The 6 Most Disastrous Product Launches Ever – And What You Can Learn From Them

By: Richard Adams     Topics: Entrepreneurship     More posts about: Product Launches, Startups

If you’ve ever created a product only to see it fall flat on its face then take heed. You may think that the big brands like Coke and IBM, with all the resources at their fingertips, would never release a disastrous product. But you’d be wrong.

As it turns out, the history books are littered with product launches gone bad – some costing literally hundreds of millions of dollars.

Fortunately the bigger the disaster, the more we can learn from the experience. So let’s pick apart some of the biggest ever failed product launches to highlight not only the risks of launching a new product but also what we can learn from these shocking case studies.

IBM PCjr

Once upon a time IBM were the manufacturers of business computers in the form of their IBM PC. Buoyed by their success, and keen to expand their market reach even further, IBM decided to venture into the consumer market by offering a computer specifically designed for home users. Thus, the IBM PCjr was born.

The pre-launch excitement was palpable – it was the “Apple cult” of it’s day. Computer lovers weren’t just lining up ready to buy the new system months before it’s launch but they were even shunning equal machines released by IBMs competitors. The pressure was on.

Sadly, rather like many over-hyped product launches, the reality failed to live up to expectations. For one, the keyboard was so small and so ugly as to be virtually unusable. Indeed, as sales flagged IBM even swapped out the keyboard for a better one at huge expense but sales failed to recover.

However this didn’t address the two core issues that led to the IBM PCjr’s failure; firstly the machine cost almost double what similar machines were selling for with no obvious benefits.

Even worse, the limited processing power of the IBMjr meant that in many cases software, and even individual files, weren’t compatible between the IBM PC and the PCjr. This meant that anyone wanting to transfer information between the two machines – such as business owners who wanted to do some work from home – were setting themselves up for a fall.

Shortly after launch, when monthly sales were only in their thousands, IBM pulled the plug on their greatest product launch failure ever.

So what can we learn from IBM’s dismal failure with the PCjr? Firstly, if you’re going to sell a product, it must be worth the money you’re changing. Many brands over the years have shown that premium products will sell, but only when customers still consider them fair value.

Before launching any kind of product, market research is essential. Get your product into the hands of your potential customers and ask them for their thoughts. Do they like it? How can it be improved? How does it measure up to their expectations? And arguably most importantly of all (for IBM at least): what will customers willingly pay for your product?

New Coke

One of the classic product launch failures involves one of the most iconic and well-known brands in the world; namely the Coca Cola company. For years, Pepsi and Coca Cola had been fierce rivals for the title of “cola king” but what worried the Coca Cola company was that they seemed to be losing the battle. Pepsi’s sales continued to grow while their own faltered. Alarmed at dropping sales, Coke decided they need to take massive action.

Taste tests suggested that many customers preferred the sweeter taste of Pepsi over Coke so experts set about creating a “new Coke” that was more appealing than Pepsi’s offering. Researchers found customers largely in favour of New Coke and so in 1985 the product was officially launched.

The response was almost immediate. While some cola drinkers did indeed prefer New Coke over the old formula or even over Pepsi, there was a problem. A vocal customer base felt cheated that their beloved drink had been tampered with and started to boycott the new version. Sales dropped still further until, with a heavy heart, executives at Coke had to perform a “u-turn” and reintroduce the old formula.

The really interesting thing about the New Coke saga from an entrepreneurs perspective is that in theory the product should have been a winner. Coke poured huge amounts of time and money into their research and development and indeed on average people did prefer the new, sweeter beverage over the old one. So what really went wrong?

In essence, Coke forgot to consider one vital element – and that was their brand. Not the price, the appearance or the flavor of their drink but rather the feelings people had about the company. For many people, Coke was a part of their identity. They’d enjoyed it for years and rather like supporting a certain football team the Coke/Pepsi divide helped to define who they were as a person.

Indeed Coke’s branding was so strong that when they stopped producing the old formula, some die-hard enthusiasts even started importing it from overseas where New Coke had not yet been introduced. Their customers felt cheated and deceived. The brand had changed – and they didn’t like it.

So the biggest lesson that entrepreneurs can learn from the dismal failure of New Coke is the importance of really understanding your customers. By interacting with them through the enquiries they make and through surveys and social media, you’ll gain a better understanding of what works.

Try to gain an understanding of how your customers view you and what your brand traits are, so that you can live up to these expectations. Consistent branding works; it builds trust and makes customers feel comfortable. It’s how Ray Kroc grew McDonalds into one of the biggest companies in the world, because wherever you see the “yellow arches” you know exactly what you’re getting. Imagine walking into McDonalds to find it selling only vegeburgers and imagine how cheated you’d feel.

In other words choose a brand and stick to it, no matter what.

Tetris

“Tetris, a failure?” I hear you ask? Right now you’re probably remembering the Gameboy you lovingly owned years ago and the many happy hours you spent playing Tetris. So how could a game that has become such a part of popular culture be considered a dismal failure?

The reason to consider Tetris a product launch disaster concerns the secret battle between Nintendo and Atari. Before it hit the big time, every software manufacturer that encountered Tetris saw the games massive potential and wanted a piece of the action.

Soon many of the biggest names in the industry were battling it out for rights to produce and sell the game on their platform and two of the biggest rivals were Atari and Nintendo. In theory Atari won the race; they got approval to mass-produce the game long before Nintendo got to the table. But there was a problem; they were negotiating with the wrong person. Nintendo may have been late to the game but they rapidly identified the “go-to” guy and began negotiating in earnest.

The outcome was that Atari incorrectly thought they had won sole rights to the game when infact they had been beaten by Nintendo. As Atari had negotiated with a more junior person, the Nintendo deal won out after some unpleasant legal wrangling.

Unfortunately by the time Nintendo was finally crowned the victor, Atari had already manufactured vast supplies of the game to distribute. On losing the case Atari were then faced with an expensive and embarrassing obligation to dispose of all their Tetris game cartridges. In all, they recalled and destroyed over a quarter of a million games, a mistake that cost them millions of dollars.

So while Tetris may have been a major success for Nintendo it also represents a massive disaster for competitor Atari who failed to do their research properly and eventually missed out.

There are a number of points that we as entrepreneurs would do well to learn from this unfortunate saga. Firstly, try to identify the real authorities in your chosen business niche and build trust and rapport with them. Relationships are just as important as ever when it comes to growing a venture and having the right friends can make or break a business.

Secondly while entrepreneurs tend to be impatient, action-oriented individuals, it’s also important to have someone on staff who is well-grounded and will look at the finer details of a project. Whether you employ a staff member specifically or outsource as necessary, don’t underestimate the importance of the right counsel in the form of lawyers and accountants when you’re making important decisions in your business. One badly-checked piece of paper really can bring the roof down if you’re unlucky.

Dasani

Poor old Coca Cola. As if the New Coke fiasco weren’t enough of a mistake, the UK release of their bottled water product was an even greater disaster leading to possibly more bad press than any other major product launch in history.

By definition, most bottled water sold comes from natural springs where it is considered to be fresher, purer and more healthy than tap water. Many people also believe it tastes better too. All the major bottled water brands sold in Britain such as Evian and Buxton follow this most basic rule. However Coca Cola decided to do something different…

Upon the release of the Coke’s heavily-marketed Dasani water, consumers were outraged to discover that the water they were spending good money on hadn’t just bubbled up from an anchient aquifer but had instead come from a tap in London. No matter that Coca Cola claimed the tap water was put through a purification process and had trace minerals added to it – the fact is that bottled water is seen as natural and healthy while tap water and artificial processes aren’t.

In other words, the product was at odds with consumers from the very outset. Just like the New Coke scenario, the taste wasn’t what mattered. What counted was what consumers thought about the product – and that was over-poweringly negative.

With a PR crisis on their hands and customers feeling cheated and lied to the story just got worse; abnormally high levels of a cancer-causing agent was also identified in the water. As the mineral wasn’t present in the original water, Coke’s “purification” process must have been inadvertently adding it somehow.

Coke quickly withdrew hundreds of thousands of bottles and as consumer confidence sunk to an all time low, the drink was finally discontinued. Indeed, while Dasani is still sold in some countries, the negative publicity in the UK not only led to the product’s withdrawal here but also shelved the launch of the product in mainland Europe too.

There are two lessons here that we entrepreneurs need to keep in mind. The first of these relates to quality control. If Coke was properly testing their water then the harmful chemicals would have been noticed in advance. Never make assumptions about your product or business; instead try to experience it as a customer with fresh eyes and see what your own experience is.

Secondly, your customers aren’t stupid, so don’t treat them like it. The overwhelming response from customers about Dasani water was that they felt cheated and conned. They felt like Coke had tried to take advantage of them, and nobody likes to feel like that.

Remember that your customers are the lifeblood of your business and they should be treated with the utmost respect at all times. Think about how your product lives up to expectations and, like Apple or Dyson, find ways to exceed those expectations in every interaction. When you succeed, you’ll build massive trust and loyalty in your business that can explode your growth.

Premier Cigarettes

When the dangers of smoking cigarettes started to become public knowledge in the 1980’s, tobacco firm RJ Reynolds hit on a novel idea to grow their customer base; a cigarette that doesn’t give off smoke. The theory was that a smokeless cigarette would not only be more socially-acceptable but would also appear healthier to customers who were concerned about the risks of smoking.

Sadly, the reality was rather different. While the developers made good on their claims of a smokeless cigarette, the complicated process of making a tobacco that didn’t produce visible smoke had two major shortfalls. Firstly the cigarettes were virtually impossible to light and secondly customers found the taste repulsive.

For most customers, one packet was enough before they scurried back to their old cigarette brand. Shortly after it’s launch, the smokeless cigarette was withdrawn from sale, as RJ Reynolds flushed over $300 million of development costs down the drain.

The simple fact is that there’s no point in trying to run before you can walk. It’s doesn’t matter if a cigarette doesn’t produce smoke if the most basic elements aren’t there. If you can’t light a cigarette and it tastes vile then nobody will want it.

As an entrepreneur, remember the old adage that “form follows function”. Ensure your product does exactly what it says on the tin – smoothly and efficiently – before you start trying to add any gimmicks on top to try and make you unique.

Imagine if Popup Domination – the most popular WordPress plugin for building your mailing list – wouldn’t actually add subscribers to your autoresponder. It wouldn’t matter how fancy the popups looked or how easy it was to install – if the core functionality isn’t there then your product is going to fail.

And as a final point, try to keep your product development costs as low as possible. The more money you spend, the higher your risk is. While you may have grandiose ideas about a new piece of software, a mobile app or whatever else, try removing things from the project to see if you can save time and money on development costs without giving up the core purpose of the product.

Entrepreneurs have a saying: “fail fast and fail often”. The more products you release, the sooner you’ll find a winner. And when you land that “big catch” you’ll be in a perfect position to reinvest some of your profits into new features and really turn your product into a market leader.

Betamax

Many of us have heard the story of two competitors battling it out for dominance in the video cassette market. Strangely, while we all know that VHS was the ultimate winner, with Betamax dying a painful death, the most obvious question is why? After all, most people who tested both formats preferred Betamax citing it’s far higher quality as the reason for their preference. So if a “better” product lost out to an inferior one, what really happened, and what can we as entrepreneurs learn from the experience?

It turns out that Betamax had an Achilles heel that led to it’s downfall; namely the video tapes they made weren’t very long when compared to VHS which made putting a whole movie on a Betamax cassette almost impossible.

As a result of this shortfall, the major Hollywood studios opted to release their movies on the longer VHS format which helped it to almost instantly corner the market. While Betamax may have been a superior product, there simply weren’t enough videos worth watching and so, slowly, even die-hard Betamax aficionados found themselves admitting defeat and investing in VHS in order to enjoy their favourite films.

They say that “no man is an island” and this can be applied just as easily in business. A really smart way to get big fast is to piggyback off an already successful company. In many ways this is why Paypal has become such a big name because they set themselves up as the payment service for Ebay sellers. It’s also one reason that Buffer has become so big – by creating a simple solution to a problem that millions of existing Twitter users have. Piggybacking works, big time.

When you’re considering launching a product take a long, hard look at the market and your potential customers. Try to find related products and services that you can align yourself with and use their success to build your own business as break-neck speed.

So now it’s your turn. If you’ve ever launched a product of your own – whether it was a success or not – please leave a comment below and tell us what your experiences were and what your learned. We’d love to hear from you!