Product Launch Failure – Samsung
Development of Product and Services for International Market
Product Launch Failure 1: Samsung Galaxy Note 7
Product Description
Launched in August 2016, Samsung Galaxy Note 7 failed in early September 2016, forcing Samsung to cease selling it. In recent years, Samsung Galaxy Note 7 remains among the biggest product launch failures. Reports of batteries overheating, exploding, and burning were the phone’s major faults. According to (Leon, 2019), the Samsung Galaxy Note 7 brand issued a voluntary recall of the phones, during which they recalled 2.5 million units. This recall cost Samsung $5.3 billion and hugely tarnished its reputation to the world’s customer base/market.
Company Description
Samsung Electronics Co., Ltd is a global electronics producer headquartered in South Korea. The company operates four divisions, including home appliances, digital media, information and communications, and semiconductors (BBC News, 2017). Among Samsung’s leading products are phones, fax machines, cellular phones, televisions, audio equipment, computers, solar panels, fiber-optics, and more. Today, Samsung has expanded its electronics operations in over 74 countries, attracting foreign investors. Samsung has enjoyed market success in its innovative effort while sometimes learning from product launch failures (BBC News, 2017). This is the reason why Samsung is very competitive in the electronics industry.
Detailed Explanation of Situation and which Regulations were in Question
In the case of the Samsung Galaxy Note 7 product launch failure, there were neither hardware nor software faults. Reports by the “internal and independent investigations” concluded that the cause for Samsung Note 7 failure was faulty batteries (Mozur, 2017). There were issues with the Note 7’s batteries exploding, burning, and overheating. In this case, the regulation in question was ensuring “quality standards,” i.e., quality, fitness for purpose, battery storage capacity, and human health.
Why the Product failed to Meet Regulations
In early September 2016, Samsung stopped selling Galaxy Note 7 and informally recalled over 2.5 million phones from the market. According to (Mozur, 2017), it was found that a manufacturing fault and defect in Note 7 caused some of the phones to generate excess heat, and eventually resulting in a fire. Manufacturing issues made Galaxy Note 7 fail to meet regulations, and these mistakes included: big size defects, poor welding of batteries by a 3rd-party manufacturer, and tech failures. Also, Samsung skipped some tests before launch, and there was pressure to axe the iPhone, its biggest industry rival.
Lessons Learnt
Samsung Galaxy Note 7 launch failure was due to the company’s improper product development. Manufacturing issues were the main problem. Samsung themselves made a mistake in regards to the phone’s size. Another blunder was incorrect/faulty welding done by the third-party manufacturers (Barker, 2020). These two minor mistakes cost the company a lot. The main lesson from this product launch failure was that Samsung needs to carefully inspect each aspect of its product development before setting the launch date. Also, products must only be launched once all features have been verified to be faultless.
The Outcome and Whether the Company face Fines
Due to this product launch failure, Samsung’s reputation in the market was adversely affected. In the end, Samsung lost $14.3 billion in investments (BBC News, 2017). Although no fines were imposed on Samsung, various airlines worldwide banned the Samsung Galaxy Note 7 on flights.
Product Launch Failure 2: Amazon Fire Phone
Product Description
Amazon Fire Phone launch failure was among the most significant product launch failures in 2014. Despite the product’s ability to fulfill its goal by enabling customers to compare the appropriate product charges with only a “click of a button,” Amazon Fire Phone did not fully satisfy consumer needs; particular needs were unmet (Goode, 2016). Customers gave the Amazon Fire Phone a low rating, only 2.6/5 stars. The reviewers termed the device as “mediocre” and “forgettable.” After one (1) month since its launch, Amazon lowered its price to 99 cents from $200.
Company Description
Founded in 1994 by Jeff Bezos, the company is a leading e-commerce wholesaler and retailer for video games, electronics, toys, apparel, jewelry, software, food, furniture, and more. Amazon is headquartered in Washington, DC, in the United States. Today, Amazon has fourteen (14) unified accounts worldwide, whereby retailers can sell on. Also, Amazon operates thirteen (13) country-specific websites and has been a competitive player in the cloud computing, artificial intelligence, e-commerce, self-driving cars, electronics, and digital distribution sector. Among Amazon’s main product launch failures in history is Amazon Fire Phone (Mangalindan, 2014).
Detailed Explanation of Situation and which Regulations were in Question
As per (Rubin & Cheng, 2015) report, Amazon was overly satisfied with the Amazon Fire Phone device’s efficiency. Due to this, Amazon overlooked to consider the other vital factors/regulations governing their product manufacture and steps required to be completed before the launch. For example, the devise’s design lacked any visual appeal; and this ignorance was the main factor behind its failure in the market (Goode, 2016). Second, Amazon did not maintain the fashionable standards that are set to ensure that a product appeals to the target consumers.
Why the Product failed to Meet Regulations
In today’s digital age, every product must appeal to consumers. Instead, the Amazon Fire Phone did not look fashionable. Also, the product did not efficiently address smartphone owners’ needs and wants. Perhaps, this is the main reason why Amazon discontinued its production and selling in the market in 2015 (Leon, 2019). The assumption that the device was efficient cost Amazon its consumers, investments, reputation, and more.
Lessons Learnt
Amazon Fire Phone’s failure provided Amazon management with useful lessons. To the CEO, this disaster was a blessing in disguise (Heater, 2017). Although Amazon lost millions of dollars, the company cited it as an experience edging them close to success. However, to business analysts, the Amazon Fire Phone disaster teaches that, before producing a product, user needs must be given top priority. Second, companies must avoid focusing more on establishing product demand. Rather, companies must develop products that meet people’s wants, tastes, preferences, and demands (Mangalindan, 2014). Last, whenever the product fails to impact the market, the chances are that the launch will fail even if sensational and unconventional marketing efforts are used.
The Outcome and Whether the Company face Fines
Due to the Amazon Fire Phone launch’s failure, Amazon incurred a loss of $170 million. Also, users left bad product reviews of 2.6 out of 5 (Mangalindan, 2014). Also, the reviewers labeled the Amazon Fire Phone devise as forgettable and mediocre. Such product reviews left a lasting effect on the brand’s reputation and image. No fines were imposed, but the loss incurred was hefty to recover by Amazon (Barker, 2020).
References
Barker, S. (2020, September 28). 6 of the worst product launch failures (and what you need to learn from them). Retrieved October 29, 2020, from Shane Barker: https://shanebarker.com/blog/product-launch-failures/
BBC News. (2017, January 23). Samsung confirms battery faults as cause of Note 7 fires. Retrieved October 29, 2020, from BBC News Web site: https://www.bbc.com/news/business-38714461#:~:text=Samsung’s%20probe%20into%20its%20Galaxy,by%20faults%20with%20their%20batteries.&text=Internal%20and%20independent%20investigations%20%22concluded,giant%20said%20in%20a%20statement.
Goode, L. (2016, March 3). Amazon’s smartphone flop was the best thing that happened to Alexa. Retrieved October 29, 2020, from The Verge: https://www.theverge.com/2016/3/3/11157394/amazon-alexa-fire-phone-failure-echo-success-smart-home
Heater, B. (2017, October 7). In defense of the Amazon Fire Phone. Retrieved October 29, 2020, from Tech Crunch: https://techcrunch.com/2017/10/07/in-defense-of-the-amazon-fire-phone/#:~:text=After%20debuting%20in%20the%20top,due%20to%20the%20phone’s%20failure.
Leon, D. A. (2019, June 22). Product Launches: An Analysis of the Samsung Galaxy Note 7 — An Explosive Launch! Retrieved October 29, 2020, from Medium.com: https://medium.com/@dantealvaradoleon/product-launches-an-analysis-of-the-samsung-galaxy-note-7-an-explosive-launch-65adb459f2eb
Mangalindan, J. P. (2014, September 29). Why Amazon’s Fire phone failed. Retrieved October 29, 2020, from Fortune: https://fortune.com/2014/09/29/why-amazons-fire-phone-failed/#:~:text=Reviewers%20called%20the%20device%20%E2%80%9Cforgettable,splashy%20press%20conference%20in%20Seattle.
Mozur, P. (2017, January 22). Galaxy Note 7 Fires Caused by Battery and Design Flaws, Samsung Says. Retrieved October 29, 2020, from The New York Times: https://www.nytimes.com/2017/01/22/business/samsung-galaxy-note-7-battery-fires-report.html
Rubin, B. F., & Cheng, R. (2015, July 24). Fire Phone one year later: Why Amazon’s smartphone flamed out. Retrieved October 29, 2020, from C/net: https://www.cnet.com/news/fire-phone-one-year-later-why-amazons-smartphone-flamed-out/