Why innovations fail

Most FMCG innovations are safe product range expansions, but luckily, there are companies willing to turn everything upside down. Unfortunately, that does not always yield results…

Marketing blunders

The Museum of Failure recently opened its doors in Swedish Helsingborg, a museum filled with flops. On display are the major marketing blunders and innovative monstrosities that did not make it: New Coke, from the eighties, is one such FMCG flop classic. Coca-Cola faced an increasingly competitive Pepsi, which had created the Pepsi Challenge to help it beat its competitor’s flavour. This prompted Coca-Cola to change its famous recipe, its trump card, and launch New Coke.

Even though the new, sweeter-tasting coke performed well with focus groups prior to launch, it did not perform as well. Particularly consumers in the southern part of America rebelled and even considered it a second capitulation in favour of the Yankees.

Female ballpoint pen

Another gem is McDonald’s Arch Deluxe, a luxury burger for urban consumers with an above-average income. The creation cost 100 million euro, but it failed to generate even that much because it flopped badly. The targeted consumers did not come to McDonald’s, which meant the Arch Deluxe’s demise. The idea was not that bad, especially considering how many premium hamburger chains are doing extremely well nowadays. Basically, the Arch Deluxe was introduced at the wrong place and the wrong time.

The “Cristal for her” BIC ballpoint pen fits into the “nonsensical innovation” category: it was a ballpoint pen that allegedly fit the female hand better, sold in pink and purple colours. BIC Cristal is one of the most successful ballpoint brands now, but back in 2012, the board felt there was still room for growth within the female consumer base. Unfortunately, it failed miserably and became a laughing stock on social media and websites like Amazon.

Automatic pilot

The main question is why certain product launches fail? There are multiple reasons, but the question can also answered very easily: because the market does not want it. The consumer does not need it (BIC ballpoint pen) or does not consider it to be an upgrade compared to the old product (New Coke). Sometimes, it is just the (wrong) timing or a wrong product market combination, like with McDonald’s luxury hamburger.

There is just no way around the fact that a large part of our grocery list does not change. A Harvard Business Review article (Why most product launches fail, Schneider/Hall, 2011) shows that 85 % of an American household’s grocery list is fixed. These are the things you buy on automatic pilot. New products have to fight to become part of the remaining fifteen %, not exactly a large share.

Own life

Confronted with this situation, it does not help if companies forget to study the market appropriately, according to the article’s authors. Companies tend to focus on product development and the production process. Only when it has been fully developed does the actual market come into view.

“The classic response is ‘We haven’t done the research yet, but we know anecdotally that it works and is totally safe.’ We’ve been fielding these calls for so long that we can often tell from one conversation whether the launch will succeed. If they do research the market, they often ask the wrong questions or ignore certain answers”, the authors claim. Sometimes, product launches – particularly the larger ones like New Coke – start leading a life of their own and the results are analysed in the context of an inevitable launch.

Two thirds fails

It is public knowledge that the majority of product innovations are doomed to fail. Nielsen’s Breakthrough Innovation Report from 2014 shows that two thirds of 12,000 European product launches since 2011 did not surpass 10,000 items sold. 76 % gets cancelled after a year. Luck is rarely the reason the rest did succeed, Nielsen says.

Co-author Johan Sjöstrand says: “Through the study process, we found proof that innovation success is never just a remarkable coincidence. It’s about deliberate attempts to disrupt all aspects of the innovation process and challenge everyday norms, such as consumer attitudes, long-standing beliefs, launch mechanics, organisational behaviour and disciplines.”

Idealists

Nielsen also wrote down four basic rules organisations need to follow. The first is probably the most important: what does the consumer need? Does he need a new toilet freshener option or a fat-free potato chip? It is not easy for marketeers and product developers to really innovate when confronted with a saturated market and a somewhat spoilt audience. Radical innovations are often not appreciated, especially in product categories where the consumer operates on automatic pilot.

Thank goodness for the idealists that want to alter Coca-Cola’s traditional recipe or who want everyone to ride Segways. It will not always turn out to be a success, but if it does, the world (or the market) will be at your feet. If it fails, researchers, consultants and journalists have another good story to add to the list.