Article Cat: Failing strategies

Date: February 12, 2024

The most efficient cigarette

In 1988 the RJ Reynolds tobacco company (RJR) launched product that was called to revolutionise the tobacco industry: “a smokeless cigarette“. RJR was already known by brands such as Camel or Winston and was one of the top tobacco companies worldwide. Under the name Premier, RJR launched a cigarette that only produced a “trace of smoke” and claimed to “be cleaner”.

RJR had a great launch, with even the CNN informing the American population  about its launch.

However, the product barely lasted one year in the market after disastrous customer feedback. The New York times reported that the initial tests in Arizona and Missouri had shown “slow to non-existent” sales and that customer interviews revealed that the product “tastes like burning plastic” or that customers “had to throw them in the sink”.  Other interviewees disclosed that besides the unpleasant taste the product was too hot told.

To RJR’s credit it’s positive that the launch was only performed in few test cities, but even before getting to run those external tests shouldn’t have someone tried them internally? Didn’t anyone realise that the product tasted like burning plastic and that it wasn’t possible to hold because it was too hot? It’s hard to think who RJR thought might have benefited from such product. For existing smokers, why would they want a product that doesn’t produce smoke? Furthermore, if that was the case, wouldn’t they at least want a product that tasted as well as the ones they were used to?  To entice non-smokers, RJR should have come with a product that was appealing to them, tasted nicely and was convenient to hold between fingers (and only maybe then focus on the “clean” attribute).

RJR’s Premier is history and total costs for the product failure were estimated at over $1 billion.

Date: December 21, 2023

Colgate Kitchen entrees

In the 1980s, the consumer market witnessed a boom in frozen food, driven by the growing desire for convenience, and the evolving lifestyle for consumers, as well as advancements in freezing technology. Consumers sought quick, easy-to-prepare meals that didn’t compromise on taste, and the industry responded with a plethora of options, ranging from frozen pizzas to complete dinners. For example, Green Giant began the distribution of the first vegetables processed exclusively for the microwave oven.

Colgate had been founded a century earlier as a starch, soap, and candle factory. In 1873 the company launched its first toothpaste, and by 1980s it was worldwide regarded as an oral care industry giant with leading products. However, Colgate also had several products in other non-related categories, such as pet food or personal care. In the 1960s Colgate had tested crabmeat and chicken products and eventually,  decided to launch its “Kitchen Entrees” line with products such as “Beef Lasagna”, which aimed to be  a convenient dinner option that would seamlessly fit into the daily lives of their existing customer base.

The company anticipated that their reputation for quality and care in one sector would translate into another, but the result was overwhelmingly negative. Consumers struggled to reconcile the image of a brand known for toothpaste and mouthwash to that of ready-to-eat meals. To many consumers it evoked a visceral reaction: the idea of eating food from a brand synonymous with oral care products was unpalatable to many.

Now, do brand extensions always fail? Virgin Group provides a case in point of a very successful diversification. Virgin began as a record shop in the 1970s, eventually expanding into Virgin Records, a major record label. In 1984, Virgin moved to the aviation industry with Virgin Atlantic, which thrived largely due to  its focus on customer service and innovation, traits that were core to the Virgin brand.

While Virgin is still a success with further expansions into sectors as varied as telecommunications (Virgin Mobile), health (Virgin Active) and even space tourism (Virgin Galactic), the story of Colgate Kitchen Entrees serves as a reminder that a strong brand domain does not necessarily translate to success in another. While the market conditions can be very appealing in a given moment, companies should have a customer-driven approach and thoroughly test whether an existing, leading brand could be used in a different sector.