There are many established companies in different sectors that have built a successful brand name for themselves – think Johnson and Johnson, Apple, Tim Hortons, Microsoft, Procter & Gamble and Walmart.  Their products are recognized by the masses and there is a lot of media attention devoted to the technology-oriented corporations (ie. the buzz surrounding Apple’s iPhone 5 launch). However, despite their strong balance sheet and access to best resources that money can buy, some companies come out with products that turn out to be damp squibs.

If only the timing was better…

A (nearly) good product could still fail if it was released without being ready for prime time action. Apple has been a pioneer in the technology industry but it has had its share of failures. Apple released the Newton MessagePad, a personal digital assistant (PDA), in the 1990s for a price of ~$700 (at that time). The PDA was marketed as a tool with excellent handwriting recognition capabilities but the performance did not meet the claims and hype. Consequently, consumers voted with their wallet and Apple pulled the plug on the project.

Improving a product that was already perfect (to consumers)

Almost every corporation is big on continuous improvement, operations excellence, Lean manufacturing, and product development. However, when thriving companies look for avenues to grow, they sometimes end up with a flop story. The Coca Cola and Pepsi rivalry is well-known and the 1980s were no different. Coca Cola released New Coke to combat Pepsi’s popularity but realized a little too late that consumers preferred the tried and tested Coke. The reformulated drink did nothing to alter consumer taste and New Coke was shelved.

Drifting away from their core business

As the saying goes, sometimes, it is better to “leave it to the experts”. Xerox Corporation is an established name in the document management field selling all-in-one/multi-function units/machines that take care of printing, copying, scanning, and faxing. They also offer consulting services to businesses. In 1981, Xerox launched Star, which was an information system similar to the modern-day personal computer to compete with IBM. Nevertheless, despite some pioneering work and laying the foundation for technologies that are part of today’s personal computer, the Star never shone bright enough.

Confusing consumers with poor brand extension

An example of wasting a good brand name on unwanted products can be found in Colgate’s Kitchen Entrées. Colgate has been associated with toothpaste for a long time and the company is successful in that line. Nonetheless, the company decided to take advantage of its strong brand name and get into foods. Buyers were not thrilled with the idea of Colgate taking care of their meals and dental hygiene and the product, rather unsurprisingly, died soon.

Getting associated with the wrong partner

In personal finance, a partner who has different goals and not on board with budgeting and saving can drag a relationship downhill soon. Corporations are no different and merging with a company with different philosophies can become disastrous. In 1998, Daimler Benz, the German manufacturer of Mercedes-Benz and Maybach, merged with Chrysler, a US company, to form Daimler Chrysler. The deal was aimed to create a trans-Atlantic auto behemoth but within 10 years, Daimler sold Chrysler to cut losses. The corporate culture of a high-end manufacturer like Daimler did not work well with Chrysler’s and the end was a logical conclusion.

Can you think of other diversification/branching out examples that failed? Have you worked for a company at a time when it launched a product that failed? If so, do you think it was due to one or more of the reasons mentioned above or was it something not discussed?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

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  1. saveddijon on January 23, 2013 at 9:31 am

    I wouldn’t necessarily call the Xerox Star a failure.

    Yes, that specific product didn’t go anywhere. It was far too expensive, as it required too much computing power for the day.

    However, Bill Gates and Steve Jobs saw it, and saw the way of the future. They developed similar systems, only those that could run in 640K of RAM on a 16-bit 8 MHz processor, and even those were advanced for the day. But they prevailed.

    Windows and MacOS, and countless other GUI-based operating systems are now ubiquitous as a result.

  2. Jane Savers @ The Money Puzzle on January 24, 2013 at 12:56 am

    McDonald’s pizza. A pizza oven in every McDonalds and the pizza tasted like the frozen stuff from the grocery store.

    Wonder what happened to all those used pizza ovens? Wonder what happened to the guy who was responsible for pizza at McDonalds?

  3. on January 24, 2013 at 8:03 am

    Google. Is there anything they do other than adwords that isn’t a huge fail? And half of what they do is completely unrelated to their market. Cars? Now they’re going to compete with Ford?

  4. Geoff on January 24, 2013 at 11:02 am

    @ Life insurance – Android as an operating system seems to be quite a dominant force in the market.

  5. Canadian Dividend Blogger on January 24, 2013 at 9:59 pm

    And Gmail, Google News and Google Image search. Not to mention their purchase of Youtube – for $1.6 billion in stock, not a product launch, but a wildly successful part of their business. And I’m using Google Docs more and more and like the integration with Google Drive. I don’t even own their stock and I’m promoting them like I work for them!

  6. SST on January 25, 2013 at 3:24 am


  7. on January 25, 2013 at 9:14 am

    Interesting definition of success. Google makes all their money from adwords. All those other things you’ve mentioned – They don’t make any amount of money from them.

    It’s nice if you have boatloads of cash to maintain products that don’t make any money – but that doesn’t make them a success IMO. Take adwords away from Google and what do you have? Gmail? Google News? Google Image? Google Plus? A self-driving car? What you have is a company that doesn’t make any money.

  8. FrugalTrader on January 25, 2013 at 9:57 am

    The thing about google is that their side products drive traffic back to their bread and butter, search (android, gmail, etc). The traffic back to search then keeps their revenues in adwords/adsense up. Seems to be working for them!

  9. Bet Crooks on January 25, 2013 at 1:16 pm

    Another failure I can remember is a major Cdn oil company with a huge retail chain decided to offer gourmet fresh-grilled sandwiches etc at their service stations. It was going to take on the entire restaurant industry and win. Everyone except the one in charge just rolled their eyes and headed for cover. Do y’a really think people want to go to a gas station to eat? “Honey, let’s get dressed up and go to the self serve for a really nice meal.” Not.

    @SST Hey, the Pinto was the safest car on the road! No one, but no one tailgated you! We drove my Mom’s till the cops pulled it over and took off the plates. (Maybe because of the Snoopy flying his doghouse bolted on as a hood ornament?)

  10. Michael Kohn on January 26, 2013 at 3:32 am

    Apple was on the verge of bankruptcy for some bad choices.
    However, examples of failed products produced by large companies, are many in the world of video games and consoles.
    Just think of the Apple console, or even the Sega Dreamcast or Nintendo’s various console (with the release of the Playstation 1 Sony dominated the market for years)

  11. tw on January 27, 2013 at 9:54 pm

    I am new to Canadian stock market. and I am still considering which online brokerage I can use. I-trade or anyone is good ? My investment amount is less than 50K. So I think I have to pay higher than $9.90 per transaction. I have stock trading experience in my home country but not in Canada. I contacted BMO and it is not that suitable for me. Any recommend ? thanks.

  12. Matt on January 28, 2013 at 12:22 am, @FT: You have it all wrong. Google’s product isn’t Adwords, or Android, or Gmail, or even Search; it’s us.

  13. trevor on January 28, 2013 at 1:33 am

    I’m waiting for the Cold Stone Creamery “experiment” coming to an end at local Tim Hortons.

    I’m not saying it will, but when I first heard of the idea I thought it had McPizza written all over it.

  14. Brett @ wstreetstocks on January 29, 2013 at 8:40 pm

    Best Buy heavily marketed 3D tvs in 2011, it looks like that the plan is back firing on them. Whatever happened to Palm? Their products were hot commoditites 10 years ago.

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