10 Greatest Marketing Disasters in History
No one is perfect, not even the greatest of minds or the multi-million dollar organizations. This had been proved time and again through various mistakes by the corporate giants which later proved to be blunders. These disasters should not be taken lightly as herein lies some of the best marketing lessons. So, let’s take a look at the 10 greatest marketing disasters in history.
1 In 1992 The Hoover Company offered free flight tickets on the purchase of more than £100 of its product but the offer cost the company almost £50,000,000 after a huge response from customers who were more interested in availing the free flight offer than buying the Hoover products.
In the 1990s the British division of The Hoover Company was having a surplus of washing machines and vacuum cleaners sitting in their warehouse gathering dust. In order to sell them, Hoover began a marketing promotion in August 1992. According to the Hoover free flight promotion, a purchase of £100 of Hoovers products would make them eligible for two round -trip tickets to Europe. Later the destination of flights was expanded and included the USA. The actual cost of the same flight was several times more than £100. So, it was a very cheap bargain.
Soon hundreds of people flocked to Hoover’s stores to take advantage of the offer. Hoover never anticipated such huge response and was overwhelmed by the demand due to which it could not keep its promise. This made the customers sit up and take notice and soon Hoover entered into their bad book. Later an undercover research Journalist from BBC secretly investigated and filmed the loopholes. Armed with evidence BBC created a documentary “Hoover Flight Fiasco” and aired it. The documentary led to the sacking of a number of top Hoover executives and a loss of £50 million to the company.(1,2,3)
2 Red Lobster lost $500,000 each week during a 7-week all-you-can-eat promotion in 2003. As a result of underestimating the American appetite, each restaurant started losing money on the third plate of crab legs served.
In 2003 the sea food chain Red Lobster launched its new all-you-can-eat promotion under the direction of the former head, Edna Morris. As per the promotion, the Red Lobster offered an unlimited supply of snow crab legs for a payment of $20. Along with the crab legs, they also offered an array of side dishes. For the seafood lovers, it was a godsend deal.
When the executives of Red Lobster rolled out this deal they believed that people won’t eat more than three plates of crabs. Their underestimation soon came into view as people sat for hours ordering plate after plate of crab legs. At the same time, the price of crab started increasing as the US government capped a number of crabs hauled from the ocean. Soon the seafood chain started piling up huge losses. In the end, the seven-week promotion left the company with a net loss of $3.3 million.(1,2)
3 In 1981, American Airlines offered unlimited first-class tickets for a one-time fee of $250,000. One of the first-class ticket holders flew over 10,000 flights costing the company $21,000,000.
The AAirpass was a discount program offered to its members by American Airlines. It was launched in 1981 and was specifically aimed at frequent flyers. According to the American Airlines, the holder of the pass would have unlimited access to first-class travel for life.
The cost of the pass was $250,000 and a companion pass could be obtained at another $150,000. It was a great deal of money especially considering that it was three decades ago. American Airlines believed to be a good deal which would rope in its loyal customers. But it got the shock of its life when some pass holders started traveling at the drop of a hat. A person named Steve Rothstein bought the pass in 1987 and took 10,000 flights while clocking 10 million miles. In another instance, a Dallas-based marketing executive bought the pass and traveled nearly 38 million miles. His AAirpass was later revoked after he was caught selling the companion seat.(1,2,3)
4 As a reaction to the rival company Pepsi’s ad, Pepsi Challenge, Coke threw out their old formula and brought forward a new product and named it New Coke. But consumers did not like the new taste leading to a sharp dip in the sales and the old formula was reintroduced soon after.
The biggest disaster of Coca-Cola Company began on April 23, 1985, when it changed its century-old secret formula and introduced the New Coke. Coke took this step when its rival Pepsi began expanding its market cutting in Coke’s market share. According to market research and polling done by Coke, the new product was expected to become a hit. But the reality took a U-turn and the New Coke was instantly disliked by consumers.
5 In 1994 as part of a promotion campaign, Fiat sent out 50,000 anonymous love letters to young women in Spain with the intention of revealing its identity after 4 to 5 days. The campaign backfired and instead of curiosity, it spread panic and fear of stalker among women.
When Italian carmaker, Fiat, decided to increase their market in Spain they took a unique approach. Instead of an ad or any other form of marketing, the firm sent love letters to women in Spain. 50,000 pink letters were sent and each one was addressed personally to the recipient. The letter contained words of compliment about the woman inviting her to indulge in a “little adventure.” Also, it said, “I only have to be with you a few minutes and, even if it doesn’t work between us, I promise you won’t forget our experience together.” The twist: all the letters were sent anonymously.
Fiat was planning to send a second letter some days later. The second letter would contain an explanation of who the writer was, i.e. Fiat, and it would suggest a test drive.
But upon receiving the first letter most women got scared believing it to be sent by some stalker. Many women across the country complained to the police. Soon Fiat apologized and stopped the campaign. Later Fiat was fined with 15,000 pesetas for sending the letters and was also ordered to pay 140,000 pesetas to a woman who had taken the issue to the court.(1,2)
6 Hyundai suicide ad, which showed a man failing to commit suicide in the car was frantically taken down after a blogger condemned the ad and published the suicide note of her father who died in a similar manner.
In 2013 Hyundai launched a TV commercial that showed a man trying to commit suicide in a car. But the man fails in his attempt as the car’s exhaust emission is 100% water because it is a fuel cell car, not a diesel or gas car. The ad was praised by UK ad media. But the commercial went downhill with the viewers as soon as it was launched. The greatest backlash came from Holly Brockwell, a copywriter.
Holly’s father had committed suicide earlier in his car by using the same process as shown in the ad. So, the ad brought back a flood of negative emotions for Holly. She penned down a letter in her blog condemning the advertisement. She also included an image of her father’s suicide note with it. The blog post spread like wildfire and became viral. As a result, Hyundai took down the video and apologized. Hyundai had also stated that the video would not be used in any advertising or marketing in the future. (1,2)
7 The Indian-built Tata Nano, the world’s most inexpensive car, became a sales disappointment because, in a country where a car is a luxurious commodity indicating prestige and status, people perceived Tata Nano as being too cheap.
When Tata Nano was launched in India, its aim was to bring motoring to masses. With a price tag of $2,400, Tata Nano was easily affordable even for those with lower incomes. Before it hit the market, the Chairman of Tata group, Ratan Tata, had set a sales target of 20,000 per month. But after the launch, the sales statistics were nowhere close to the target.
The main reason the Tata Nano flopped was its marketing. Tata Nano was launched in India as the cheapest car available. But for Indian people, a car is a luxury, not a commodity. So, the more expensive a car is, the more prestigious the person feels. In such a society, owning the cheapest car was considered as a stigma and hence people refrained from buying Tata Nano even though many could afford it.(1,2)
8 In mid-2008, Dr. Pepper offered a free can to everyone in the USA if Guns N’ Roses released their album Chinese Democracy in 2008. On the day of the album’s release, they reneged on their vow, ruined the day of release of the album, and were threatened litigation by Axl Rose.
The making of Guns N’ Roses’ album Chinese Democracy began in 1994. Fourteen years later, in 2008, the album was still under production. People began to believe that the album would never become a reality just like the actual Chinese democracy. So, in 2008, the US soft drink giant, Dr. Pepper, released a statement that it would provide a free can of their beverage if the album was released by the end of 2008.
To everyone’s surprise, Guns N’ Roses released Chinese Democracy on November 23, 2008. To honor its promise, Dr. Pepper set up a 24-hour website offer the same day. The website offered a coupon which could be redeemed for a free can of Dr. Pepper. But many people complained that for most of the day the coupon was inaccessible. In the end, the Dr. Pepper free can promotion turned out to be inadequate and it affected the release of the album. Two days later, on November 25, 2008, the lead singer of Guns N’ Roses, Axl Rose, threatened the company with a lawsuit and demanded a full-page apology.(source)
9 In the 1970s, Nestlé aggressively distributed free formula samples in third world countries encouraging mothers to use their formula instead of breastfeeding which resulted in hundreds of thousands of infant deaths in Africa.
Nestlé’s marketing of milk-based baby food began in the late 1800s. The infant formula was marketed as a substitute for mother’s milk, and Nestlé successfully convinced millions of mothers that bottle-feeding is better than breastfeeding. The greatest impact of the infant formula was witnessed among the babies of the third world.
Nestlé baby formula is mixed with water and then fed to a child. In poor countries, due to lack of sanitation, the formula was usually mixed with impure water which caused great harm to the baby’s health. Due to illiteracy and lack of money, many mothers used less formula powder so infants received inadequate nutrition. Also, antibodies and some nutrients present in mother’s milk were also missing from the baby formula. All these factors caused illness and death of a number of children in Africa and other developing countries. This gave Nestlé a bad reputation, and it was named as “The Baby Killer.” In 1977, a boycott was launched in the US which expanded into Europe.(1,2,3,4)
10 As a part of a promotion, the CEO of Lifelock published his Social Security number in product ads to promote his company. But it led to his identity being stolen 13 times, and the company was later ordered to pay $100 million for deceptive advertising.
Lifelock is an American company that provides identity theft protection. It was co-founded in 2005 by Todd Davis and Robert J. Maynard. When Lifelock began promoting its services in 2006, it was so confident in its product that, as a symbol of trust, CEO Todd Davis’ Social Security number was displayed on its advertisement. In 2007, their security system was breached, and Todd Davis himself became a victim of identity theft. The crime was discovered when a company called on his wife’s cell phone regarding an unpaid debt. Upon investigation, it was found that someone used Todd Davis’ identity and obtained a loan of $500.
Four months later, Davis’ identity was stolen again. The person who stole it used it to open an AT&T/Cingular wireless account and racked up a sum of $2,390 which remains unpaid. Later, Davis’ identity was stolen 11 more times.(1,2,3)
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