Not every product is a home run
The Sunday March 8, 2020 edition of the New York Times has a fascinating article about products that fail. Have you ever heard of Watermelon Oreos? How about Colgate Kitchen entrees? Would this clean your teeth while you eat? What about Cheetos Lip Balm? You can get your cheese fix while you moisturize.
All of these products failed. As you read over their categories, it’s pretty obvious that by pushing the boundaries of what the purchasing public understands of their core products, that these were all doomed to fail.
But what if you could somehow tell if a product was going to be a failure? The Times article quotes a 2015 study of data gleaned from a U.S. national convenience store chain’s patrons. Professors at Northwestern University and MIT analyzed who purchased what among 130,000 customers. What they found was, that about 25% of the convenience store’s customers purchased products that failed. The study went on to show that the purchasing habits of these same consumers could be used to somewhat reliably predict what products would flop. The study coined the term, ‘harbinger of failure’ for these purchasers.
What about Automotive?
In the broad categorization department; if we were to apply this same logic to the U.S. automotive market, with roughly 17 million new units per year sold in 2019, that would mean that about 4.25 million vehicles are foundering. That’s a lot of failing product, and just not accurate. Since this argument doesn’t hold, let’s narrow it down a little, and work backwards from some product failures we know about.
The classic product failure, of course, is the Ford Edsel line-up of vehicles. Over the course of its short three-year life, according to Wikipedia, about 116,000 Edsels were sold. In 1958, they sold about 61,000 vehicles. Car production for North America that year was around 4.6 million, so we’d want to back out the sales in Mexico and Canada for that year. Let’s say 4 million for round numbers sold in the United States. That’s only 1.5% of sales.
A vehicle with 1.5% of sales today would be about 255,000 units. Most manufacturers would love to have a product that sold 255,000 per year. This would be in the company of vehicles like Nissan Altima, Jeep Wrangler, GMC Sierra and Toyota Highlander (2019 figures). These vehicles appeal to a wide range of purchasers for a variety of reasons. They are very successful vehicles and their sales history suggests that they’re not in any danger of disappearing any time soon.
What other vehicle can we look at as a failure? The Pontiac Aztec. This vehicle suffered at the hands of both the buying public and the automotive press. Similar to Edsel, the Aztec was universally reviled, to the point where General Motors staffers were ordered to drive them just to get them seen on the road. In its best year, 2002, it only sold 27,793 units in the US. The Aztec was no Edsel. Over its eight year life, it sold a total of 119,692 units, which is more Edsel-like.
So it looks like the ‘harbingers of failure’ found in the Northwestern study don’t really apply to the automotive marketplace. Given the low number of actual automotive product failures, a new vehicle purchase is one area that a ‘harbinger of failure’ can find some success in their lives. Development costs for a new vehicle can run into the billions of dollars, which is why most manufacturers have to play it safe when it comes to styling and amenities. These days, with the cost of a new vehicle, and the cost of development, no one can afford to purchase or sell a doomed vehicle. As always, do your research, and make sure the vehicle you purchase is right for you.