Market Failures Essay Example

Paper Type:  Essay
Pages:  3
Wordcount:  806 Words
Date:  2022-03-29


Marciano and Medema (2015) describe market failure as a process through which a product or service fails to attain the expected market results in the interest of a market society. Notably, companies introduce new products or services into the market with the aim of filling up some market gaps and to achieve consumer satisfaction. However, some of the newly introduced products may not get a good market reception. This leads to market rejection thereby resulting in market failure, and hence product or service withdrawal from the market. Admittedly, American, European and some parts of the world market have witnessed numerous product market failures. This paper gives an analysis of market failures of three products: Edsel from Ford Motors, Samsung Galaxy Note 7, and New Coke from Coca-Cola.

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The Market Failure of Edsel

As an effort to catch up with General Motors, Ford Motors introduced Edsel, a new car model in 1957. However, the car was withdrawn from the market about three years after it was unveiled because customers rejected the car and the company was making nearly no sale on the automobile (Chukwuma-Nwuba, 2013). The customers mockingly referred to Edsel as an ugly car. The exaggerated advertisement prior to the official unveiling of the new model created anxiety and set a high expectation from consumers who later admitted that the Edsel was not actually the car that they anticipated. Although Edsel had a number of great innovations such as the Teletech-transmission system and the rolling dome speedometer, it did not meet the expectations of buyers. Additionally, the failure was attributed to lack of proper attitude from the company workforce during the car assembly. Markedly, the management failed to give the new brand its own car line and relied on the general employees instead of specialists. Furthermore, the workers were not trained on the special features and design of the car. Therefore, the car produced was of a lower quality than what had intensively been advertised. Buyers were disappointed and rejected Edsel.

The Market Failure of Samsung Galaxy Note 7

The iconic smartphone was withdrawn from the market in 2016 after several incidences of the phone explosion were reported. The Samsung Company through the Chief Executive Officer later confirmed that the phone model had several manufacturing defects in its batteries that caused the explosions (Melanie et al., 2018). It was reported that the explosion was as a result of short-circuiting within the phone battery which occurred when two oppositely charged electrodes made contacts. The short-circuiting was facilitated by a number of other factors. Remarkably, the battery size was too small and the two electrodes were positioned too close to one another. Therefore, the negative plates were deflected and made contact with the positive plates. Another contributor to this malfunction was the incorrect installation of the negative electrodes. Additionally, the batteries were poorly welded and were not properly insulated. All these defects contributed to fatal explosions that completely destroyed the phone which led to its withdrawal from the market.

The Market Failure of New Coke

The Coca-Cola Company was, in 1985, forced to withdraw one of its brands known as New Coke. Remarkably, an intense competition was growing between the two main soft drink companies, Coca-Cola and PepsiCo, during the better part of the 20th century. PepsiCo aligned its brands with the youths and sacrificed the aged to Coca-Cola and other competitors. This strategy worked well for PepsiCo and this made Coca-Cola lose a large market segment to PepsiCo. In an attempt to curb this competition, Coca-Cola introduced a new brand called New Coke and scrapped off all its original brands. Unfortunately, this idea was not well received by a majority of consumers who then decided to boycott the new product (Jones, Ondracek, Saed, & Bertsch, 2016). The company later expressed its apology through Donald Keough, the then Chief Operating Officer, and announced the return of the original brand to replace New Coke.


Market failure is an unfortunate occurrence in the market cycle of a product that brings forth numerous dire consequences. It results in huge financial losses and defames the company image leading to a loss of customer loyalty and trust. Therefore, every company management should take precautions while making decisions to introduce a new product to the market to limit possibilities of market failure.


Chukwuma-Nwuba, E. O. (2013). The Failure of Most Entrepreneurial Technological Innovations to Diffuse: What the Literature Say. International Journal of Management Sciences, 1(11), 463-470.

Jones, K., Ondracek, J., Saed, M., & Bertsch, A. (2016). Don't Mess with Coca-Cola: Introducing the New Coke Reveals Flaws in Decision-Making within the Coca-Cola Company. GE-International Journal of Management Research, 4(10), 2394-4226.

Marciano, A., & Medema, S. G. (2015). Market Failure in Context: Introduction. History of Political Economy, 3(1), 471-19.

Melanie J., L., Guillaume, R., Nadia, K., Ronny, G., Anup, B., Mike J., L., & ... David, G. (2018). Looking Deeper into the Galaxy (Note 7). International Journal of Mobile Marketing, 8(2), 75-84.

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