The top product and brand failures of 2016 in North America. Failwatching publishes this analysis once per year and we write about business and brand failures as we are interested in success. We give conferences on product and brand failures with a strong focus on learning from your own and other's mistakes.

1. SOURCE: YAHOO / AFP
L’ÉCHEC
Yahoo! vit ses derniers jours comme compagnie indépendante depuis son rachat par Verizon, en 2016, pour près de 5 mil-
liards $. Les tentatives de redressement de Marissa Mayer, à sa tête depuis 2012, n’ont rien donné. Pas plus que le recrute-
ment de plusieurs journalistes vedettes, dont Katie Couric, pour attirer des visiteurs sur le site.
En quatre ans, Yahoo! a investi 2 milliards $ dans l’acquisition de plus de 50 « startups », maintenant fermées pour la plupart. Ya-
hoo! a tout essayé : la recherche web, les médias sociaux et le commerce en ligne, mais elle n’est devenue leader en rien. Sa plus
grosse acquisition a été l’achat du site de Tumblr pour 1 milliard $, dans le but d’augmenter l’audience de Yahoo! et de raviver sa
branche publicitaire. Ce fut, là aussi, un échec.
Yahoo! a changé de mission plus de vingt fois en vingt ans : une vraie girouette ! On n’a jamais réellement compris ce que Ya-
hoo! voulait faire, être, devenir, bref, où elle voulait en venir. Ses employés non plus d’ailleurs…
LA LEÇON
À la défense de Madame Mayer, Yahoo! était déjà en déclin lorsqu’elle en a pris les rênes en 2012. Toutefois, la PDG n’a pas su développer de straté-
gie claire ni imposer une ligne directrice. En essayant d’être partout pour tout le monde, avec un pied sur le terrain de chaque compétiteur, l’entre-
prise s’est éparpillée, passant plus de temps à copier les autres qu’à se concentrer sur ses forces.
DE TOUT ET DE RIENYAHOO!
1
Research in the print media and on the web
and from the contents of our brains
presents
THE BEST PRODUCT
& BRAND FAILURES
2016

2. 1
SOURCE : YAHOO / AFP
ALL AND NOTHING
THE FAIL
1
THE MORAL
To Ms Mayer’s credit, Yahoo! was already sinking when she took over as CEO in 2012. Still, she was never able
to develop a clear strategy or chart a guiding principle. By trying to be all things to all people and stepping on
its competitor’s toes, the company spread itself too thin, spending more time copying others than building core
strengths.
YAHOO!
In the past four years, Yahoo! has invested $2 billion in the acquisition of more than 50 startups, most now de-
funct. Yahoo! has tried it all: search engine, social media and e-commerce, but has taken the lead in none. Its big-
gest acquisition was Tumblr for $1 billion, aimed at building an audience for Yahoo! and boosting its advertising
branch. Chalk up another failure.
Yahoo! has changed its mission over twenty times in as many years: mission impossible! We have never really
understood what Yahoo! was trying to do, to be, to become, in short, where it was trying to go. And neither have
its employees…
Yahoo! is on its last legs as an independent company since it was bought out by Verizon in 2016 for close to
$5 billion. Attempts by Marissa Mayer, at the helm since 2012, have not paid off. And bringing in hotshot journalists
like Katie Couric has done nothing to draw traffic to the site either.

3. 1
SOURCE : HUFFINGTONPOST.CA
SUCCESS IS ONLY SKIN-DEEP
THE FAIL
THE MORAL
Danier remained inert for too long in a fast-evolving competitive environment. Changing your image and building
a new clientele is never easy, but can be done if you proceed gradually and don’t alienate your loyal customer base
along the way. This is where Danier Leather went wrong.
DANIER LEATHER
The growing popularity of down-filled parkas squeezed out this niche retailer, which had allowed itself to become
outmoded over the years. But, in attempting to refocus its brand on a younger, trendier clientele, Danier let down
its loyal, long-time customers, who had valued and sworn by the brand from the start. The company suffered
huge financial losses.
For 45 years, Danier Leather sold its leather coats and accessories in 84 stores across Canada. Established in 1972,
the brand never set out to be cool; it sold classic leather coats for adults at reasonable prices.
Faced with bankruptcy in March, the company reopened in Ontario last fall with only three stores, and dropped the
word Leather from its name. Under new ownership, Danier switched over to fashionable sportswear in a variety of
fabrics, targeting a young, trendy clientele. But wait a minute…aren’t there a lot of world-famous brands already
doing that?
2

4. 1
SOURCE: TOBLERONE
DON’T ASK CHOCOLATE LOVERS TO FILL IN THE GAPS
THE FAIL
THE MORAL
Mondelez decided to tinker with the Toblerone brand’s DNA: its distinctive signature triangles. They compromised
product integrity and Toblerone lovers felt betrayed. You have to be very careful when it comes to altering
a brand’s differentiator and promise – that which makes it recognizable and distinctive – the backlash can be very harsh.
TOBLERONE
When Toblerone UK then took the surprising step of increasing the space between the triangles, which represent
Switzerland’s Mont Cervin, reactions were swift and negative. TOBLERONE now reads T_ B _E _O_ E.
With all these gaps, Toblerone lovers no longer recognized their chocolate bar. Many wondered why Toblerone didn’t
simply shorten the bar so it looked the same as before.
Last November, Mondelez International, owner of the Toblerone brand, decided to reduce the weight of its
famous chocolate bars in the UK. The 400-gram bar dropped to 360 grams, and the 170-gram to 150.
So far, so good. It’s common practice in the food industry to cut product weight when the cost of basic
ingredients goes up as a way of keeping the same sales price.
3

5. 1
SOURCE: JENNY HUESTON
THE BLEEDING EDGE
THE FAIL
THE MORAL
Today, we expect brands to be honest and transparent and to keep their promises. It’s intolerable to learn that
brands claiming “perfection” and to be “the ultimate” have been lying to us all along. Ms Holmes paid the price
where it counts the most: by losing her fortune and her credibility.
THERANOS
Then, the highly respected Wall Street Journal revealed that Theranos only conducted 15 of the 240 screening
tests on its own equipment. The others were conducted using competitors’ equipment.
Last November, Walgreens drugstores, a partner from the outset, filed a $140-million lawsuit for fraudulent prac-
tices. Theranos had failed to respect its promise because the product simply didn’t work.
In 2015, Theranos CEO Elisabeth Holmes was on Forbes magazine’s list of the world’s wealthiest businesswomen
under 30, at $4.5 billion. Less than one year later, her net worth was an estimated… $0.
Ms Holmes claimed that Theranos had developed technology that could screen for hundreds of diseases in a sin-
gle drop of blood, thereby saving millions if lives. The company raked in over $700 million in investments, and its
CEO was widely touted as the next Steve Jobs.
4

6. 1
SOURCE: NEWS.VICE.COM
BOGUS ACCOUNTS, REAL FEES
THE FAIL
THE MORAL
In today’s highly-connected world, it’s becoming harder and harder to get away with lying, and with the growing
erosion of consumer trust in big business, there are sure to be some great opportunities out there for startups
that truly believe in the importance of giving their customers good service and respect. It’s up to us consumers
to “vote with our wallets”.
WELLS FARGO
In an effort to hit management sales targets from 2011 to 2016, Wells Fargo opened 1.5 million unauthorized bank
accounts and issued 550,000 credit cards to clients without their knowledge. It also created fake electronic
addresses and phony PINs to sign them up to online services for which fees were collected. The company then
accused its employees of fraud, firing 5,000 of them. Even the president, John Stumpf, was forced out.
Last September, Wells Fargo was finally ordered to pay a $185 million fine to the CFPB, the Consumer Financial
Protection Bureau, for illicit trading practices.
Founded in 1852, Wells Fargo is America’s biggest bank in terms of market capitalization. The brand name evokes
an era when its stagecoaches carried gold across the United States at record speeds.
The values Wells Fargo adheres to, its corporate ethics, are clearly expressed on its website in words such as trust,
integrity and honesty
5

7. 1
SOURCE: REUTERS
PAYING THE PRICE FOR HIKING THE PRICE
THE FAIL
THE MORAL
By aiming for profits at any price, a company can shoot itself in the foot. Pricing is a reflection of trust between
a company and its market. Once this relationship of trust has been broken, it’s hard to recover. Valeant tried to
smooth things over by naming new directors and lowering prices. But is this too little, too late? It’s better to play
fair from the start than to try to pick up the pieces.
VALEANT
In 2016, Valeant came under investigation for its pricing practices. The report found that the company had first
determined revenue targets, then set drug prices to reach these targets. To maximize profits before the advent
of generic equivalents, Valeant inflated the prices of these lifesaving products and treatments by 200% to 800%.
By selling these drugs to hospitals, generally less rigorous in terms of prices, Valeant and its exclusive distributor,
Philidor, took advantage of a favourable context. This is obviously a question of ethics and questionable practices.
The outcome: loss of trust in the company and its directors, and plummeting stock prices.
In recent years, the Laval-based pharmaceutical company, Valeant, showed strong growth and generated high
shareholder returns. In 2014 and 2015, it prided itself on its unconventional sales approach based on acquisitions.
This period saw earnings and market quotes soar.
6

8. 1
SOURCE: TBO.COM
NEITHER/NOR
THE FAIL
THE MORAL
Developing a new brand in the automobile industry is a colossal task. In entry-level categories, Scion competed
with industry giants, including Toyota. In bringing the best prospects for Scion under the Toyota banner, the com-
pany hoped to make good on its bets: time will tell if Scion has what it takes to rejuvenate Toyota.
SCION
Even though Scion cars turned heads in the beginning for their bold and appealing design, sales quickly levelled
off. Scion looks good on paper, but in reality, not only are its models in the same category as Toyota, they’re sold
at Toyota dealerships. In the end, Toyota realized that the two brands overlapped, and that they could do just as
well with only one.
This is not unlike the case of the GM Saturn, also intended to attract a younger clientele. Similarly, Scion did not
succeed in carving out or maintaining a suitable territory distinct from that of its sister brand.
With its reputation for dependable, safe products, Toyota projects a conventional image that doesn’t tend to at-
tract young drivers. Bring young customers into Toyota’s ranks: this was what the Scion brand, launched in the
United States in 2003 and Canada in 2010, was supposed to do.
7

9. 1
SOURCE: CITY NEWS
CRASH LANDING
THE FAIL
THE MORAL
Faced with this widespread outcry and its own inability to meet demands, Air Miles rescinded its decision in De-
cember 2016. When you make a promise to your customers, then change the rules of the game along the way,
you better be ready to deal with the fallout. Especially when this promise goes right to the heart of customer ex-
perience, in this instance, claiming rewards. As the saying goes, a fault confessed is half redressed, but a broken
promise is much harder to mend.
AIRMILES
The purpose of this initiative was to incite members to claim their rewards on a regular basis. Internal data
showed that this would help retain membership. But the outcome was just the opposite.
As the deadline loomed in 2016, many collectors rushed to redeem their miles, and even with increased customer
service staff, Air Miles was unable to meet the demand. Members became extremely dissatisfied and lost faith
with program partners. Air Miles was hit with a class action suit and a proposed law to prohibit the expiration of
points under loyalty programs.
Air Miles is Canada’s most widespread loyalty program: with a 72% penetration rate and over 220 participating
partners, including IGA-Sobeys, Shell and Amazon. LoyaltyOne, the corporate owner of the program, announced
in 2011 that all miles collected to date would expire on December 31, 2016. Successive miles would only be good
for five years.
8

10. 1
SOURCE: OMACCANADA.COM
GIGA HIKES IN DISSATISFACTION LEVELS
THE FAIL
THE MORAL
Despite appearances, this same situation wouldn’t have made a ripple at Costco, Wal-Mart, Maxi or Super C. The
Achilles heel of IGA didn’t lie in raising prices on a few items – the competition does the same thing :). Their mis-
take lay in promoting a campaign based on a value that it is not known for: a low-price policy. By turning the spot-
light on its pricing strategy, IGA came under close scrutiny. Anything that seemed to diverge from its campaign
became the focal point for unwanted attention.
IGA
In the spring of 2016, IGA launched with great fanfare a campaign to introduce everyday low prices on 8,500 of
its products – labelled GIGA low prices. The supermarket chain announced an overall 5% to 7% price cut, offset
by bringing an end to its policy of offering consumers free items and by negotiating new agreements with its
suppliers.
In fact, during this same period, the price of 2,000 items actually went up and promotions were withdrawn or
modified. A wave of popular discontent came crashing down, along with commentary and articles about the price
hikes in the media. IGA was forced to reorient its campaign, at times shifting the blame over to its suppliers.
An affiliate of Sobeys, IGA is a leading supermarket in Québec and a local retailer known for the variety and the
quality of its products. Obviously, to support this kind of offer, prices in such stores tend to be higher.
9

11. 1
SOURCE: N4BB.COM
TOO HOT TO HANDLE
THE FAIL
THE MORAL
Pressure is heavy when you’re the leader in such a competitive market. In its push to become the most innovative,
Samsung cut corners that allowed defects to slip by. The speed at which information travels today greatly increas-
es its impact on a brand’s reputation. Samsung must now take extra care and work extremely hard to win back
consumer trust and rise from its ashes.
SAMSUNG
The company could not have foreseen how this would blow up in its face. Just a few months following the launch,
a few Galaxy Note 7 phones caught on fire. By the end of summer, some one hundred such instances were re-
ported. Samsung, believing it to be a faulty battery issue, offered to replace defective phones. But when some of
these “replacements” also began to overheat, it decided to recall all the phones and stop production.
Obviously, Samsung was faced with consumer redress and both its reputation and its stock took a hit on the
markets. This whole affair went so far as to affect the South Korean economy. At the height of the crisis, several
airlines even prohibited the device onboard.
In the mad rush to the top in smartphone sales, South Korea’s Samsung has led the pack in recent years, overtak-
ing even the giant, Apple. Its Galaxy Note 7 was meant to be its 2016 star product, securing market dominance.
The new Samsung smartphone boasted more functionalities and innovations than any other device on the mar-
ket, and the critics loved it.
10

12. SOURCE: BEALMIGHTY.COM SOURCE: DIGITALSPY.COM
SOURCE: THE INDEPENDANT SOURCE: MANAN VATSYAYANA/AFP/GETTY IMAGES SOURCE: TASTY MADE
Arriving in 2008 like a breath of fresh air in the
tea industry, David’s Tea experienced explosive
growth with its multiple flavours and enterprising
points of sale. Eight years later, the brand is being
squeezed to the limit, diluted by its fifty kinds of
tea and derivative products. Could it be that it lost
sight of the most important ingredient: genuinely
good tea?
We expected Apple, Samsung and Garmin to
drive the commercial success of this device. But
the real challenge lies in differentiating the experience
relative to smartphones. By default, these watch-
es remain associated with physical activity. Until
a real revolution comes along, we shouldn’t be
surprised to see some brands fall by the wayside.
It’s not easy to sum up in 140 characters the poor
performance of Twitter since it went public.
The fact is, it’s having a hard time attracting new
users in comparison with Facebook, the giant
that advertisers love. The momentum created by
Snapchat, Instagram and similar apps has also
clipped this little bluebird’s wings.
Long a symbol of perseverance and the commu-
nity of nations, the Olympic Games brand has lost
its shine. The remarkable performances of its in-
spiring athletes are tarnished by the flip side of
the story: the social vacuum left behind in Sot-
chi, the organizational headaches and the emp-
ty grandstands in Rio, doping scandals... the list
goes on. On top of that, the machine has grown
so unwieldy that potential host cities are unwilling
to submit their candidature. The Olympic Games
should draw inspiration from the genuine spirit of
fair play that prevails at the Paralympics!
Right in the middle of an E. coli food poisoning
scare, Chipotle Hamburgers decided to jump into
the highly competitive burger market with its
new Tasty Made brand. Chipotle is going to have
to beef up its efforts if it hopes to take on the
likes of McDonald’s, Five Guys, Burger King and
Wendy’s on their own turf.
DAVID’S TEA SMART WATCHES
TWITTER THE OLYMPIC GAMES CHIPOTLE HAMBURGERS
ON OUR
RADAR

13. SOURCE: EDOUARD PLANTE-FRÉCHETTE, LA PRESSE SOURCE: FOTOLIA
SOURCE: JEREMY KOHM SOURCE: AP SOURCE: HUFFINGTON POST QUÉBEC
Airport food is generally mediocre, but the
Montréal Airport has made an effort to offer
a gastronomic experience designed to leave
visitors with a good impression. With the addition
of 17 gourmet restaurants, ranging from French
bistro fare to the best of Montréal’s street food,
travellers now have as many good reasons to get
to the airport well ahead of their flight!
Under pressure from consumers, Kraft replaced
the artificial orange colour in its famous mac-
aroni and cheese dinner by paprika and curcuma.
More than 50 million boxes of this ‘natural
version’ were sold before the official announcement.
Kraft qualified this experience as “the world’s
biggest blind test”. The brand was able to meet
expectations of consumers without changing the
product’s DNA: its orange colour.
Unlike most of the country’s clothing stores,
Simons is expanding. With 13 stores under its
banner, it plans to open two more in
Alberta in 2017 and will also be revamping two
of its branches. Already, over 500,000 customers
have a Simons loyalty card. This goes to show
that good products at reasonable prices and
excellent customer service can take you a long way.
In 2000, at the dawn of the Ballmer era, Microsoft
was the richest company in the world, famed for
its office software. The growth of search engines,
social networks and mobile devices signalled its
slow decline. But in 2014, Satya Nadella stepped
in and turned what had become little more than
a software company registering one-off, flat
revenues back into a dynamic company with
recurrent revenues.
In 2016, Couche-Tard continued to make acquisitions.
The purchase of CST Brands thrust it to the
top of the convenience store market in Canada
and the US. Extending beyond North American
boundaries, it has stores in Asia and Europe,
with a strong presence in Scandinavia and the
Baltics. Couche-Tard is a model of growth that has
managed to give credentials to an often dispar-
aged market segment.
MONTRÉAL AIRPORT KRAFT DINNER
SIMONS MICROSOFT COUCHE-TARD
HONOURABLE
MENTION

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