By Jackson Yu

Jackson Yu is a marketing enthusiast who specializes in social media and new product development.

Why Studying Product Failures Matters in Business

Every company dreams of launching the next revolutionary product. Businesses invest millions of dollars in research, design, advertising, and marketing with the hope that their new idea will make a splash in the world.

Many products have succeeded in this. The Sony Walkman. The Tesla Model S. The Apple iPhone. All of these have gone down in history as some of the most successful products to hit the market.

However, not every product succeeds. In fact, many products fail. And some fail horribly. These failures may be embarrassing for the companies involved, but they provide great lessons for people to learn from.

One of the most effective ways to understand marketing strategy is by analyzing what not to do. Failed products reveal what happens when companies misunderstand their customers, ignore brand identity, or release products that just don’t make sense to consumers.

In this blog, I will explore several product failures and identify patterns that explain why certain ideas collapse in the real world.

Now, let’s dive into these marketing disasters and discover what they can teach us.

The Ford Edsel: When Expectations Destroy a Product

Perhaps the most famous product failure in American business history is the Ford Edsel, created by the Ford Motor Company in 1957. At the time, Ford believed the Edsel would represent the future of automobiles. The company invested massive amounts of money in development and advertising, promoting the car as something revolutionary. Ford launched one of the most dramatic marketing campaigns of all time, and they teased the car in a way to signal that something revolutionary was coming. The Edsel was the “car of the future”. The hype generated around the Edsel was significant, so naturally they expected consumers to come rushing in.

But that wasn’t the case.

Consumers quickly criticized the Edsel’s design, calling it unattractive and strange. Even worse, the car failed to deliver on the expectations created by Ford’s marketing campaign. It goes without saying that when customers are promised something extraordinary, they expect something extraordinary. When those expectations were not met, it was only a matter of time for disappointment to settle in.

The Edsel only remained in production for four years before Ford abandoned the project entirely. Today, the name “Edsel” has become synonymous with failure in marketing and product design.

The lesson? Overpromising is dangerous. When companies build enormous expectations through advertising, the product must deliver exceptional value. If the product falls short, the disappointment can be amplified and damage the brand.

Read: How to Use Marketing Math to Win at Social Media

Crystal Pepsi: When Consumer Expectations Do Not Match Reality

What color is cola? Brown. And it has been brown for as long as cola existed. However, in the early 1990s, PepsiCo introduced a product that looked completely different from traditional cola. This unique product was Crystal Pepsi, a transparent version of Pepsi designed to appear healthier and more modern.

The idea, at least on paper, seemed clever. During the 1990s, many consumers were becoming more health conscious. A clear soda looked pure and clean compared to the dark color of traditional cola.

However, there was a major psychological problem. You see, consumers associate certain colors with certain flavors. For example, dark brown soda usually tastes like cola. And clear soda usually tastes like lemon lime drinks like Sprite or 7Up.

So, when people saw Crystal Pepsi, they expected a citrus flavor. When they drank it and tasted cola instead, the experience felt confusing.

Now as with any new product, it attracted attention because it was novel and unusual. However, once that novelty disappeared, consumers lost interest. Eventually, stores struggled to sell the remaining inventory. And Crystal Pepsi joined the ranks amongst other product failures in history.

The lesson here is that consumers rely heavily on visual cues. Product appearance must match what customers expect the experience to be. Novelty will only carry a product so far.

WOW Chips: When a Health Solution Creates New Problems

Here’s a dilemma. Snack chips taste so good, but they’re bad for you. What if there was a chip that was both tasty and healthy? Snack company Frito-Lay attempted to solve a common problem: people love potato chips, but they contain a lot of fat. The company created Lay’s WOW Chips, using a fat substitute called Olestra. The way this worked was that Olestra allowed people to eat chips with fewer calories because the body could not absorb the fat substitute.

It seemed like the perfect idea. Now health-conscious people can feel better about eating chips. But they did not feel better. In fact, quite the opposite.

You see, olestra caused serious digestive side effects in some consumers. The warning label famously stated that the chips “may cause anal leakage,” which quickly became a marketing nightmare. Because that’s the one thing that you really do not want to see on something you’re about to consume. 

Not surprisingly, customers avoided the product once these side effects became widely known.

The lesson to be learned here is that health innovations must be safe and trustworthy. If a product causes unpleasant side effects, customers will quickly abandon it. Just the idea of anal leakage should scare most consumers, but seeing it on a bag of chips? Not very appealing.

Read: How to Use Your Website to Build Goodwill with your Clients

New Coke: Ignoring Loyal Customers

Coca-Cola has one of the most devoted and loyal customers in the world, but the way the company really came to realize this happened during one of the most famous marketing mistakes of all time. In 1985, Coca-Cola Company introduced New Coke. And it led to chaos.

The company changed the formula of its famous soda in an attempt to compete with PepsiCo, whose products were performing well in taste tests.

Instead of introducing a new product alongside the original Coca-Cola, the company replaced the classic formula entirely. They believed this would please their customers.

Oh boy. They could not have been more wrong.

Consumers reacted strongly. Many loyal fans felt emotionally connected to the original drink and protested the change. Within only 70 days, Coca-Cola removed New Coke from the market and reintroduced the original formula as Coca-Cola Classic.

Interestingly, the return of the original formula generated massive positive publicity.

Coca-Cola is an iconic brand, and its classic formula is arguably even more iconic. The lesson is to never underestimate the emotional attachment customers have to iconic products. Again, “if it ain’t broke, don’t fix it.” Otherwise, you will feel the wrath of loyal Coca-Cola enjoyers.

Microsoft Zune: Losing to a Better Competitor

Technology company Microsoft attempted to compete with the wildly successful Apple iPod by launching the Microsoft Zune. That was already a daunting task given the iPod’s success, but that’s not why Microsoft failed.

It was simple. The Zune struggled to differentiate itself. It lacked the stylish design and strong ecosystem that Apple had already established. Even worse, music purchased through the Zune platform was often more expensive than songs on Apple’s store. This gave consumers no real reason to choose the Zune over the already established iPod

As a result, consumers saw little reason to switch from the iPod. The project ultimately resulted in billions of dollars in losses for Microsoft. And while the iPod went down in history as one of the most successful icons of its time, the Zune faded into obscurity. How many of you have even heard of Zune before this blog? Now how many of you have heard of the iPod?

When entering a competitive market, a new product must provide a clear advantage over existing alternatives. Granted, it was difficult to compete with Apple’s iconic iPod, but had Microsoft implemented more appealing and distinct features, the Zune could have been successful.

Samsung Galaxy Note 7: When Safety Becomes a Crisis

Few product failures literally go up in flames. In 2016, Samsung Electronics released the Samsung Galaxy Note 7, a highly anticipated smartphone. Shortly after its release, reports began to appear that the device’s battery could overheat and catch fire.

The problem became so serious that airlines banned the phone from flights. Eventually Samsung recalled the product entirely. This failure demonstrates how dangerous product defects can be.

I believe the lesson to be learned here is very obvious. No amount of marketing can save a product that is unsafe. When consumers buy a phone, “spontaneous combustion” is not a feature they’re looking for.

Read: 5 Reasons Why Content Creators QUIT Social Media

Colored Ketchup: When Changing a Classic Goes Too Far

What color is ketchup? If you say anything other than red then you might be crazy. But during the early 2000s, you wouldn’t have been that crazy. During this time, Heinz attempted to make ketchup more exciting for children. The company launched Heinz EZ Squirt Colored Ketchup, offering unusual colors such as purple and green.

The marketing strategy focused on fun and creativity. Kids might enjoy decorating their food with colorful condiments. Instead of just an ordinary condiment, kids could treat their food like a canvas and paint whatever they like.

Initially, the idea attracted curiosity and early sales were strong. However, consumers soon realized something was off. I mean, who could blame them? For generations, ketchup had always been red. So when people saw purple ketchup on their hot dogs or hamburgers, it looked unnatural. Maybe even disgusting.

Even though the taste remained the same, the visual experience made the food seem less appetizing. And just like Crystal Pepsi, the novelty wore off and consumers weren’t interested in this fun but strange idea for colored ketchup.

This is a classic example of why changing a familiar product too dramatically can make customers uncomfortable. Some traditions exist for a reason. There’s the saying, “if it ain’t broke, don’t fix it.” And that applies perfectly to ketchup and its default red color.

Cheetos Lip Balm: A Product That Made No Sense

Some ideas sound great on paper, but are questionable in reality. Snack brand Cheetos experimented with a novelty product called Cheetos Lip Balm. And of course, it was questionable.

The idea was simple but strange. Many people love the flavor of Cheetos, so why not create lip balm that tastes like the famous snack? Licking the Cheeto dust off your fingers and lips is a big part of enjoying Cheetos. Now you can have it as a lip balm. Genius!

Unfortunately, consumers did not appreciate the combination. At the end of the day, Cheetos are food, while lip balm is a cosmetic product. Mixing the two categories made the product feel awkward and unnecessary. Sure, it was novel. But remember what happened with Crystal Pepsi? Novelty only lasts so long without other appealing features.

So, even though it was an interesting promotional idea, the product never achieved widespread success.

The lesson here is similar to the Clairol case with the yogurt shampoo. Sometimes two popular ideas are great on their own but should stay separate.

Colgate Frozen Dinners: A Branding Disaster

If I told you to say the first word that comes to your mind when I say “Colgate”, I bet many of you would say “toothpaste.” So when Colgate tried to expand into the food industry with Colgate Kitchen Entrees, a line of frozen dinners, consumers had one big question: “why?”

Consumers immediately rejected the idea. People associate Colgate with dental hygiene, not dinner. The thought of eating a meal produced by a toothpaste brand created a strange mental image.

Because the last thing you want to be thinking about while digging into a savory meal is toothpaste.

This example demonstrates how powerful brand associations can be. When companies expand into new product categories, they must consider how the brand will influence customer perception. Colgate is associated with toothpaste and always will be.

Yogurt Shampoo: When Product Associations Become Confusing

Do you love yogurt? Yes? Perfect! How do you like yogurt in your shampoo? If you’re put off by that question, you weren’t the only one. In the late 1970s, the hair care company Clairol launched a product called Clairol Touch of Yogurt Shampoo. The idea was quite simple. Yogurt is commonly associated with health and nutrition. Right? Okay. Then adding yogurt ingredients to shampoo might suggest healthier hair. I mean, that kind of makes sense…right?

If you’re confused, you’re not the only one. While the concept sounded creative, consumers struggled to connect yogurt with hair care. Most people think of yogurt as a breakfast food. Not a beauty product.

Even worse, yogurt has negative associations when it spoils. If yogurt is left out overnight, it develops a strong smell that people do not want in general. Much less in their hair products. Because of these conflicting associations, the shampoo failed to gain traction in the market.

The lesson to be learned here is that consumers build mental connections between products and categories. If a new product violates those associations, customers may reject it immediately. Yogurt is healthy. Hair care is also healthy. But combined together? Not so much.

McDonald’s Arch Deluxe: Confusing the Brand Identity

When people think of McDonald’s, they think cheap, fast, and familiar. McDonald’s tried to alter that image by introducing the McDonald’s Arch Deluxe. The goal was to appeal to adults seeking a more sophisticated burger.

The company invested over 100 million dollars in advertising to promote the product. However, consumers did not associate McDonald’s with premium dining. The brand had always represented affordable, fast, and consistent food.

Customers who wanted a high end burger simply visited other restaurants.

The lesson was simple. Your brand identity defines what customers expect. Trying to completely change that identity can confuse the market. Sometimes, it’s best to stay in your lane and perfect what you already know.

Coors Spring Water: A Branding Identity Crisis

You ask your friend for a nice cold refreshing bottle of water, and he hands you one. But the label says Coors. You’re a little confused, and so you do a double take. Nope, your eyes aren’t deceiving you. That’s right. The Coors Brewing Company attempted to sell bottled water called Coors Rocky Mountain Spring Water.

At first glance, the idea seemed logical. Coors often advertises its beer using imagery of fresh mountain water, so selling bottled water might seem like a natural extension.

However, consumers strongly associate the Coors brand with beer. When customers saw the Coors label, they automatically assumed the product contained alcohol. And this was very difficult to change because Coors and the association of beer go hand in hand.

Because of this strong association, the water product confused consumers and failed to succeed.

The issue here was not necessarily the product. It concerned brand names and how powerful the meaning is behind them. Not every product fits within the identity that consumers already recognize. 

Betamax: When Superior Technology Loses

In business, being the best does not necessarily guarantee that you will win. The perfect example was the format war between Sony Betamax and VHS in the late 1970s and early 1980s.

Betamax offered higher quality video and sound, yet it ultimately lost the market battle. How does that make sense? If something is better, it should be more popular, no?

The reason was strategic rather than technical. Sony limited access to the Betamax technology, while VHS manufacturers allowed other companies to produce compatible equipment.

Because VHS machines became widely available and affordable, consumers adopted that format instead.

This is a classic case where the “best” does not always win. Other factors come into play too, and in this case, distribution and industry partnerships decided that VHS would go on to be the popular choice.

Final Thoughts: Turning Failure into Business Wisdom

Product failures may appear embarrassing, but they result in valuable learning opportunities. Each example in this blog demonstrates how critical it is for businesses to understand consumer psychology, brand identity, and market expectations.

The companies discussed here are not incompetent organizations. In fact, most of them remain extremely successful today. What stands out then is that even large, experienced companies can make mistakes when they misunderstand their customers and/or attempt to force unusual ideas.

Successful marketers are the ones that listen carefully to consumers, as well as understand and respect the meaning of their brand.

In short, innovation must always align with customer expectations. And when these two work together in harmony, great things are possible.

And when they don’t? Well, that’s the whole reason this blog was written.