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This is an example of it going poorly but advertisers to an extent do it on purpose. Kool-aid gets used to refer to powdered drink mixes like band-aid is used to refer to adhesive bandages and, in some regions, coke is used to refer to soda in general. The idea is to become so associated with the concept as to overshadow the competition.
At the same time, lawyers also fight the phenomenon because if your product name becomes the concept itself it loses all trademark enforcement. There’s a chart posted on this site somewhere that shows words losing trademark status because of court rulings, but I guess I didn’t save it. The term is “genericized trademark”.