Market Driven Strategy can be defined as consistently successful companies that start with an external market orientation and vigilantly study customer trends in order to design their strategy. They look to understand customer’s needs, problems, challenges, and issues that if solved would provide new value that the customer would be willing to pay for. Conversely, an “inside-out” strategy is one that relies upon an internal orientation. It starts by asking what a company can do with existing resources, and looks to streamline operations through right sizing and repressed spending. While this approach can create short-term shareholder gains, an internal focus limits a company’s ability to notice and adapt to market changes. Today, most organizations are still driven by an inside-out perspective instead of outside-in.
Consistent innovation is a key factor in sustaining revenue growth for market leading companies. Firms with an Outside-In approach have grown their sales 134 percent while the S&P 500 has grown just 53 percent. History has shown, however, that many companies substitute their judgment of what customers would like for what the market truly desires. The following is a list of 26 infamous product flops from the past 60 years. While it is not fair to pummel companies that took risks in launching new solutions, it is always helpful to remember the quote from philosopher George Santayana “Those who do not learn history are doomed to repeat it.”
1957 — Ford Edsel
Bill Gates cites the Ford Edsel flop as his favorite case study. Even the name “Edsel” is synonymous with “marketing failure.” Ford invested $400 million into the car, which it introduced in 1957. But Americans literally weren’t buying it, because they wanted “smaller, more economic vehicles,” according to Associated Content. It was taken off the market in 1960.
1975 — Sony Betamax
The 1970s saw a war in home video formats between Betamax and VHS. Sony made a mistake: It started selling the Betamax in 1975, while its rivals started releasing VHS machines. Sony kept Betamax proprietary, meaning that the market for VHS products quickly outpaced Betamax. Though Betamax was technically superior, VHS won out by simply being ubiquitous.
1985 — New Coke
In the early 1980s, Coke was losing ground to Pepsi. The infamous “Pepsi Challenge” ads were largely responsible for Pepsi’s surge. In response, Coca-Cola tried to create a product that would taste more like Pepsi. While New Coke fared well enough in nationwide taste tests before launching in 1985, it turned out those were misleading. Coke abandoned the product after a few weeks and went back to its old formula. It also gave its product a new name: Coca-Cola Classic.
1989, 1992 — Pepsi A.M. and Crystal Pepsi
1989 — RJ Reynolds smokeless cigarettes
In the 1980s, just as anti-smoking campaigns were heating up, RJ Reynolds put $325 million into a new product: smokeless cigarettes. They didn’t work, and people weren’t buying them — so four months later, they were gone..
1990 — Coors Rocky Mountain Spring Water
This was an interesting experiment in brand extension: Coors Rocky Mountain Spring Water launched in 1990 and didn’t fare well.
1993 — Apple Newton
The Newton is held up as an example of Apple’s bad old days, before it was the world’s most valuable company. Forbes says the Newton PDA flopped for a number of reasons: Its price started at $700, it was 8 inches tall and 4.5 inches wide, and its handwriting recognition was so bad that a classic “Simpsons” episode made fun of it.
1995 — Microsoft Bob
Microsoft Bob was supposed to be a user-friendly interface for Windows, a project that was at one point managed by Bill Gates’ now wife, Melinda. Microsoft killed it one year after launching it in 1995. Why? “Unfortunately, the software demanded more performance than typical computer hardware could deliver at the time, and there wasn’t an adequately large market,” Gates later wrote. “Bob died.”
1995 — Nintendo’s Virtual Boy
Nintendo’s Virtual Boy was an ambitious push into a burgeoning new technology — virtual reality. Simply buy the Virtual Boy and get swept away into the digital environs of VR. Except the reality of Virtual Boy was totally unlike what it promised. Games were little more than black and red nightmares, with low-resolution graphics and gameplay that would’ve been better suited to a standard game console. Virtual Boy ended up selling under 1 million units — it’s the biggest hardware flop in Nintendo’s
1996 — McDonald’s Arch Deluxe
In 1996, McDonald’s introduced the Arch Deluxe, which never caught on. It was intended to appeal to “urban sophisticates” — outside of its target demographic. To reach this group, McDonald’s spent $100 million, which makes it one of the most expensive product flops in history.
1997 — Orbitz soda
Although the soda, which looks like a lava lamp, appealed to young kids, it was not tasty (people compared it to cough syrup). It disappeared off shelves within a year of its 1997 debut.
1998 — Frito-Lay WOW! Chips
File this under “too good to be true”: In the late ’90s Frito-Lay rolled out a miracle food, a line of chips with the upbeat branding of WOW! The marketing claim was tantalizing — a compound called Olestra allowed for a fat-free potato chip. “While it provided the satisfaction of tasting just like fat, (Olestra’s) molecules were too large to be digested by the body, passing directly through the digestive tract unabsorbed,” writes Fast Company.
1999 — Cosmopolitan Yogurt
Cosmopolitan made an interesting decision to launch a brand of yogurt in 1999. Needless to say, the yogurt market was already saturated, and Cosmo’s readers were content enough reading the magazine.
2006 — Microsoft Zune
The Zune was built to take on the iPod. It didn’t. Robbie Bach, the former leader of Microsoft’s home entertainment and mobile business, gave his explanation as to why: “We just weren’t brave enough, honestly, and we ended up chasing Apple with a product that actually wasn’t a bad product, but it was still a chasing product, and there wasn’t a reason for somebody to say, oh, I have to go out and get that thing.”
2006 — Mobile ESPN
Mobile ESPN, introduced in January 2006, was one of the biggest flame-outs of “mobile virtual network operators,” or MVNOs, in the past decade, which also included Amp’d Mobile, Helio, Disney Mobile, and others.
The idea was that ESPN would exclusively sell a phone that offered exclusive ESPN content and video, leasing network access from Verizon Wireless. But ESPN had only one phone at launch, a Sanyo device selling for $400. Can you imagine buying the phone above for four-hundred big ones? Neither can we. No one bought it, and ESPN quickly shut down the service, instead providing content to Verizon’s mobile internet service. And, of course, smartphones essentially obviated this entire concept.
2006 — HD-DVD
Sponsored mostly by Toshiba, HD-DVD was supposed to become the hi-def successor to the DVD when it launched in March 2006. Standalone HD-DVDs players were sold, and Microsoft’s Xbox 360 — a wildly popular game console — sold an HD-DVD attachment. But the Sony-led Blu-ray faction ended up winning the format war when Warner Bros. announced it was dumping HD DVD for Blu-ray on Jan. 4, 2008. It certainly didn’t hurt that Sony’s PlayStation 3 game console had Blu-ray playback functionality built right in — the PlayStation 2 helped christen DVD as the dominant format previously, and the PlayStation 3 took that concept another step further. About a month later, Toshiba said it would shut down its HD-DVD efforts. Years later, Blu-ray is still the most dominant media format for video playback.
2007 — Joost
Joost, originally known as “The Venice Project,” was supposed to be a peer-to-peer TV network for the future, invented by the European geniuses behind Skype. The company recruited a rising star — Mike Volpi — away from Cisco to become its CEO. It nabbed a deal with CBS. Joost was supposed to reinvent the way we consumed professional video. Instead, Hulu, a joint venture between News Corp., NBC, and Disney, became the go-to site for TV episodes on the web. And who’s ever heard of Joost nowadays? Meanwhile, Joost had all sorts of problems with its P2P architecture, its bulky software player, its content library, and more. After launching in September 2007, it never took off; its scraps sold in late 2009.
2008 — Google Lively
For some reason, Google thought it had to compete with “Second Life.” Remember “Second Life”? The virtual world that looked like a game but was actually just a virtual world for social interactions? Neither do most people. It still exists, powered by a super-dedicated userbase. Google created its own version of “Second Life” in “Lively,” which came out in July 2008. (Unlike “Second Life,” “Lively” was supposed to be sex-free.) When the economy went down the toilet, those dreams faded fast. Google quickly pulled the plug by November 2008.
2009 — The Nook
Launched in 2009, Barnes & Noble has now spun off the NOOK into its own company, orphaning the under-achieving e-reader. Sales had been plunging for awhile. Brian Sozzi, chief equities strategist at Belus Capital Advisors, explained the demise to us: “Shoppers couldn’t get beyond Barnes & Noble being a destination for something they no longer want or generally care about, books,” Sozzi said. “Barnes & Noble management perpetuated that by not investing aggressively enough in marketing to alter perception.” Perhaps even more importantly, the Nook just isn’t a great e-reader — Amazon’s Kindle is inexpensive, easy to use, and syncs up easily with an Amazon digital account.
2011 — Qwikster
In September 2011, Reed Hastings announced that Netflix would spin off Qwikster as a DVD rental business. This move met tons of criticism, and Hastings backtracked on his statement 23 days later. At the same time, Netflix announced a video game add-on that would ship game discs to your house. Beyond just the name Qwikster, those plans were also scrapped.
2011 — HP Touchpad
HP gave up the TouchPad and its mobile operating system, WebOS, after just a month and a half on the market. The tablet was no iPad killer, selling just 25,000 units for Best Buy over the 49 days it was on the shelves.
2013 — Facebook Home
With Home, Facebook tried to become the homescreen for your phone. It failed. “So, what happens when you have no control over what appears on your phone’s home screen? It becomes a mess.” In less than a month of being released, the two-year subscription plan dropped from $99 to $0.99. The consensus between reviewers and critics: Home worked only for the most fanatical of users. “It was fine for a Facebook addict,” one reviewer noted. “But [it] seems to run through a lot of data and battery. Uninstalled.” The flop is reflected by a re-organization in the company. “Facebook has disbanded the team of engineers originally assigned to work on Facebook Home,” The New York Times’ Mike Isaac reported.
2014 — Amazon’s Fire Phone
Amazon’s Fire Phone was a flash in the pan — getting announced and released in 2014, then being discontinued the following year. It ran on Android, and looked competitive. In reality, it was a critical and commercial failure. The one big sell point — 3D face scanning technology — was seen as a gimmick, and a limited availability at AT&T initially didn’t help it get off the ground. In the long run, Amazon discontinued the phone 13 months after its launch, and outright retired from phone manufacturing after this one model.
2014 – Google Glass
Google Glass might have come too soon. Between a sky-high price, issues around privacy, and cultural backlash, this wearable product just didn’t connect.
2016 — Samsung’s Galaxy Note 7
The Note 7 — one of Samsung’s big flagship phones — had a little problem where it occasionally caught fire and/or exploded. There was a car that supposedly was burned down by one. The phones have been outright banned on flights, and Samsung had to recall the entire line.
2017 Mercedes home battery pack
Daimler, parent of the Mercedes-Benz car brand, decided that it would go after the US home energy market. It teamed up with Vivint, which installs solar systems, and marketed an energy storage battery that looked quite a bit like Tesla’s Powerwall system. Like the Powerwall, the Mercedes-Benz battery was intended to store energy from solar panels. The major flaw in solar power is that it obviously is basically produced during the day and in sunny weather, so storage systems are needed if electricity is to be generated at other times. However, in April 2018 Mercedes-Benz announced that it’s dissolving the US subsidiary set up to run this home energy business and ceasing manufacturing of home battery packs globally. What happened to the would-be Tesla killer? It was expensive for the market, and basically over-served its customers. One Daimler spokesperson told Greentech Media: “It’s not necessary to have a car battery at home: They don’t move, they don’t freeze. It’s over-designed.”
Juicero was a California-based startup that raised $120M for its fresh-squeezed juice device. But after it was found that its $400, Wi-Fi-enabled machines were no more effective at making juice than squeezing the pre-packaged fruit with your hands, the company shut down within months of its launch.