Age is important for marketers. There are many social, cultural and personal differences between age-defined cohorts. Having said this, a strategy based on age is not always the  best strategy for enduring profitable growth. Of course, there are products designed specifically for certain age-demographics such as diapers – baby and adult  – or wrinkle creams. But, it is always wise to remember that one condition is inevitable: people become older and older. Brands must always both maintain customers and attract customers.

Having a reputation for being a brand for older folks may be very profitable for a while but new, younger users may avoid becoming customers. Although it is possible to span cradle to grave very few brands do this successfully. Disney is probably the single brand that crosses the cradle-to-grave expanse. No matter how adorable the toddler jean jackets, Baby Gap did not help The Gap. No matter how fabulous their music, having AARP sponsor the Rolling Stones Tour is cringeworthy. 

And, lest we forget, the “Not Your Father’s Automobile” campaign for Oldsmobile only reinforced that the fact that the brand was for your father and his father. 

This brings us to Harley-Davidson. Harley-Davidson’s strategy focuses on the brand’s core Boomer biker constituency and on big expensive touring bikes that Boomers buy. The CVO Street Glide and the CVO Road Glide start at US $44,499.

Harley-Davidson CEO, Jochen Zeitz continues to trust in a strategy aimed at expensive touring bikes where the average age of the buyer is “late 50s” meaning there are lots of Harley-Davidson owners well into their 60s and above.

Mr. Zeitz says that Harley-Davidson “dominates” the “most profitable categories.” OK, but making money off of a diminishing segment cannot remain a profitable approach.  The Wall Street Journal has  opined, “ Harley will ride or die with the graybeards.” In other words, Harley-Davidson is committed to selling bikes for aging Boomers who connected with the zeitgeist of Stanley Kramer’s 1953 Marlon Brando film “The Wild One” (considered to be the first outlaw biker film).  Those Harley-Davidson riders are the aging Boomers who saw themselves in Dennis Hopper’s Peter Fonda’s and Terry Southern’s 1969’s “Easy Rider” which ”starred” three Harley-Davidson customized Hydra Glides. These are the aging Boomers who have compartmentalized the cultural disaster at Altamont Speedway where the Rolling Stones thought it was a good idea to have Hell’s Angels as security.

At some point, sooner rather than later, the Boomers buying the big, expensive touring bikes will stop squeezing themselves into their leather pants and hang up their leather jackets. Sure, these Boomers may still be listening to Steppenwolf’s Born to be Wild but the song will be on Spotify while maneuvering the golf cart.

As reported in The Wall Street Journal, when Jochen Zeitz was appointed CEO, he told analysts that the previous CEO’s strategy of model expansion while chasing new customers and markets added manufacturing complexity and “diverted attention from Harley’s profitable models.” Mr. Zeitz eliminated offerings aimed at entry-level riders. Mr. Zeitz’ strategy was and is to focus on “profit over growth.” This strategy is not, apparently, drawing riders into the Harley-Davidson franchise.

Focusing on a core customer base only works until it does not, just channel Jaguar. Jaguar’s marketing lesson is do not rely solely on the established, loyal customer base without seeking new customers. Jaguar’s reputation and reality of cars spending more time being serviced than driven forced the brand to sell to Ford. At the time, there was an extremely loyal user base but an extremely small user base. There were not enough users to maintain profitability, even though some drivers owned two Jags, one to drive while the other was in the service bay. Tried and true Jaguar owners hung in with the brand until the end. There were so few Jaguar owners left that the brand could have sent birthday cards to each one. To raise margins, Ford made Jaguars on the Taurus chassis. Stuck in traffic behind a Ford-made Jaguar which now had the rear end of a Taurus could bring you to tears. And so,  there went Jaguar’s exotic, enticing design. Eventually, even the loyalists let go.

Although Mr. Zeitz says that people “age into” the Harley-Davidson brand, this “aging into” is risky business. And, for Harley-Davidson, the Hog appeal has never been about age. Harley-Davidson’s appeal was fundamentally about a mind-set, a values set, a personal spirit. Anyone at any age can have the Harley-Davidson soul. (As a note, this is what VW is advertising now in the US. “We shape its metal. You shape its soul.’)

A little bit of Harley-Davidson history.

In 1981, AMF (American Machine and Foundry, now defunct, but at the time a very large recreational equipment company) sold the Harley-Davidson brand for $80 million. The new owners, a group of thirteen investors led by Vaughn Beals and Willie G. Davidson (grandson of co-founder William Davidson), completely restructured and rejuvenated Harley-Davidson.  Under AMF, Harley-Davidson endured severe cost cutting and produced poor quality machines, damaging Harley-Davidson’s reputation.

One of the key components of the Beals-Davidson brand revitalization of Harley-Davidson was Harley-Davidson’s now famous market segmentation. (The Harley-Davidson segmentation has been used many times in marketing lectures and presentations.) Harley-Davidson’s market segmentation helped spur one of the greatest periods of enduring profitable growth for the Harley-Davidson brand. 

The Harley-Davidson market segmentation divided the customer (owners/riders) base into seven segments. The brand recognized that its customer base was not monolithic. In fact, there were a variety of people with different needs, lifestyles and opinions who loved, owned and rode the brand. 

A 1998, Ad Week used Harley-Davidson’s segmentation to illustrate the fragmentation of American marketplaces. The journalist wondered whether this meant a brand would have multiple messages to different target audiences.  (Today, we take this type of communication for granted as big brands do have multiple audiences receiving different messages across multiple media and devices. The marketing approach is called Brand Journalism and was pioneered at McDonald’s during the 2002-2005 turnaround.)

In the June 25, 2012 edition of Hog Happenings’ part 2, the full segmentation of Harley-Davidson riders and owners appeared, taken verbatim from an “official” Harley-Davidson handout distributed at an internal marketing and management course. The segmentation was described as “The Diversity of HARLEY-DAVIDSON Buyers.” 

As a note, please keep in mind this segmentation was generated over 40 years ago, when the majority of Harley riders were male. Since then, Harley-Davidson has created communications and outreach to female bikers. Additionally, just because the segmentation was generated decades ago, reading the segment descriptions still sounds fresh and real. Even though brand-business segmentations need updating, it does not mean the segmentations should be completely overturned. 

Importantly, the Harley-Davidson segmentation is not about age. A person could be any age to reflect one of these segments. 

1) Sensitive Pragmatists (29%)

The largest segment of Harley owners tends to be blue-collar workers. They consider themselves easy going and practical. These owners take motorcycle riding seriously. They say, “You’d better know something about what you’re doing before riding a motorcycle.” They like the “high” of riding. They tend to be FL-series owners.

2) Laid Back Campers (24%)

Quiet and soft-spoken. That describes these Harley owners. This group likes to cruise, not speed or race. The also view their bikes as a way to get out of the city and in touch with nature. These bikers are patriotic: the “Made in America” label is their number one reason for buying a Harley. They tend to be Sportster owners.

3) Cool-Headed Loners (17%)

The loners consider a Harley motorcycle the perfect get-away vehicle to express their independence. They tend to be higher income “white collar” individuals. In their opinion the “Harley experience” is the ride itself. They describe Harley as a “fingerprint: you buy the basic cycle, then personalize it so no one else has one exactly like yours.” Loners also believe in “live and let live;” to them, riding a Harley reflects that attitude. They tend to be Softail owners.

4) Adventure-Loving Traditionalists (10%)

This market segment rides a Harley for its independence, freedom and adventure. These individuals love risk and seek thrills. Traditionalists consider new Harley-Davidson riders trendy and unappealing. Like the Laid Back Campers, this group believes the reason behind Harley’s great performance and quality is the “Made in America” label.

5) Classy Capitalists (8%)

Sometimes described as “Rich Urban Bikers” or “RUBS” this segment represents the traditional American success story – a class of winners. Famous stars are represented in this group; members are often 45 to 50 years old. Most promised themselves years ago they would reward themselves with a Harley-Davidson after making a certain amount of money. This group loves the attention they get when riding a Harley-Davidson. They tend to purchase Softails.

6) Cocky Misfits (7%)

This buyer enjoys its reputation as the ‘bad guy” and the “wild man.” These owners claim to have “tattoos with attitude.” The last thing they want is to be seen as stylish! They live for a chance to cut loose on their machine. The sound and speed of a Harley are important to this group. They’re always looking for an opportunity to “open it up.”

7) Stylish Status Seekers (5%)

The smallest Harley-Davidson market segment is young, stylish and elitist. This group tries to emulate the “famous stars” of the Classy Capitalists group. These riders say, “ Riding a Harley separates you and makes you stand out.” Like the Classy Capitalists, this group wants to be noticed. Harley aesthetics have the biggest appeal to this group. Owners liken a Harley bike to a vintage car –both are made for a ride on a sunny day.

As part of Mr. Zeitz’ continuing strategy, updating this incredible market segmentation would seem to be a necessity. Focusing on age was never a Harley-Davidson strategic imperative. The original segmentation shows the complexity of the Harley-Davidson core customer base as specific people with specific needs in specific occasions. 

Of course, a brand needs to have a bulls-eye target group. But, there are other core customers whose needs and occasions also need to be satisfied. The big Harley-Davidson brand is not uni-dimensional. Harley-Davidson is a multi-faceted, multi-dimensional, multi-segmented, multi-layered brand.

Using age as the discriminator may not be the best way for Harley-Davidson to ride on its road to enduring profitable growth.  The analysts, observers and commentators recently interviewed by The Wall Street Journal seem to believe that sidelining younger generations in favor of older ones is bad for the Harley-Davidson brand. The goal must be to maintain established core customers while generating new core customers. 

Age may be a descriptor but it is not a definer.

Something amazing is happening when it comes to food, nutrition and brands. After all the decades of low fat, no fat, fat free, fewer calories, Olean cookies and chips, keto-paleo-Atkins-South Beach diets, macrobiotics, vegetarianism, veganism, fruitarians and other dietary regimens, the CEO of Danone just informed us that “The food industry is at a tipping point: health, and the role food plays in health, will become more critical than ever.”  All of a sudden, the healthy foods landscape has grasped the attention of American eaters.

Put your yellowed, dog-eared copy of Mollie Katzen’s Moosewood Cookbook aside and shelve your well-read copy of Frances Moore Lappé’s Diet For A Small Planet. Apparently, America has finally found a reason to change the way it eats; change the way it ages and change the way it lives. 

All because of drugs. Forget the War on Drugs. We are now embroiled and engaged in the Way of Drugs. Those diabetes drugs that help you lose tonnage – the GLP-1 winners such as Ozempic, Mounjaro and Wegovy – have altered the landscape for dieting and food-focused packaged goods companies.

Now, that does not mean that millions of Americans have stopped clamoring for Whoppers, Big Macs and fries. Not everyone is on GLP-1 drugs. But, a sizeable number of people are taking the drugs. 

Both Danone and Nestlé are reviewing their strategies so each company can cater to users of weight loss drugs. The guiding principles seem to be helping users to keep weight off while providing proteins and other nutrients that are lost from massive weight loss. These drug-users account for a large enough segment  of our population that food companies used to selling Kit Kat bars and Danette desserts are now suddenly seeing opportunities for weight-loss designed protein-laden, keep-the-weight-off foods.

According to CNN, Nestlé will offer frozen food meals for people taking GLP-1 drugs, such as Ozempic. Named Vital Pursuit, the line of GLP-1 associated foods is currently  “12 portion-controlled meals, high in protein plus fiber, intended to be a companion for GLP-1 weight loss medication users and consumers focused on weight management.” 

CNN commented that this line of Nestlé foods and other offerings from other food giants is a golden opportunity to stay relevant in a world where the parameters for weight loss have dramatically changed. 

Apparently, CNN says, customers perceive Nestlé’s Lean Cuisine, its 40-year-old diet-focused, low-calorie brand, as “old school.” Vital Pursuit, says one retail analyst, is “… a much more scientific approach with an emphasis on nutrition and balance. Nestlé is hoping to gain new customers and widen its audience.”

Vital Pursuit is not just a knee-jerk reaction to a growing or full-grown trend in eating. Nestlé has a lot to worry about. To quote CNN, “J.P. Morgan last year said that current GLP-1 users purchased around 8% less food – including snacks, soft drinks and high-carbohydrate products – over the prior year, compared with consumers who were not on these drugs.”

Danone reports a different strategy. Danone is already invested in a portfolio of dairy, plant-based and water brands. Its current portfolio is very weight-loss compatible. After jettisoning underperforming businesses, Danone is now viewing the acquisition of businesses that will contribute to expanding its health-and-wellness focus. The Wall Street Journal stated, “The French food producer (Danone) said it see changes in the way people eat, age and live as structural tailwinds for its business. It (Danone) is confident a focus on health and nutrition will help (it) deliver profitable growth.”

For those Boomers who worshipped at the altar of George Ohsawa and Michio Kushi; who spent time filling jars with organic peanut butter and brown rice at Erewhon stores carefully noting the empty jar and full jar weights; and who mixed lecithin into sticks of butter to make better-butter, this must be some kind of karmic, cosmic redemption.

Danone and Nestlé are not the only brand businesses gaining perspective from losing weight with GLP-1 drugs. With J.P. Morgan predicting that obesity drugs will soon be a $100 billion market, with about 9% of the US population being on a weight-loss drug by 2030, there is a brand battle to get on the drug-weight-loss bandwagon.

This year Weight Watchers abruptly changed its strategy, with a CEO apology, telling customers that will-power, point-counting and group support may have caused more harm than good. Weight Watchers now has a program for drug-focused weight loss, once considered the “easy way out.” Through Weight Watchers, members now have access to physicians who can prescribe GLP-1 drugs. Weight Watchers is also buying a telehealth company that provides “virtual prescriptions to patients for these weight loss drugs where appropriate.”

Weight Watchers’ new strategy now competes with retail giant Costco, now offering its warehouse way tow eight loss.  Costco provides Ozempic at its in-store US pharmacies. Costco uses Sesame, its affordable health care partner. Like Weight Watchers, Costco provides users an online consultation with a weight loss physician who is able to provide prescription for a GLP-1 or other weight loss drug. And, like Weight Watchers, Costco is offering personal support “through unlimited messaging and guidance with a health care provider.”

GNC, the vitamin and supplement store, now in Chapter 11 and closing at least 1200 retail outlets, says it will sell “vitamins, protein shakes and supplements tailored to people on GLP-1 medications.” GNC told CNN that there will now be a dedicated GLP-1 user section of the store. 

What some might see as opportunistic is really an example of how brands can adopt and adapt quickly to changing circumstances. Innovation and renovation are the lifeblood of brands. Cynics may comment that brands will do anything to make shareholders happy for the short term. And, in many cases, this may be true. However, the idea of health and wellness has been around for a long time. Health and wellness have gone through many iterations leaving legacies such as spas, wellness cruises, herbal supplements, plant-based beverages and proteins and all sorts of dietary regimens. 

Brands are not passive. Brands are active promises of relevant, differentiated experiences. Being able to adopt and adapt quickly saved many brands during COVID-19 lockdowns and the aftermath. 

Brand management is fundamentally about attracting more customers who purchase more often and become more loyal, generating more sales while becoming more profitable.  Brand management is about generating value for customers and creating value for the company. Brand management is business management and vice versa. 

Instead of seeing this new food revolution of new GLP-1 offerings as crass, observers and critics should understand that brands can live forever but only if properly managed. Proper brand management means understanding customers, staying relevant, satisfying users, not doing business as usual, innovating, renovating, creating news and being aware of the changing world. 

Value. 

KFC, Wendy’s, Jack in the Box, Arby’s, McDonald’s, Burger King are all offering value meals. Even Starbucks is offering ‘Pairing Menus,” a euphemism for value meal along with steep promotions on coffee drinks.

Here is the problem. Value is more than price per offering. Value is not on the menu board. Price is on the menu board. Many brands today are defaulting to the bad habit of equating value and price. Over the years, marketing has corrupted the meaning of value equating value with price. Price is important. However, a brand’s worth depends on a lot more than price.

By focusing only on price per offering, these brands seem to be saying that the total brand experience and other total brand costs (time and effort) are irrelevant. Only price per pieces matters. 

And, this behavior is odd because increasingly our economy is experience-driven. Yet, these establishments, including Starbucks, are forgoing the total brand experience in order to gain immediate sales, albeit, from possibly deal loyal customers. Starbucks is saying that the café experience is no longer an issue. Visit us for the great price. This rankles Starbucks founder and ex-three-time-CEO, Howard Schultz. Mr. Schultz believe improving the Starbucks experience is the road to redemption.

The days of value being price per offer are gone. It is no longer “the price is right.” The better communication is “the great, branded experience is right for the price.” What you get for what you pay is now defined as the total brand experience relative to the total brand costs (price, time effort). Brands must deliver the total brand experience at an exciting cost to generate value. 

Defining value as merely low price is one of the riskiest practices of modern marketing. Brands have been their own worst enemies by letting “low price” become a substitute for the idea of “value.” 

Price and value are not the same thing. Yet, many brands continue to use these terms interchangeably.  Price is what marketers charge. Value is what customers perceive an offer to be worth. Price is the amount of money required to pay for something. Value is about worth. In fact, the actual word, value, comes from the Latin valere, which means, “to be worth.” Price means, “How much money does it cost?” Value means, “How much is it worth?” That is why we have two different words.

Worse yet, it is a marketing sin when owners of brand portfolios refer to a particular brand in their portfolio as a “value brand.” Each brand in the portfolio is a value brand. Each meal in the portfolio is a value meal. We value each offering for different reasons. The customers of a Toyota Corolla and the customers of a Lexus ES are both looking for a good value. Value can happen at any price point: “That’s a great value” can apply to a Porsche and a Prius; great value can apply to a shoe from Designer Shoe Warehouse and from Saks Fifth Avenue. Great value applies to Aldi supermarkets and to Whole Foods. Value is in the eye of the customer. It is learned from interaction. 

This means that it is a major marketing misdeed to identify a market segment as the “value conscious” customer. Every customer is value conscious. It is wrong to say that customers have become more value conscious. Customers have always been, and will always be, value conscious. And, yet, this is what brands are doing: brands are saying that lower income customers are value conscious while higher income customers are not value conscious. And, brand are saying that certain offerings are better value than others. Please keep in mind that the “good-better-best” approach to selling is a classic of brand mismanagement. Every offering must be a great value.

Value is relative. Brands must calculate value for each brand in the customer-defined competitive set. A specific brand’s value is indexed to the average of the competitive set.

Additionally, a brand’s perceived value must be seen as a fair value for the promised experience. Again, brands do not determine fair value. Customers do. Brand marketers set price. Consumers decide fair value. Fairness is more than mere price. Fairness contains justice. Justice means that the benefits-per-costs equation is equitable, just, dependable, trustworthy and fair.

The fast food industry has always used the terminology of Value Meal. This nomenclature has educated customers to the relative “cheapness” of the deal. However, Starbucks has always been uninvolved in this Value Meal marketing. Starbucks was created with a premium caché as the convivial place for coffee connoisseurs. 

But now, Starbucks has entered with its Pairings Menu. Starbucks is also touting deals, especially on its app. Starbucks’ CFO indicated that there is a “value perception” with Starbucks. Starbucks also is offering BOGOs and 50% libations.  Is a value meal the way to go? Are discounts part of Starbucks’ DNA? What about the Starbucks experience? Howard Schultz indicates that current management has been skimping on improving the experience as current management kowtows at the altar of data.

The looming danger is the loss of true loyalists and the temporary accrual of deal loyalists. And, the diminishment of the Starbucks experience; an experience that has relevantly differentiated the Starbucks brand. Restaurant Business thinks that the value menu for Starbucks is a good thing. 

Starbucks value perception must rely on more than a good deal. Starbucks is a great brand. Communications must focus on the great brand experience that is the best value.

The recent iteration of Forrester Research’s customer experience survey indicates that customer experience ratings have declined for a third year in a row, according to Wall Street Journal reporting. The Forrester study polls 98,363 consumers across 223 brands. The Wall Street Journal writes that the scores are the lowest since 2016.

Although Forrester points out that the pandemic did create customer “frustrations,” right now, “… consumers are skeptical of the value they believe they are getting from companies.”  A Forrester principal analyst indicated, “Somebody is paying more but then they’re not seeing the benefit of paying more. They’re not getting a better experience that they think should accompany that higher price.”

A brand is a promise of an expected relevant, differentiated experience. Once you determine that the experience is incidental to the price, you damage the brand. Once you determine that price is the prize rather than the total brand experience, you place your brand into the commodity corner. The data appears to show that experiences are not always the focus of marketing efforts. 

Howard Schultz recently complained – publicly – that the in-store Starbucks experience was declining and management needed to focus more on the store. Operational issues are marring the Starbucks experience. Now, Starbucks is falling into line with the fast food brands when it comes to price deals.

So, what happens next? Will Starbucks continue to offer promotions? When the prices return to higher levels what will happen? And, what about the Starbucks experience? Starbucks’ total brand experience – which drives value – has always been at the core of the brand. Starbucks has always been about more than the coffee. 

And, what about Burger King, KFC, Wendy’s, Jack in the Box, Arby’s, McDonald’s: what happens when the promos go? What will define value at these brands? Until brands start understanding value as something much bigger than price, brands will continue to harm their essential experience.

What do McDonald’s, Target, Walgreen’s, McCormack, Applebee’s, Campbell’s, Kellogg’s and other national brands have in common today? Each is having a comeuppance. This is long overdue. 

Consumers are saying “no” to over-priced brands and for good reason. There is increased pushback from customers who have just had it with continual price hikes. Brands such as McDonald’s, Target, Walgreen’s, McCormack, Applebee’s, Campbell’s and Kellogg’s are impacted by consumers’ reluctance to pay the exorbitant prices that these brands are charging. According to Adobe Analytics, and reported in Axios, low priced items are accounting for a significantly higher share of online unit sales in numerous product categories compared to five years ago.

Brands were successful during the ravages of Covid-19 because brands had good reasons for raising prices to cover the high costs of manufacturing, distributing and selling during a pandemic. Now, post-pandemic, consumers notice that prices continue to be higher. And, data from NewsNation reveal prices are 26% higher than pre-pandemic.

The pandemic allowed brands to become greedy and reliant on the increasingly higher prices. Fueled by their success during lock-downs, post-pandemic, brands continued to behave as if coronavirus still existed. Brands continued to raise prices, publicly stating that their consumers are so loyal, these consumers will continue to pay whatever brands cost. Brands boasted that their consumers would continue to bear the brunt of high prices helping to preserve brands’ margins.

Newspapers such as The Wall Street Journal and The New York Times report the current news of high prices as “because of coronavirus.” These prestigious reporters seem to forget their own reporting. Yes, there were price hikes due to the pandemic. But, those days are gone. Reporters cited CEOs and CFOs discussing margin preservation and multiple price hikes quarter-to-quarter. Reporters described the kudos from Wall Street when brands raised prices. 

Reporters should be reporting on the singular worst behavior that brands adopted: falling into the arms of arrogance.

Arrogance. 

Arrogance is possibly one of the most destructive brand-business behaviors. And, so many of our favorite brands chose arrogance over deference, respect and esteem. These brands took their most avid customers for granted.

Nothing succeeds like success.  Success is everybody’s aim; no one aims to lose. However, for some, nothing fuels arrogance more than success. Arrogance fosters an environment of “I can do no wrong.” Arrogance is at the core of the mind-set defined as “we will sell what we know how to make” rather than focusing on the customer-focused mind-set, “we will promise and deliver what customers want.” Or the mindset, “We will sell at the price we define” rather than “we will sell at the price customers perceive as value.”

In 2009, Jim Collins, the management and leadership guru, after studying success and failure, wrote, “When an enterprise becomes successful, it can cover up a lot of sins. It is not success that makes you vulnerable, it is when you respond to that success with arrogance.” He related arrogance to hubris, the great downfall within the Greek tragedies. 

In an interview with The South Africa Star, Mr. Collins quoted a Classics professor’s definition of hubris, the ruin of many in Greek tragedies: that is, “an outrageous arrogance that inflicts suffering upon the innocent.” In contrast, Collins found that all the leaders he discussed in Good to Great displayed a common trait: a genuine humility about their success that Collins saw as “the real antithesis of arrogance.” 

CEOs used to understand the perils of arrogance.  CEOs understood that arrogance is a corporate killer. 

In 1991, Pepsi CEO Wayne D. Calloway stated that arrogance was the single biggest reason people did not succeed at Pepsi. “He said that there is nothing wrong with having confidence, but arrogance is something else. Arrogance is the illegitimate child of confidence and pride. Arrogance is the idea that not only can you never miss [shooting] a duck, but no one else can ever hit one.” He said, “Arrogance is an insurmountable roadblock to success in a business where the ‘team’ is what counts. The flipside of arrogance is team-work, the ability to shine, to star, while working within the group.”

In 2015, Warren Buffet referred to business arrogance in his Berkshire Hathaway Annual Report letter to shareholders . He said, “It was arrogance, more than any other factor, that caused the banking crisis. In any area of life, arrogance is a damaging character defect, undermining interpersonal relationships, but in business it’s potentially lethal. A CEO who is arrogant will ignore the advice of col- leagues who may have a far better insight into risks threatening the company. That leads to bad decision-making, low corporate morale and loss of contact between senior management and employees. It destroys the culture of collegiality, of shared opinions and objectives that is crucial to the effective functioning of any organization. Once a CEO becomes isolated in a boardroom he has lost his ability to lead the company effectively.” 

Arrogance is bad for business and bad for brands. Why? Because how you manage your brands is how you manage your business. When the CEOs of the Detroit automotive industry flew down to Washington, D.C., on private jets and then asked Congress for money (except Ford) to sustain their businesses, that was arrogance. Their stance affected their car brands’ perceptions as well as the perceptions of the brand Detroit and the brand “cars made in America.” When the CEOs of the U.S. cigarette brands stood in front of Congress and swore their brands were safe to use, even in the face of decades of data beginning with a landmark Surgeon General’s Report in 1964, that was arrogance. 

Thinking that consumers will continue to buy your brands because you know best is arrogance. Thinking that consumers will buy your brands at any price you choose is arrogance. Thinking that consumers, no matter how loyal, will stick with your brand even if your brand is over 10% higher than a second choice brand or a store brand is arrogance.

Cereal brands continue to believe that consumers will wake up every morning and fill a bowl with sugared grains, no matter how high the price; that is arrogance. 

And, thinking that consumers will continue to buy your brand because it is high quality and iconic rather than a high quality affordable store brand that tastes the same is arrogance. Food Industry Association data show 65% of shoppers choose store brands or private labels over big national food brands because of lower prices, according to a Wall Street Journal report. Research from Circana indicates that dollar sales of store brands increased 6% in 2023. 

The Wall Street Journal reported on 20 categories of grocery items where store brands have out-powered national brands. Retail establishments have spent resources on ensuring that their store brands are credible, delicious, high quality alternatives to national brands. And, this strategy is paying off. So, thinking that just because your mustard brand is French’s will appeal to consumers at a high price while the store brand is perceived to be affordable quality that tastes the same as French’s is arrogance.

Brands see the same patterns in casual dining and fast food. Starbucks is perceived to be too higher priced. Analysts at Deutsche Bank report that, “Among the 45% of consumers buying less or no longer buying from Starbucks, the top reason was related to price, with 47% saying ‘it’s become too expensive.’” Apparently, the cost at Starbucks is “well above every other reason indicated.”

Dine Brands’ brands, Applebee’s and IHOP, are generating deals to attract customers who have been unwilling to pay the higher prices at these establishments. At an analyst meeting, Dine Brands said publicly that lower income diners were shunning Applebee’s and to a lesser extent, IHOP. To combat the decreased frequency and loss of diners, Applebee’s and IHOP are doing deals. Applebee’s is hoping that its deals will attract customers who will then order something else at the high price. 

McDonald’s is also dealing. McDonald’s CEO echoed Dine Brands by saying that McDonald’s was losing its lower income customers. Even with the furor over the $5 meal deal only lasting for one month, Burger King copied the idea and started selling prior to McDonald’s rollout.  And, it did not help that the president of McDonald’s US publicly addressed the viral price issues plaguing McDonald’s by saying McDonald’s prices were not 50% higher but just 20%-21% higher. 

Campbell Soup has put emphasis and resources behind its snack portfolio. Now, according to CEO Clouse, consumers are moving from Campbell’s expensive snacks to similar, less-expensive alternatives. The snacks division fell 2%for the last quarter according to The Wall Street Journal.

You do start to wonder on which planet these CEOs are living. It is as if these CEOs do not see the perils of their pricing policies.

First, price and value are not the same thing. The brand sets price but the customer perceives value. Consumers are saying that the value of the brand is not as high as the brand thinks. Price is a cost, as are time and effort. Cost is the denominator of a consumers’ value equation. The numerator is total brand experience. The higher the costs with the same brand experience, the less customer-perceived value. And, of course, there is trust.

Second, trust is a must. Once trust is busted, it takes time to rebuild. Consumers are not dumb. Consumers see that their favorite brands are the same, only price has changed and changed. In fact, consumers have been quite aware of the continual price hikes so brands can make more money (to protect profit margins and keep shareholders happy). Since trust is part of a brand’s value equation, losing trust greatly impacts brand value. Without brand value there is no shareholder value.

Third, deal loyalty is not the same as brand loyalty. Deals are nice and make money. But, deals attract deal loyal consumers who are loyal to a deal. Once the deal is gone, these customers are gone. They are leaving for the next deal. And, deal loyal customers are very price sensitive. Loyal customers are not. Brands need to be smarter by finding the best price for the brand and communicating, “Great brand at a great price” rather than “Great deal.”

Fourth, taking advantage of your loyal customers by continually raising prices is mismarketing at the highest level. Losing loyal customers affects profitability.  Data are clear on this. Over the past 2 years, brands have been shooting themselves in the pocketbook by raising prices.

Fifth, while brands were happily reporting huge profits to Wall Street, the competitive sets changed. Now, brands are facing serious high quality contenders challenging them for market share. Brands such as 365 (Whole Foods), Market Pantry by Target, Aldi, Great Value by Walmart, Kroeger Simple Truth and private Selection are high quality, affordable alternatives. It is not just price. Store brands have greatly improved quality. 

Sixth, focusing on satisfying analysts at the expense of customer satisfaction is death-wish marketing. 

Not every brand is receiving the message that continually raising prices is bad brand business. According to The Wall Street Journal, Spotify “… is testing the loyalty of its customer base by raising prices for the second time this year as it aims to become more consistently profitable, sending shares higher in early trading.” Wall Street is probably the only entity other than the executive suite at Spotify who think this is a good idea. It appears that Spotify continues to promise Wall Street that it will be more predictable in profitability. 

And, even as the leader in its category, adding millions of subscribers, Spotify still needs to increase profits. Spotify sees the only way to satisfy Wall Street is to dissatisfy customers. Focusing on shareholders at the expense of customers is another tendency for trouble and that tendency for trouble is wrapped tightly around Spotify. The risk of losing customers, especially loyal ones is high when a brand sees its analysts as tis customers.

Seventh, offering discounts at the expense of the brand promise and provenance can be deadly.

Do not stray from the brand’s promise and provenance. Revitalize but do not ditch what your brand means to customers. Some brands like Starbucks never had value in its promise .

“There is a difference between putting a deal out there and how it relates to the totality of the brand,” said Todd Sussman, chief strategy officer at FCB New York told Ad Age. “Creative done right can make value part of a brand’s story and not just a reaction to the economic times. You should be reacting, but in a way that does not discount the brand … You need to have a higher empathy for the moment and not just give a deal, but a value exchange. Consumers don’t want to feel like you’re giving them a handout.”

Peter Drucker, the respected management guru, once said, “The purpose of business is to create a customer.” Losing customer focus is a certain path to trouble. The future will belong to customer-focused businesses that are best at attracting and retaining customers resulting in sustainable, profitable share growth. 

As for brands that are finally seeing the results of their bad behavior, it will take more than deals to drive enduring profitable growth.

Avoiding arrogance takes character and effort on the part of leaders. It is a test of true great leadership to fight the inclination of focusing on oneself rather than the brand and its customers. The leader who creates a ego-trip culture of arrogance, letting success go to the head, is a leader who is more committed to self than to brand. There are perils to arrogance. Some brands are feeling the pressure now. Brand responses of deals and a race to the price-bottom will probably not be the answer.

Beyond Meat, the plant-based protein alternative, just concluded its Quarter 1 2024 earnings call. Creator and CEO Ethan Brown spent a good portion of the call explaining the rationale behind the brand’s new strategy. 

From observations, strategically Beyond Meat never really focused on its brand promise. Customers never really understood what was relevant and differentiating about Beyond Meat. This was unfortunate because Beyond Meat’s brand promise would have relevantly differentiated the brand from its competitor, Impossible Foods. What we knew was that these plant-based burgers, nuggets and crumbles were a non-animal alternative to cattle-based protein. We also knew that Impossible Foods chose restaurants as the preferred channel and Beyond Meat chose grocery as the preferred channel.

Weak communications allowed the association of cattlemen to skewer Beyond Meat as ultra-processed, lab-generated, bad-for-you food. This relentless attack impugned the brand irking Mr. Brown. To be fair, there were some taste issues that only hard-core vegans could excuse. However, Mr. Brown became laser-focused on returning fire. Innovation has helped. The latest iteration of Beyond Meat is supposedly better-tasting and even better for you. 

This brings us to Beyond Meat’s new strategy and communications.

Beyond Meat decided that gaining the approval of highly reputable, trusted organizations would be the best counterweight to the aggressive derision of cattlemen. Beyond Meat decided to use dietary, nutritional and health science information to gain institutional approval hopefully leading to consumers’ approval.

Reaching out to third-party signifiers such as the Good Housekeeping Institute for its Nutritionist approved seal of approval, the American Diabetes Association for its imprimatur, the Clean Label project certification, the Non GMO project verification and the supremely trustworthy American Heart Association checkmark, Beyond Meat believes that consumers will realize the cattle-meat industry has been remiss in its accusations. Beyond Meat believes that consumers will change their minds about eating Beyond Meat’s plant-base alternatives because eating right for your heart and health are serious drivers in which foods we choose.

It is also important to note that the tag line – Serve Love – has a steer in the “O” of the word Love. Possibly to subtly remind us that cows are loved but are killed to make meat protein items.

Beyond Meat is betting on three things for its revitalization: 1) the power of third party expert testimony; 2) the consumer’s actual purchase of food that is better for them; and 3) the improved taste of offerings.

1. Third party expert testimony has been powerful, no question.

Decades ago, when advertising agencies and researchers spent time and money understanding how advertising works, we learned the value of third-party testimony in marketing. Crest toothpaste is one of the oldest and best examples of the power of third-party testimony. Crest obtained the seal of the American Dental Association (ADA) for its fluoride (Crest’s formula “flouristan”) toothpaste. People with TV sets saw black and white ads with a kid coming home from a dental visit saying, “Look Ma, no cavities.” 

We also learned the power of peer testimony. Pillsbury used children as peer testimony in its cake mix commercials. Cakes were now easy to make and less time-consuming. But, many people thought that all this convenience took the heart and the taste out of baking. Pillsbury had a grinning child say, “Thank you, Mom” after eating a piece of Pillsbury cake mix cake.

The 2003-2005 McDonald’s turnaround used peer testimony. The idea behind “I’m lovin’ it” was speak in the voice of the customer. Up until “I’m lovin’ it,” McDonald’s had always used the corporate voice, telling customers what McDonald’s could do for them, such as “Your deserve a break today” or “You… you’re the one” or “We love to see you smile.”

Third-party experts and peer testimony have been important reinforcements for consumers. Over time, however, we lost trust in institutions and experts. The annual Edelman Trust Barometer 2024 data show the continuing decline in institutional trust. Today, we trust peer testimony over expert testimony. Social media has spurred this default to peer testimony.

Edelman data indicate that peer testimony (people-like-me) is equal to scientists’ testimony when it comes to “telling me the truth about innovations and technologies.” Both scientists and people-like-me were tied at 74%.

As for third-party seals of approval, research from 2018 indicates that “… the success of a seal is dependent of consumers’ knowledge of the brand being marketed, their awareness of the third-party seal being applied in marketing material and the seals ability to convey information important to the consumer in differentiating offerings.”

1. Buying For Health Benefits

Studies show that when food shopping, prices and quality are more important than health, safety and environmental impact. And, other data show that price, quality and convenience are more important than having a seal of approval relating to health or environmental issues.

A recent US survey indicated that 37% of those interviewed were in the highest bracket of concern (a 5-point scale) when asked “How conscious or concerned are you about your current or future heart health?” Thirty-three percent (33%) of respondents placed themselves in the second highest bracket. Aggregating these data, 70% of consumers said their personal health concern was high.

This high level of concern did not seem to translate into purchasing heart healthy products. So, when asked what is most important in maintaining or improving heart health, a mere 40% of respondents said “physical exercise “ Only twenty-one percent (21%) said foods that have heart-healthy benefits, while only 13% said exercise and heart-healthy foods. Asked about “food making heart healthy claims,” only 3% said this was important.

1. Taste

And, then, of course, there is taste. Being vegan or vegetarian is difficult. There are many products designed for vegans and vegetarians that taste great and there are many offerings  that do not. CEO Brown tells us that the new versions of Beyond Meat are “loved” by people who have tasted the products. 

Taste is critical. Especially when many people believe that good-for-you foods do not taste as good as foods with fats, sugar and salt. Just think about all those chips, pretzels, crackers and cookies made with olestra – a fat substitute introduced into foods in 1998 – that died on grocery shelves. Even if the new iterations of Beyond Meat offerings are delicious, consumers will compare Beyond Meat offerings to cattle and chicken offerings.

Wall Street did not seem very impressed with Beyond Meat’s performance and strategy as the brand’s share price fell post-call. One reason may be pricing. To be profitable and demonstrate that this “next generation” of Beyond Meat is of the highest quality (and to protect while growing margins), Beyond Meat raised prices. Beyond Meat products are already at a premium to animal-based protein offerings. Prior to these new versions of Beyond Meat, consumers looked at the price of meat and the price of Beyond Meat and chose meat. 

It may be that once again Beyond Meat is missing the compelling, uplifting message of its core vision and essence. Seals of approval are nice to have and meaningful but only if customers understand the seals. Peer testimony is critical; relying on expert testimony alone is probably not as strong. And, it is unclear whether customers will understand the meaningfulness of each seal. Hoping that people will eat for their heart health is nice but what people say and what they actually do, especially when it comes to food tend not to match. Most people say they will eat healthy but do not follow through. 

The first Earth Day was in 1970. That was 54 years ago. We still are divided on issues such as climate change. Expecting people to change attitudes and behaviors on food may take just as long. After all, during the 1960s and 1970s, vegans and vegetarians introduced tofu, brown rice, kelp, daikon, nori , miso, tahini, dates, seeds, turmeric, ginger and kale that are not only now mainstream but highlighted in restaurants including fine dining. But the 1960’s were 64 years ago; Molly Katzen’s Moosewood Cookbook and Michio Kushi’ Book of Macrobiotics were published 47 years ago

It is difficult to change behaviors. But, changing behaviors can be easier than changing people’s attitudes. The questions are: Will seals of approval change behaviors? Will seals of approval make a relevant difference in a world where the opinions of people-like-me carry equal or more weight than the opinions of experts? The current strategy and communications from Beyond Meat may make employees and executives happy and show shareholders that Beyond Meat is challenging the status quo. But, is this approach the way to generate users, loyalty, revenue and enduring profitable growth?