Summary
Professor Magda Nenycz-Thiel of Ehrenberg-Bass Institute challenges common CPG marketing assumptions, arguing advertising is a "weak force" that builds long-term memory structures rather than driving immediate sales. Nestlé's increased marketing spend amid declining sales illustrates the complexity of translating advertising investment into market performance without addressing fundamental availability and portfolio issues.
Marketing Spend Benchmarks
| Metric | Typical Range | Nestlé Position |
|---|
| Company-level advertising spend | 4-6% of sales | ~8% of sales (above average) |
| Brand-level spend | 0-15% of sales | Not disclosed |
| Trade vs. marketing expenditure | Marketing usually less than trade | Changing with retail media |
Core Advertising Principles
- Advertising refreshes and builds memory structures rather than forcing immediate purchase behavior
- Only a limited number of people are in-market to buy at any given time
- Mental Availability (brand recall) overlaps with Physical Availability (distribution) to drive long-term growth
- Brands without Mental Availability investment become like private labels: competing only on shelf space and price
- Buyers search for brands in their brains before shopping; known brands have higher purchase probability
Conditions for Effective Marketing Investment
- Wide reach with continuous exposure across target audiences
- High-quality branding in creative assets that refresh existing memory structures
- Working media (actual ad exposure) prioritized over non-working media (production, agency fees)
- Relevant messaging and creative execution that builds distinctive brand assets
- Natural experiments comparing exposed vs. non-exposed consumers to validate impact
Growth Strategy Framework
- Prioritize investments in businesses that are large-scale (scale matters for ROI)
- Focus on categories likely to grow and deliver profitability
- Understand category-specific growth levers before allocating resources
- Evaluate portfolio fit for current and emerging channels and demographics
- Cannot grow everything; strategic focus is essential for effective resource allocation
Diagnosing Underperformance
- De-average data to identify specific problem areas: channels, demographics, portfolio segments
- Price increases of 25% will cause volume declines regardless of advertising spend
- Distribution gaps cannot be overcome with advertising alone; brands must be present where buyers shop
- Audit working vs. non-working media spend and evaluate reach achieved
- Test hypotheses through natural experiments rather than relying on consumer surveys
- Examine pack-price architecture and promotion effectiveness across channels and retailers
Brand Turnaround Requirements
- Consumers maintain repertoires of multiple brands; weak brands are not permanently "dropped"
- Weak brands are harder to buy (think of, find, or choose) rather than actively avoided
- Diagnosis requires examining Mental and Physical Availability levers systematically
- Asking consumers why they stopped buying yields unreliable answers
- Snickers successfully turned around through distinctive assets ("You're not you when you're hungry"), wide reach, and creativity
Key Insights
- Short-term results come from price promotions and distribution improvements, not advertising
- Long-term market share maintenance requires overlapping Mental and Physical Availability
- Simply increasing marketing budget without addressing root causes (pricing, distribution, portfolio) fails
- Evidence-based media beliefs and continuous reach matter more than total spend
- Quality formats, packaging, and pricing architecture are critical alongside advertising investment