hopefully positively)?
6. Have you had everyone you are talking to sign an NDA (non-disclosure agreement)?
7. Can you identify a third party who can corroborate that the world needs this product that will go on record?
8. How long will it take to manufacture the product and will you meet the deadline for the market (season, trade show, holiday)?
9. Do you have money to capitalize the manufacturing and launch of the product?
10. Do you have a business plan and a budget?
11. What is your day job and can you do both?
The vast majority of new products fail. Here's a look at some prominent flops from the past.
Before the overhyped, two-wheeled contraption launched in 2001, the Segway’s inventor, Dean Kamen, predicted it “will be to the car what the car was to the horse and buggy.”
Not so much.
Despite roughly $100-million spent on product development, the Segway was never priced right to catch on. In some cities, safety concerns led to banning the vehicles on sidewalks. By September, 2006, the company had sold only 23,500.
Coors Rocky Mountain Sparkling Water
In 1990, Coors saw the growing market for bottled water and decided it wanted in. After all, its marketing had boasted of the crystal-clear rocky mountain water that went into its beer for years. It offered the product in plain, lemon lime and cherry.
“Bottled water is the fastest-growing beverage category in America,” brand development manager John Recca said at the time.
Turned out no one wanted to buy water branded by a beer company. It was discontinued.
Sure, it holds a special place in the hearts of eighties children thanks to a starring role in Back to the Future. But by the time the movie came out, the real life DeLorean – sans time travelling capabilities – had already faltered. The futuristic cars with the top-hinged doors hadn’t sold well, and the company went bust in 1982 after turning out roughly 9,000 units.
Nostalgia is a powerful marketing tool, however. One company in Texas bought the trademark and is dedicated to reselling used DeLoreans and refurbishing old models for a niche crowd of enthusiasts.
The ne plus ultra of brand failures, New Coke seems destined to be a business school case study forever.
In 1985, Coca-Cola Co. was feeling the heat in its competition with Pepsi. Coke was entrenched in American culture, but the competitor was having success marketing itself as the soft drink of choice for the younger generation. By 1983, Coke’s market share had dropped to a record low of less than 24 per cent. The Pepsi Challenge was claiming that its product tasted better.
So Coke worked on a new recipe, and did 200,000 taste tests of its own. Once it was sure it had a winner, it replaced its 99-year-old flagship product with New Coke. It vastly underestimated consumers’ link to its heritage. Outraged letters poured in, and people threatened boycotts. In less than three months, the company was forced to bring back the original Coke, naming it “Classic” for good measure.