As someone who ate those Dulce de Leche M&Ms, what would've helped is if they were any good or bore any resemblance to the flavor they were named after.
The other issue was that the whole "Dulce de Leche" market became over-saturated. I remember that time - it was like everything was "dulce-this, dulce-that"; heck, I think there were cough-lozenges in that flavor.
This nails the issue. It's why flaming hot Cheetos were successful but Dulce de Leche weren't.
Don't make something meant to be something else explicitly. Make something that has the same meaning (or in this case flavor) as something else but make it its own thing for its own sake.
