CAMBRIDGE, Mass. -- Diet Crystal Pepsi. Frito Lay Lemonade. Watermelon-flavored Oreos. Through the years, the shelves of stores have been filled with products that turned out to be flops, failures, duds and losers.
Some consumers seem to have an unerring knack for buying these unpopular products.
A recently published study co-authored by two Massachusetts Institute of Technology (MIT) professors says the same group of consumers has a tendency to purchase all kinds of failed products, time after time. The study calls the people in this group “harbingers of failure” and suggests they provide a new window into consumer behavior.
“These harbingers of failure have the unusual property that they keep on buying products that are taken from the shelves,” said MIT marketing professor Catherine Tucker, co-author of a paper detailing the study’s results.
These “star-crossed” consumers can sniff out flop-worthy products of all kinds, she said.
“This is a cross-category effect,” Tucker said. “If you’re the kind of person who bought something that really didn’t resonate with the market, say, coffee-flavored Coca-Cola, then that also means you’re more likely to buy a type of toothpaste or laundry detergent that fails to resonate with the market.”
And while strong initial sales of products normally seem like a good thing, the research reveals that is not always the case--not if it’s the harbingers of failure who are rushing out to purchase those products.
“It’s not just how many people are buying them, it’s how many of the right people are buying them and how many of the wrong people aren’t buying them,” said Duncan Simester, an MIT marketing professor and another co-author of the study.
“Usually when you’re doing market research, the common wisdom is that people liking your product is a good thing,” Tucker adds. “But what we’ve done in this research is identify a group of people who you really want to [have] hate your product. And that changes the paradigm of market research.”
The study draws upon two large data sets from a large chain of convenience stores that reaches across the United States. One data set consists of weekly aggregate transactions from 111 store branches, from Jan. 2003 to Oct. 2009. The other data set consists of individual-level transaction data from Nov. 2003 to Nov. 2005.
All told, the researchers ended up examining 77,744 customers who purchased 8,809 new products between 2003 and 2005, and then tracking the aggregate data longer to see how well those products fared. They defined a failed product as one pulled from stores less than three years after its introduction; only about 40% of the new products survived that long.
In a key part of the study, the researchers studied consumers whose purchases flop at least 50% of the time, and saw pronounced effects when these harbingers of failure buy products. When the percentage of total sales of a product accounted for by these consumers increases from 25% to 50%, the probability of success for that product decreases by 31%. And when the harbingers buy a product at least three times, it’s really bad news: The probability of success for that product drops 56%.
“You could think of it as preference for risk,” Simester said. “People who are more willing to take a risk on an unusual product are more willing to take a risk in multiple categories.”
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