Product Development Failures: Lessons from Keurig’s Soda Machine

Less than 10 months after launch, Keurig Kold has officially lost its fizz. Keurig, which built its empire on single-serve, pod-based beverages, just announced its discontinuation of Kold, the expensive home soda machine no one wanted. But its exorbitant cost – $370 dollars – isn’t the only hurdle. Soda consumption in the U.S. is on the decline, falling to a 30-year low.

The company had high hopes for Kold, even suggesting they could eventually be bigger than its coffee brewers. Now it’s humbly admitting the product was a flop. It’s hardly the first: 72 percent of new products fail to meet their financial targets – or fail entirely.

Keurig’s fast fail with Kold pushes such staggering statistics back into the spotlight. Clearly, something is seriously wrong with the way companies bring new concepts to market. Like so many – too many – before it, Keurig is showing what happens when you fail to design product around price, and launch hoping to meet sales expectations instead of actually knowing you would.

Kold is a classic undead product: a product that customers don’t want or need but has been brought to market. One of the most celebrated – and then reviled undead products – was the Segway. Aside from the hefty price charged to consumers, the Segway didn’t transform the world because its appeal was narrow, and the product was the wrong answer to the right question: What’s the most efficient way for people to get from point A to point B?

Ensure your product not only stays alive, but thrives, by talking with customers early in the product development process. Long before the product development team begins to draw up the engineering plans, and long before any manufacturing resources are committed and configured to build something, have in-depth needs, value and willingness-to-pay discussions with customers. If you don’t, you won’t be able to prioritize the product features you develop, or know whether you’re building something customers will pay for until it’s in the marketplace.

Shockingly, 80% of companies don’t have this type of discussion with customers early. Instead they develop a product, prepare it to go to market and slap a price on it without understanding whether customers value and are willing to pay. It’s a recipe for failure – and likely one Keurig followed when creating Kold.

Don’t be a wrong answer to the right question. And don’t be an answer to a question no one is asking. Design your product around what customers value and are willing to pay for. In other words, design the product around the price. The results will surprise you and it would be time to put the undeads to rest once and for all.

Looking for more content like this? Check out Monetizing Innovation: How Smart Companies Design the Product around the Price (Wiley, May 2016) by Madhavan Ramanujam, Partner & Board Member at Simon-Kucher & Partners, and Georg Tacke, co-CEO at Simon-Kucher & Partners.