Learning From The Biggest Marketing Failures In History
Failure has always been seen as a stepping stone to success. As long as the failure is not fatal, lessons can be gleaned from it. However, it’s always better to learn from someone else’s mistakes, before making your own. In this article, we’re going to take a look at some of the biggest marketing failures in history, and look for the positive principle in each.
1. The Facebook Phone
The Facebook Phone was the result of a collaboration between Facebook, HTC and AT&T. We can immediately see the idea behind this merger and product: integrating the market vertically – HTC would provide the phone, AT&T would provide the service and Facebook would provide the branding. The Facebook phone ran on a modified version of Android, where Facebook integrated its services.
So what went wrong? To start, the phone was so heavily integrated with Facebook that the app totally dominated the experience. Users routinely referred to it as “jarring” and “an experiment.” On top of that, Facebook had an exclusivity contract with AT&T. This meant that users had to become AT&T customers in order to purchase the phone.
We can go into details about the competing market offers, which would not be a trivial analysis, but ultimately, we can see that the Facebook Phone required so many concessions from the customer that it was simply not worth the purchase. In other words, the companies put their needs first, and in the process, created hurdle after hurdle for a customer looking for a phone. When you enter a market dominated by two highly-competent giants, you’re not really in a position to make demands from your customer base, no matter your brand.
Kodak’s example is the exact opposite of Facebook’s and we can use it to highlight a false dichotomy. In 1973, a 24 years old Steve Sasson, who was working as an engineer for the company, invented the digital camera. Kodak’s top brass rejected the idea, because it was too disruptive to the current market. Simply put, by leading the way with the digital camera, Kodak would open Pandora’s Box, and risk endangering its fundamental business operations. In an ironic twist of fate, it was the digital camera in the hands of the competition that completely destroyed the company.
So on the one hand you have Facebook, demanding the market change to fit its needs, and on the other you have Kodak, placating the current market in order to maintain profitability. However, Facebook was leading from behind, with a copycat product that offered basically no benefits over the competition. Kodak had in its hands a totally disruptive product, and in a stunning display of incompetence, not only did they not release it to the market in a controlled fashion, they stuck their heads in the ground and pretended that the product was never invented in the first place.
Since we’re on the subject of digital photography, we might as well present a case of Catch-22. Polaroid was in complete control of the market for instant photography, and its stranglehold was so strong that it managed to drive out the much bigger Kodak when it tried to enter the market. Polaroid was also working on its own tech for digital photography, but once it was all said and done, senior management realized that it would give up a 70% margin and replace it with a 38% margin. Ultimately, Polaroid filed for bankruptcy in 2001.
For Polaroid, digital photography was not merely a replacement for their current products, but an outright downgrade. Kodak was faced with the option of restructuring its massive 140,000-people-strong operations in order to meet the upcoming threat of digital photography. Polaroid was faced with the option of taking a considerable margin cut, in order to be first to market with digital photography. Ultimately both companies chose the short term over the long, for different reasons, and through different means.
4. Microsoft Spot
In a case of innovation done seemingly right, you have the Microsoft Spot, which was the world’s first smartwatch. SPOT stands for Smart Personal Object Technology, and the watch came with built-in email capabilities, MSN Messenger and FM radio. Sounds like a great product, right? The only problem was that it was too early to market. There simply was not enough infrastructure for high speed mobile internet service, and the product was ultimately pulled off the market.
Unlike the first three examples, Microsoft actually sought to be innovative and customer oriented, but it miscalculated the rate of adoption for high speed mobile internet. As a result, the product hit a market that was not prepared for it. Microsoft may have also been pressured by stakeholders looking to recover the costs of developing the Spot.