Even the biggest businesses can make big mistakes - and when they do, the
result can be a commercial calamity.
Companies are constantly striving to improve their products and turn a profit.
But changing an existing product can go horribly wrong, leaving customers in
revolt and companies in crisis.
Mishandled marketing and bungling public relations can make the slickest of
businesses look incompetent.
And the costs both financially and to reputation can be enormous.
Persil, Coca-Cola and the British Motor Corporation have provided some of the
most extreme examples as Evan Davis has been finding out for a new BBC Two
series.
PERSIL'S POWER TRIP
Britain's washing powder market has always been a fiercely contested
battlefield, with Unilever's Persil, Surf and Comfort brands vying against
Procter and Gamble's Ariel, Daz, Bold and Fairy.
Up until the early 1990s, Ariel had always been marketed to highlight its
scientific, stain-busting properties while Persil was presented as the first
choice for devoted mothers who cared.
But Persil's dominance was waning and Unilever set about developing a new
product to attack Ariel's tough-on-stains territory.
Persil Power contained a special manganese ingredient, called "the
accelerator".
Ariel Ultra and Persil Power packs Soap wars - Ariel makers Proctor and Gamble
warned Unilever about new formula Persil
P&G warned Unilever the new formula was too powerful for general use and could
harm clothes.
But Unilever went ahead. Persil Power was launched in 1994.
Within days the press were printing photos sent out by P&G, of boxer shorts and
t-shirts riddled with holes.
Former consumer journalist Vikki Orvice recalled: "They used the phrase: 'if
you use this product, your clothes will become shredded to the point of
indecency'. I don't think the picture desk could believe their luck".
Persil's owners started to be bombarded with ragged garments sent in by
outraged customers.
Unilever had to write off 57m worth of stock. Analysts estimate the debacle
cost them as much as 250 million.
But the company rushed to recover the situation by releasing a new softer
formula, New Generation Persil, without the manganese accelerator.
Persil regained its position as market leader four years later with Persil
Tablets.
COCA COLA'S LOST FIZZ
Even though Coca-Cola was the world's best selling soft drink, it was always
nervous of rival Pepsi snapping at its heels.
When Pepsi introduced its famous Pepsi Challenge, a blind taste test which
showed that more customers preferred the sweeter taste of Pepsi when sipping
the drinks side by side, Coca-Cola was rattled.
Coke executives became convinced that the taste of their product had become a
problem and so they set about developing a new cola flavour that would beat
Pepsi hands down in a blind tasting.
New and supposedly improved Coke was launched at a lavish press event in New
York in April 1985. Amazingly, not only was the taste of Coke being changed,
but the original familiar bestselling Coke would no longer be produced and
sold.
Coke bottles Coca Cola decided to change the taste of Coke after pressure from
the Pepsi Challenge
New York Times reporter Pamela Hollie, one of the journalists at the press
launch recalled that she couldn't believe what she was hearing.
"It's like saying we've decided to change the American Flag and put the stars
someplace else," she said.
Loyal Coke drinkers were horrified and mounted noisy campaigns against the new
drink. There were protests in the streets of American cities.
One militant Coke enthusiast said at the time: "My oldest daughter is 22. Her
first word was Coke. Her second word was Mommy."
Ultimately Coke executives reviewed their market research and realised they had
made a fundamental error. The blind taste test did not take account of all the
brand associations and loyalty that attach to a product in a real world
situation.
People didn't just love the old Coke for its taste - they loved what it stood
for. And the market researchers had not asked how consumers would feel if their
old Coke was to be replaced by a new product.
After just 79 days, Coca-Cola reversed its decision and announced that the
original recipe would go back into production.
MINI'S MAJOR MISTAKE
The Mini was Britain's best-selling car ever, with more than five million
purchased over the years. But its sales success disguises a surprising story -
consumers got a much better deal on the Mini than they should have done.
When it was launched in 1959, the British Motor Corporation boss Sir Leonard
Lord decided it should sell for 500 - in order to undercut its nearest
competition, the Ford Anglia which sold for 610.
The mini production line Ford could not understand how the BMC were making the
Mini so cheaply
The Mini's low price tag made it an instant hit and with celebrity endorsement
from the likes of John Lennon, Peter Sellers and Spike Milligan, it became the
car to be seen in.
Ford bosses were mystified at how it could be produced for such a bargain
basement price, so they decided to take one apart to see how on earth it had
been done.
Former Ford Product Planner Bob Howe recalled: "We analysed the Mini, we
dismantled the thing completely even to the point of breaking spotwelds and we
costed every component.
"Based on our analysis, Ford would have incurred 35 of cost over and above the
price they were advertising it at".
It looked as though every Mini was costing 535 to make and then being sold for
500.