Question

Why Products and Services Succeed or Fail

Thousands of products fail every year, sliding into oblivion and costing American businesses billions of dollars in lost investments. Ideally, a new product or service needs a precise protocol, a statement that, before product development begins, identifies (1) a well-defined target market, (2) specific customers' needs, wants, and preferences, and (3) what the product will be and do. If more businesses developed precise protocols before new product launches, the following infamous product failures could have been avoided: Kellogg's Breakfast Mates, Colgate's Kitchen Entrees, Cocaine Energy Drink, or Clairol's Touch of Yogurt Shampoo.
Both marketing and non-marketing factors contribute to new-product failures. Using research results from several studies on new-product success and failure, we can identify critical marketing factorsâwhich sometimes overlapâthat often separate new-product winners and losers. The most common reasons for new-product failures include (1) insignificant point of difference, (2) no economical access to buyers, (3) incomplete market and product protocol before product development starts, (4) not satisfying customer needs on critical factors, (5) bad timing, (6) poor product quality, (7) too little market attractiveness, and (8) poor execution of the marketing mix.
Read the case below and answer the questions that follow.
As hot coffee sales slumped in the late 1980s, the Pepsi-Cola Company noticed a new market trendâthe morning consumption of caffeinated soda. Soft-drink manufacturers had only captured a small portion of the morning beverage market at this point, which included Coca-Cola's advertising campaign for a "Coca-Cola in the morning." Although Pepsi had not conducted significant market research into the phenomenon of morning soda consumption, they believed that young adults were driving the trend of drinking caffeinated, carbonated beverages for breakfast. Pepsi was eager to pounce on the opportunity to capitalize on this growing section of the morning beverage market.
In 1989, Pepsi elevated the morning cola game with the introduction of Pepsi AM. Clad in a new red, white, blue, and yellow can, Pepsi AM featured 28 percent more caffeine per ounce than regular Pepsi with the same Pepsi Cola flavor. In blind taste tests, most consumers could not differentiate between regular Pepsi and Pepsi AM. Pepsi marketing executives believed that the caffeinated and sweetened Pepsi AM would be a natural replacement for a morning cup of coffee, even though Pepsi AM had 77 percent less caffeine than tea or coffee.
Despite an increase in morning soda consumption and Pepsi's efforts to promote Pepsi AM as a morning beverage, consumers did not seem to want a "morning only" soda. Consumers seemed perfectly happy drinking existing cola drinks or coffee at breakfast. Pepsi also failed to recognize the social implications of drinking coffee. For most consumers, drinking a cold glass of soda was not the same as a sipping steaming cup of joe. Pepsi AM was pulled from the market in 1990 after it failed to achieve sales forecasts and goals.
Answer the questions to determine the likely cause of the product failure.
1.) The name Pepsi AM suggests to consumers that the beverage should be consumed ________.
A. only in the evening
B. only in the morning
C. any time of day
2.) Pepsi AM was perceived to be _________ regular Pepsi by most American consumers.
A. the same as
B. quite a bit different than
C. significantly different than
3.) Drinking a cup of coffee and drinking a can of Pepsi AM were perceived to be socially _________ by most Americans.
A. different
B. similar
C. unrelated
4.) Marketing research and taste testing was implemented in order to avoid a _________ mistake with Pepsi AM.
A. limited market attractiveness
B. bad timing
C. poor product quality
5.) The primary source of competition for Pepsi AM was likely ________.
A. Pepsi
B. Coke
C. coffee

Answer 1

Pepsi AM's failure can be attributed to a lack of differentiation from regular Pepsi, misjudging the morning beverage market, and underestimating coffee as its primary competition. Despite marketing efforts, consumers saw drinking Pepsi AM as socially different from the morning ritual of coffee.

Step-by-step explanation:

Understanding Why Products Succeed or Fail

Product success or failure can be complex, influenced by many factors. Examining the case of Pepsi AM, a failure in understanding the market contributed to its downfall. Here’s an analysis based on the context provided:

1. The name Pepsi AM suggests to consumers that the beverage should be consumed only in the morning.
2. Pepsi AM was perceived to be the same as regular Pepsi by most American consumers. This lack of significant differentiation could hinder its success.
3. Drinking a cup of coffee and drinking a can of Pepsi AM were perceived to be socially different by most Americans.
4. Marketing research and taste testing were implemented with Pepsi AM to avoid a poor product quality mistake.
5. The primary source of competition for Pepsi AM was likely coffee, which has a strong morning ritual association.

This analysis illustrates how Pepsi underestimated the importance of product differentiation, consumer habits, and the strong social attachment to coffee. Additionally, despite a large promotional budget, competition from already established morning beverages like coffee posed a significant barrier to entry.

Learn more about Product Failure here:

Answer 2

The name Pepsi AM suggests that it should be consumed only in the morning. Pepsi AM was perceived to be the same as regular Pepsi by most American consumers. Drinking a cup of coffee and drinking a can of Pepsi AM were perceived to be socially different by most Americans.

1.) The name Pepsi AM suggests to consumers that the beverage should be consumed ________.

B. only in the morning

2.) Pepsi AM was perceived to be _________ regular Pepsi by most American consumers.

A. the same as

3.) Drinking a cup of coffee and drinking a can of Pepsi AM were perceived to be socially _________ by most Americans.

A. different

4.) Marketing research and taste testing were implemented to avoid a _________ mistake with Pepsi AM.

C. poor product quality

5.) The primary source of competition for Pepsi AM was likely ________.

C. coffee