Market research is critical for businesses to identify and reach their target audiences, and in turn, to boost their profits. This type of research also helps companies figure out marketing and advertising essentials such as tag lines, value propositions, pricing, promotions, metrics and much more. However, there have been more than a few blunders in market research history. Here is a look at some notable failures and how they highlight the importance of accurate and thorough market research, not to mention following through on it.
1. New Coke
Why do consumers buy Coke? Perhaps they grew up equating Coke with happiness, thanks to some savvy marketing by Coca-Cola. Maybe their families drank only Coke, or perhaps some were in the U.S. military when Coca-Cola gave Coke to soldiers stationed all over the globe. There are many reasons, but when sales of Coke dropped in the 1970s and the first part of the 1980s, the company thought taste was the cause of the decline. Hence the introduction of New Coke, a sweeter version of Coke (sweeter than Pepsi, too).
This introduction had many flaws. For example, market researchers did not factor in the huge emotional impact Coke, with its specific design, has on people, and they did not explain to taste test subjects that they would eventually have to choose between drinking original Coke and New Coke.
In any case, before disaster occurred, taste tests indicated nothing but success was on the horizon. After all, market research showed that more people preferred the taste of New Coke to original Coke and Pepsi. The next step was to withdraw original Coke and sell only New Coke. Rather than boosting sales, however, this move proved a huge flop as consumers missed their beloved beverage and were put off by a differently designed Coke announcing, “NEW.”
Even restoring original Coke to sell alongside New Coke could not fix the issue. Ultimately, New Coke slunk away, and many people learned a valuable lesson in market research: marketing and sales should have designed their research to better understand the emotional factors driving the decline in Coke sales. However, a silver lining emerged from this historically disastrous flop: Coke customers asked for their Coke back (reincarnated as “Coke Classic”), Coca Cola listened and brand loyalty spiked, and conspiracy theories abounded that Coke had actually intentionally trashing their brand name to inspire loyal followers. The Coke Cult grew in their support of their brand.
2. Crystal Pepsi and Tab Clear
Many consumers see water as pure and healthy, and Pepsi decided in 1992 to give consumers Pepsi that was crystal clear. The soda dubbed Crystal Pepsi showed initial promise, with first-year sales of nearly $500 million. Of course, market research had indicated potential, so Pepsi did not anticipate the consumer confusion that happened next. Was Crystal Pepsi a lemon-lime soda? Was it healthier? What was the point in having a clear drink that tasted just about identical to Pepsi but that cost more?
After that first year of sales from curious consumers, Crystal Pepsi plummeted. Consumer confusion may have stemmed in part from the fact that Coca-Cola’s Tab Clear had launched in late 1992. It was a sugar-free diet cola (not lemon-lime) and failed as well. Consumers were confused as to why Pepsi expected them to pay more for what amounted to the same old sugary Pepsi except that it was transparent. Plus, many were disoriented from the appearance and taste not matching up. Better and expanded market research may have brought these potential flaws to light.
P.S. It seems that Crystal Pepsi built a small but loyal fan base, as 2016 sees a limited re-emergence. This move may satisfy some hard-core fans, but Pepsi seems to understand that the mass demand (and mass sales) will not be there. Rather, it wants to thank long-term fans for their loyalty by temporarily bringing back a favorite drink of theirs.
3. Rocky Mountain Sparkling Water
Bottled water was huge when Coors put out Rocky Mountain Sparkling Water in 1990. Coors beer, too, was popular, so the company figured slapping the word “Coors” on bottled water could lead to incredible sales.
Except, as with Crystal Pepsi, consumers were confused. Was this water mixed with beer or alcohol? What exactly was it? Either way, it did not seem too appetizing. Perhaps not wanting to admit a mistake, Coors kept the “Coors” wording on instead of trying to find another way to market bottled water. So not only was this a marketing research fail, it signaled a company that may have had too much pride or inflexibility to adjust quickly (unlike Coke’s about face on their brand). Personally, I think alcohol water might just be the next big thing…
Speaking of Coors’ inability to adjust to consumer confusion with what could be a simple design change, it is worth looking at Kodak and its problems in recognizing or acknowledging the advent of digital photography. Kodak did do the necessary research. In the 1980s, the company looked at factors such as the costs and flexibility of digital photography, and the research was right on point.
In fact, Kodak even developed a digital camera but shelved the project after realizing that the camera would not help sales of film and the like. Kodak was used to a certain way of doing things, and due to their heavy investment in paper and chemicals the company felt it unwise to pursue the results of the market research (and the imminent reality). The takeaway? Companies have to be prepared for their market research to tell you things you may not like. Keep in mind that their job is to satisfy consumers and provide consumer experiences, all while consumer tastes and technology evolve. Otherwise, why even bother with market research?
5. Arch Deluxe
When someone says, “McDonald’s,” many consumers think quick, predictable, cheap and convenient. In addition, they envision child-friendly fast-food experiences. Instead of continuing to do
what worked, McDonald’s, in 1996, marketed the Arch Deluxe burger. The target market was adults, and market research had indicated that adults wanted a burger designed for them. One potential problem may have been that the adults surveyed did not fit the real McDonald’s market. Additionally, many McDonald’s customers value attributes such as price and convenience over taste, so marketing the Arch Deluxe mostly based on taste ended up being an error. It was a big customer connection fail.
Commercials for the burger showed the burger’s taste turning off children, with the tag lines reading, “It’s the burger with the grown up taste.” When that move backfired, McDonald’s struggled on with advertisements showing Ronald McDonald playing pool and hitting the golf links. Again, the message was out of sync with the people who frequented McDonald’s.
The Arch Deluxe flopped hugely, but it did not stop McDonald’s from making similar marketing mistakes in the future. For example, its McLean Deluxe targeted health-conscious consumers, but research overestimated how many consumers were willing to go to McDonald’s for this burger; the burger was expensive, too. Reports also state that the McLean Deluxe flopped in part due to McDonald’s rushing the product out in stores without a sufficient period of market research. Furthermore, the taste was inconsistent; one burger might taste fine, but the next one would be dry and elastic. It was bad news for consumers who valued predictability. A burger in California should taste the same as one in Virginia.
Convenience was lacking too, as the burgers had to be made to order due to their makeup. The McLean Deluxe also got a bad rep from McDonald’s competitors because it had small amounts of carrageenan, a seaweed derivative. “Seaweed burgers” and McDonald’s just do not mesh.
It is clear that even some of the world’s strongest brands such as Coca-Cola, Pepsi, Coors and McDonald’s have fallen victim to incomplete or poorly designed market research, while companies such as Kodak did a lot of things right but failed to acknowledge the reality of the research. Big companies are in fairly good position to weather such storms, so risks may be worth taking once in a while. For smaller businesses, however, such blunders can be fatal. Correctly designed market research is imperative; businesses need to use it and listen to it. Do you know of any major research blunders that led to disasters? Share them with me @tscericv or via my linkedin page.