The modern business environment is highly turbulent and difficult to predict. However, developing a sound business strategy requires understanding the expected product demand, target demographic, and optimal development strategies. Market research is used to aid in identifying those variables, though it is only a somewhat reliable tool. The example of Crystal Pepsi demonstrates how failure to conduct successful market research can lead to product failure. Therefore, efficient use of market research technologies and approaches can increase the percentage of success chance but does not guarantee it.
Organizations conduct marketing research to gather information about their target market, customers’ needs and preferences, competitors, and industry trends. Marketing research helps organizations make informed decisions about their marketing strategy, product development, pricing, and promotion. This information can be used to position, price, promote, and distribute its products optimally according to customer preferences. Marketing research provides insights into customers’ attitudes, behaviors, and motivations, which can help organizations identify opportunities to develop new products, improve existing products, or tailor their marketing messages to resonate better with their target audience.
However, marketing research does not guarantee a new product’s success. It can provide valuable information and insights, but success ultimately depends on various factors, including the product’s quality, uniqueness, relevance to the market, pricing, distribution, and promotion. Even with extensive research, there is always a risk of product failure due to unforeseen circumstances, such as changes in consumer preferences or unexpected competition. Marketing research can minimize this risk but cannot eliminate it.
An example of a product failure due to a lack of proper market research is the early 1990s PepsiCo’s Crystal Pepsi case. This example can be attributed to the Harbinger Effect – a phenomenon of unusual purchase habits of a certain demographic signifying that a product they buy is likely to fail (Simester et al., 2019). This effect does not necessarily explain why some products fail but presents a valuable research and analysis tool to help predict the product’s chance of failure. As Anderson et al. demonstrated, harbinger customers signal that a new product will likely fail (as cited in Simester et al., 2019). Identifying such trends at the early stages of the product introduction to the market through exploring their customers’ purchase habits could have helped PepsiCo to alter its strategy before the product’s failure.
Another explanation for Crystal Pepsi’s failure is insufficient consumer preferences research. Lin et al. (2018) suggest that a food color can be critical in marketing communication when used for flavor identification. An unexpected combination of these qualities, especially when customers have firm expectations of the product, can deter potential buyers from a new product. While Crystal Pepsi was identical to regular Pepsi in flavor and other aspects, its clear color did not gain popularity among consumers due to its expected “non-cola” flavor qualities (Lin et al., 2018, p. 221). PepsiCo could have achieved a different outcome if proper consumer preferences research had been conducted to determine their expectations and predict the possible acceptance level of a new product.
Marketing research helps organizations identify the needs and wants of their target market, understand their customers’ behaviors and preferences, and gather feedback about their existing products and services. By conducting marketing research, organizations can gain insights into their competition and identify growth opportunities. However, marketing research does not always ensure that a new product will be successful. While it provides valuable information that can help organizations make informed decisions, many other factors can impact the success of a new product, such as target demographic qualities, consumer preferences, and the competitive landscape.
References
Lin, W.-S., He. P. H., Chau, C.-F., Liou, B.-K., Li, S., Pan, M.-H. (2018). The feasibility study of natural pigments as food colorants and seasonings pigments safety on dried tofu coloring. Food Science and Human Wellness, 7. 220–228. Web.
Simester, D. I., Tucker, C. E., & Yang, C. (2019). The surprising breadth of harbingers of failure. Journal of Marketing Research, 56(6), 1034–1049. Web.