Product Failure Evaluation - Inside analysis

1. Product Failure Evaluation
Presented By: Group 4

2. Mc Donald’s Arch Deluxe

3. 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

4. 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

5. Reasons Behind Failure
Inappropriate Marketing Mix
– Product
Positioned as a “sophisticated” product meant for adults
McDonalds was known for its convenience and
simplicity, not sophistication
Very high calorie content (fat contents: 32 grams)
– Price
Too high for a burger at that time ($2.29)
– Promotion
Advertisements 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.

6. Reasons Behind Failure
Faults in product development process
Centralized branding and marketing decision
Lack of a well defined cross-functional new product
strategy;
Insufficient involvement of critical departments during
the development and Launch
Insufficient roll-outs of the product before launching
Other 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

7. Reasons Behind Failure
Less appealing value proposition
Lacked a compelling consumer benefit
Was a simple me-too item
No favourable PODs
Served merely to further fragment the product line
Lack of resonating focus as compared to the
competitors’ products

8. 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

9. Time Wasted
Stage Gate Diagram

10. Crystal Pepsi

11. 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

12. 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 Pepsi
Without color, caffeine and preservatives but
added sugar
1n 1994, Crystal Pepsi was re-launched as just
Crystal with addition of citrus flavor

13. 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

14. Failure reasons(Cont.)
Too Little market attractiveness

15. 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

16. Not enough
emphasis on the
idea Stage Gate Diagram

17. Nintendo Virtual Boy

18. Nintendo
• 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

19. 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

20. 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.

21. 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

22. Stage Gate Diagram
• Focus on your brand values. If your values are ‘strong, masculine
and very rugged,’ you shouldn’t be selling perfume intowine
Not much thought or
coolers. A range of baby clothes may also friendliness idea.
user be a bad
• Don’t alienate your core customers. For brands thatin
Hype-creation failure inspire
Launch
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.’

23. Harley Davidson Perfume

24. 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.
S

25. 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.

26. World wide Revenue
$282.2 $4.3 billion 2009
million
motorcycles
$767.3 parts & acce.
million
$3.2 general
Billion merchandise
HARLEY-DAVIDSON, INC.
NYSE: HOG Fact Sheet

27. Brand extensions
 Merchandise
• Helmet
• Clothes (Jackets…)
• Mugs
• Collectibles….
• Perfumes
 Beer
 Bars

28. • 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

29. 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

30. 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

31. Stage Gate Diagram
Thinking more
products = more
sales

32. 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.’

33. POOR NPD PRACTICES

34. Crystal Harley Nintedo
McD Arch
Pepsi Perfume Virtual Boy
Strategy
Does not fit with the mission Y N Y Y
No NPD Goals N N y N
Short term tactical initiative N Y N Y
Uncear NPD Goals Y Y Y N
No Regard for mix Appropriateness Y Y Y N
No concern over types of NPD projects being developed Y N Y Y
No Prioritization of NPD products N N Y N
No process undertaking protfolio mnagement N Y Y Y
Research
Customer involved in NPD process Y N Y N
Little market Research N Y Y Y
No real evaluation of testing Y Y Y Y
No market study N Y Y Y
Process
Criteria for evaluating NPD undefined N Y Y Y
Limited doccumentation regarding NPD N N Y N
Minimal Testing Y Y Y Y
No NPD process exists N N Y N
No discipline in using company's NPD process N N Y Y
Project not reviewed at completion N Y Y Y
NPD circumvented management's approval N Y N N

35. Thanks for paying attention