Nestlé’s marketing focus and marketing-led transformation: Your Marketing Week
At the end of every week, we look at the key stories, offering our view on what they mean for you and the industry. From Nestlé’s CEO talking about the need to have the “best marketers in the industry” to the transformative power of marketing as seen at David Lloyd Clubs and Hearst UK, it’s been a busy week. Here is my take.
Be the best
Be the best
It’s always unsettling when a new CEO takes over, as it can mean changes to strategic direction, company culture, leadership style and more.
It’s all the more anxiety-inducing when the business is experiencing a period of low growth, and the previous CEO was forced to leave abruptly under less than favourable circumstances.
So when Philipp Navratil took over as CEO of Nestlé last month following the departure of Laurent Freixe, it’s safe to say its marketers were likely feeling a little unnerved. Not helped this week, when he described its marketing as “not strong enough” and many of its brands as “underperforming”.
But while that would undoubtedly have felt like a hammer blow, more encouragingly, he has singled out marketing as being central to growth going forward. He has pledged his commitment to ensuring Nestlé has the “best marketers in the industry” and identified the value they can deliver if they are given greater influence over all elements of the marketing mix. He plans to increase marketing spend to support these growth ambitions, singling out the need to boost investment across product, packaging, pricing, formats and distribution.
“It’s all about reading these underlying consumer trends correctly, being the best in driving these insights into winning, meaningful innovation, and then driving that into the market with a strong marketing plan,” he said.
Our Career & Salary Survey data shows just half of marketers have influence over product development, which drops to less than a third for price and place, so the importance of having a CEO who understands marketing’s role beyond advertising shouldn’t be underestimated.
It means the pressure to perform will be high and marketers will be under greater scrutiny than ever, but it is also a massive opportunity for its marketers to stand up and show what’s possible when they are given licence to take greater ownership across the full remit of marketing.
Join our club
Businesses putting marketing at the centre of growth has been a key theme this week.
With a former marketer taking over at publisher Hearst UK, the role of marketing has changed drastically within the business. It is now customer-first rather than “Hearst-first”; data and product development now sit under marketing; its titles, like Cosmopolitan and Good Housekeeping, are now treated as brands, and marketing is seen as a “strategic partner” of the CEO. All of which has been critical to its turnaround.
Likewise, marketing has been the driving force behind David Lloyd Clubs’ business transformation over the past seven years.
While the business was well known, with 80% awareness in the early stages of its transformation journey, the majority of people did not understand the brand and its proposition as a premium “club” rather than just a gym, and as a result, consideration lagged at 31%.
Since then, it has invested heavily in club renovations to elevate its offer. It has also upgraded its pricing strategy with the introduction of different membership tiers to underline its premium positioning and help change consumer perceptions. It then focused on short-term acquisition, moving away from the discounting death spiral to a more sustainable model based on data, all while building the brand with a shift to emotion-led storytelling.
The results are impressive. Annual enquiries grew 66%, people’s understanding of the brand as a club rather than a gym grew from 44% to 59%, and there was an uptick in consideration, with more people believing the higher price was worth it. All this led to membership growing from 430,000 to 609,000 between 2016 and 2023 – even with the pandemic to contend with – and a £137m boost to revenue.
It’s a case study in the transformative power of marketing and another example of how effective it can be when all aspects of the marketing mix work together in tandem to drive growth.
Changing perceptions
Another marketer looking to pull all the levers at his disposal is First Bus’s head of marketing, Jordan Kemp.
Aware that advertising alone will not change consumer perceptions of bus travel as slow, uncomfortable, unreliable and inconsistent, he has been working to make wholesale changes across the business.
Bus travel is by no means the most advanced sector, and definitely not the most sexy. But the development of technology and a greater appreciation within First Bus of the role marketing can play beyond promotion is helping the business get people to re-evaluate it.
The focus has been on delivering clean, comfortable buses with working air conditioning, and using technology to provide more accurate information to improve reliability. It doesn’t sound like a high bar – clean and reliable buses should be table stakes – but it’s easier said than done given the number of moving parts.
It has meant working more collaboratively with engineering and operations, and marketing having greater influence on product decisions. It’s also meant repositioning bus travel, and highlighting its ability to connect people, reduce congestion and improve air quality.
It’s early days and by no means an easy job in what is undoubtedly a low-interest category. But by taking a joined-up approach, First Bus will have a far greater chance of achieving its ambition.
As Kemp says, getting people to swap their car for the bus can’t be done with a single campaign. “It’s not something that can be promotion-led. It’s about the full marketing mix – price, product, place and promotion – working together.”
The week ahead
We will be kicking off an in-depth look into the role of AI in B2B marketing, and revealing the latest findings from our State of B2B research.
