Famous Market Research Fails, Examples, and Stories
Conducting market research is crucial in helping businesses identify and reach their target audiences. One reward in doing so is a potential boost in profits. But this type of research also helps companies figure out marketing and advertising essentials, such as tag lines, value propositions, pricing, promotions, and metrics. Despite the care that goes into the work, there have been more than a few blunders in market research history. Big brand names can recover from these oversights, but this type of failure could prove fatal for small businesses. Looking at some notable market research failures highlights the importance of accurate and thorough market research.
1. New Coke: A Market Research Failure and Recovery
Coke’s prominence in the soft drink industry is well established, and its iconic marketing campaigns have contributed to its loyal following. But even Coke isn’t immune to making a marketing misstep. When sales began to fall off in the 1970s and the first part of the 1980s, the company thought taste was the cause of the decline. To fix the situation, they introduced New Coke, a beverage sweeter than both the original version of Coke and Pepsi.
Taste tests indicated that success was on the horizon. Market research indicated that more people preferred the taste of New Coke to original Coke and Pepsi. But the product’s introduction had many flaws. Market researchers did not factor in the emotional impact Coke, with its specific design, has on people. They also did not explain to taste test subjects that they would eventually have to choose between drinking original Coke and New Coke.
Disaster occurred when the company withdrew original Coke from shelves to sell only New Coke. Rather than boosting sales, this move proved a huge flop. Consumers missed their familiar beverage and were put off by a differently designed Coke announcing “NEW.”
How The Coke Brand Adapted and Recovered
Even restoring original Coke to sell alongside New Coke could not fix the issue. In time, New Coke disappeared. Marketing and sales should have designed their research into the decline in Coke sales to factor in consumers’ emotional connection to the brand’s products. The story has a silver lining. Customers asked for their Coke back (reincarnated as “Coke Classic”). Coca-Cola listened, and brand loyalty spiked. Conspiracy theories swirled that Coke had intentionally trashed its brand name to inspire loyal followers. The Coke Cult grew in its support of its brand.
2. Crystal Pepsi and Tab Clear: Same Taste, Higher Cost
In the early 1990s, consumer demand for clear and lighter soft drinks was increasing. Pepsi decided to tap into the growing market, and in 1992 produced Pepsi that was clear. The soda dubbed Crystal Pepsi showed initial promise, with first-year sales of nearly $500 million. Market research indicated potential, so Pepsi did not expect the consumer confusion that came next. Consumers wondered whether Crystal Pepsi was a lemon-lime soda, if it was healthier, and why a clear drink that tasted almost identical to Pepsi cost more. Pepsi should have caught this failure to connect with consumers during their market research phase.
After that first year of sales driven by curious consumers, Crystal Pepsi plummeted. Consumer confusion may have stemmed in part from the fact that Coca-Cola’s Tab Clear launched in late 1992. It was a sugar-free diet cola and failed as well. Ultimately, consumers didn’t understand why Pepsi expected them to pay more for what was essentially the sugary Pepsi they knew, except this one was transparent. Many consumers were also disoriented by the appearance and taste not matching up. Better and expanded market research may have brought these potential flaws to light.
3. Rocky Mountain Sparkling Water: More Consumer Confusion
Bottled water was huge when Coors put out Rocky Mountain Sparkling Water in 1990. Coors beer was also popular. Putting two and two together, the company believed that adding its brand to bottled water could lead to incredible sales. They ran with the idea instead of completing the market research necessary to understand the consumer response.
As with Crystal Pepsi, consumers were confused. The branding led consumers to wonder if the water was mixed with beer or alcohol. Another component that doomed the project was the fact that Coors relied on its big brand name to carry them in a new market. While Coors was a trusted name in the beer industry, the bottled water industry already had several brand names that customers preferred. Coors’ name and branding did not give any indication about why consumers should choose its water over these competitors’ products.
Despite the confusion, Coors kept the “Coors” branding instead of trying to find another way to market bottled water. So not only was this a marketing research failure, it signaled a company that may have had too much pride or inflexibility to adjust as needed (unlike the recovery made by Coke). But with the rise of alcoholic seltzer water, maybe they are due for a comeback.
4. Kodak: Ignoring Market Trends
Market research shows the importance of adjusting course to address changing consumer preferences and growing trends. One important example is Kodak and its problems in acknowledging the advent of digital photography. Kodak did the necessary research, but it chose to try and save money instead of listening to what the camera market research revealed.
In the 1980s, the company looked at factors such as the costs and flexibility of digital photography, and the research was right on point. Digital photography was indeed poised to become the next big thing. In fact, Kodak even developed a digital camera but shelved the project after it realized the camera would not help sales of film or its other products. The foundation of Kodak’s business model was traditional film photography. Due to heavy investment in paper and chemicals, the company felt it was unwise to pursue the results of the market research (and imminent reality).
Companies must prepare for their market research insights to give answers they may not like. Businesses need to keep in mind that the purpose of their research is to help please customers and provide consumer experiences, all while keeping pace as consumer tastes and technology evolve. Otherwise, there is no point in conducting the market research in the first place.
5. Arch Deluxe: McDonald’s Market Research Disconnect
When someone says “McDonald’s,” many consumers think quick, consistent, cheap, and convenient. Also, they envision child-friendly fast-food experiences. Instead of continuing to do what worked, in 1996, McDonald’s 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 with the data McDonald’s based its decision on may have been that the adults surveyed were not representative of McDonald’s market. Additionally, many McDonald’s customers value attributes such as price and convenience over taste. Marketing the Arch Deluxe with taste as a key focus ended up being an error. It was a big customer connection oversight, target market disconnect, and market research fail for the books. Commercials for the burger showed the burger’s taste turning off children, with taglines 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 customers who frequent McDonald’s.
McDonald’s Market Research Failure Continued with McLean Delux
The Arch Deluxe failed in a big way, but that didn’t stop McDonald’s from making similar marketing mistakes with its McLean Deluxe. The 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 fell flat in part due to McDonald’s rushing the product out to stores without a sufficient period of market research. Furthermore, the taste was inconsistent. One burger might taste fine, but the next would be dry and elastic. It was bad news for consumers who valued consistency. A burger in California should taste the same as one in Virginia.
Convenience was lacking too. The burgers were cooked 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 don’t mesh for American consumers. In the marketing of both its Arch Deluxe and McLean Deluxe, McDonald’s failed to apply its research findings to the expectations of its core customer base.
How to Avoid Market Research Failure
Even some of the world’s strongest brands, such as Coca-Cola, Pepsi, Coors, and McDonald’s, have fallen victim to incomplete or poorly thought-out market research. Other companies, such as Kodak, did a lot of things right but failed to acknowledge the reality of the research.
Big companies are in a good position to weather such storms, which can make risks worth taking once in a while. For smaller businesses, such blunders can be fatal. TraQline gives detailed consumer insights to ensure satisfactory results. These results are divided by industry and updated quarterly. Check out our suite of market research products including Durable IQ, SKU Metrix, and HPOS to avoid market research failure. When you are ready to get serious about successful market research, contact our research specialists. Well-designed market research is critical to success. Businesses need to use it and listen to it.