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Global shift in business practice

Introduction

Traditionally, companies advertised and focused their resources on the adult consumers – the “today consumers”. Children have never been a popular demographic group of consumers despite of the money they have, they are not the spenders but the saver of the money. However, in the past few decades, a new market pops up in which companies, and divisions of companies shift their focus on making and advertising products for teens.

A brief history of marketing on the children

Actually marketers started advertised to kids since the end of the Second World War through TV advertisements. The born of baby boomers created a large and whole new market. In addition to the increasingly receptive parents to the children’s requests where children manipulated their parents to buy formed the successful marketing formula at that time (Kurnit, 2005). The child market has continued to grow since then. When tracing back to the 80s, companies spent around $100 million marketing to kids only, but in 2009, it is estimated that they spent $17 billion per year on advertising children’s products (Lagorio, 2009); new product lines are also developed to target those young consumers.

Evolution of advertising on children
http://www.youtube.com/embed/eFOs4RrwF8s 

The old retail or marketing practices may tell us that promoting and selling products to kids was not a new thing, marketers knew that though the products were designed to attract kids, the real consumers were their parents. However, the new child market we are referring in the following discussion is not the one that kids nagging and influencing their parents to purchase; instead, according to McNeal (1969), it is the market which targets the children (who aged around 5 - 13) who are willing to buy for personal purposes and satisfaction. As children are now the “real consumers”, marketers change their marketing strategies. McNeal (1969) stated “Instead of saying, ‘ask your mother to buy so-and-so,’ advertisements to children often simply say, ‘buy so-and-so’.”

Reasons of the shift

You may wonder why such change would occur. We point out the following three possible reasons of the shift:

1. The increasing purchasing power of kids
2. Kids are easily affected by the narrative advertisements
3. Kids are the future consumers

How much is the purchasing power of kids? Answer can be varied across different studies. But one thing is for sure, kids have a very high buying power nowadays. In 2002, American children who aged 4 - 12 spent $30 billion (Schor, 2004); in 2005, according to the survey done by the market research publisher Packaged Facts, kids who aged 3-11 in U.S. had a collective $18 billion in buying power. Population growth in most of the developed counties has been slowed down (Worldbank, n.d.). Each family has fewer new born baby or kids when comparing to the post-WWII. Parents can hence provide a much better environment and more resources (say money) to their kids. With more money on the hand, children may no longer need to nag their parents for buying what they want; instead, they can make the purchase all by themselves.

A story designed to prepare people for change needs to evoke the future and conjure up a direction for getting there, but without being too precise (Denning, 2004).

Another reason that marketers change to sell products directly to the kids is that the lack of cognitive ability in resisting the advertisement makes the children easily be affected by the advertisements. Advertisements that target children do not necessarily convey the message very explicitly, instead, like Calvert (2008) explained in his finding that marketers use online advertising and embedding the products in films, online and in video games that make the children difficult to understand the undermining persuasive message of the advertisement, but being attracted to buy the products.

Lastly, companies understand that the young consumers are the adult consumers in the future. Companies try to cultivate the children consumers when they are still young and make them loyal to their brand in the future. 

New marketing strategies

Advertising for children on the TV and the Internet

Young children became an important target for the advertisers as we have already mentioned at the beginning.  Before analysing in a deeper way how companies actually promote their products, we first define what children consume and how much money they can spend on it. The chart provided below shows that the average budget children have per month can allow them to buy such products as sweets, small toys or kid magazines.  

Average Income and Spending for Children aged 5-13 yrs

                   Regular Income     Annual Income#      Savings     Total Spending  

                   $US/month/child    $US/year/child                             $US/year     

Germany                 32.30             569.40                  46%              0.9 billion    

UK                            31.50            506.20                  26%              1.7 billion    

US                            29.10             493.10                 21%               8.9 billion    

France                     22.50             377.90                 30%                2.2 billion    

Japan*                    10.70             407.90                62%                1.0 billion    

China*                     9.00              182.00                 60%                2.6 billion  

* urban areas only # including special income

Source: Laurie Klein, `More than play dough', Brandweek, Vol. 38 (24 November 1997)

Sources for advertising

There are different types of means to advertise products to the children. First we will have a look at the two biggest sources of advertisement: the television and the Internet.

If we take the example of the USA, children going to school spend around 2 to 4 hours watching television. The researchers found out after various studies that children are more likely to stay in front of the television during the advertising time. That is why the companies choose very carefully the time of the day. Most of the commercials demonstrate happy children, animation and cartoons: they are happy because they use the product advertised. And young kids are easily influenced so they believe these products will make them happy as they did to the kids from the TV. The form of commercials is always joyful, musical and very colourful.  We can take an example of the advert for Kinder Surprise or Kid’s meal for Burger King.

http://www.youtube.com/watch?v=alf0HfujmGE

Nowadays, companies also use another powerful way to advertise their products to children which is Internet. It can be also used as a source of information. If we visit the website http://www.ebizmba.com/articles/kids-websites we can see that most of the popular websites for kids are games. The companies sometimes have contracts with these websites so that for example before playing a game a kid has to fill out a small and easy survey which is a very useful source of information for the advertisers. According of the Centre of Media Education at least 90% of the websites designed for kids use different type of surveys in order to gather the information. Another method is to publish an advert for the company and to offer a free gift if a child gives some information about his or her taste or even more personal information. Some companies can even create online games where children must choose characters with tastes that correspond to them and the products their characters can buy. This helps advertisers to get necessary information without surveys.

There are also websites which provide games which are free at the beginning and then you have to pay to continue the game. The most famous example is Farmville on Facebook, where you can buy “virtual” goods using your real money.   

These are the main sources for companies to advertise their products or to get to know the consumers better which are becoming increasingly important on the global market.

Other types of marketing  

Commercialization in education

To target children, the most direct way is to increase the exposure of the companies’ products to where the kids spend most of their time—school. Thus, companies now try to put different vending machines selling snacks and soft drinks with big posters or advertisement on the vending machines in school. When the kids used to buy those snacks and soft drinks of specific brands at school, they will also buy those brands outside school. This kind of marketing strategy makes use of the convenience of school setting and kids’ subconsciousness by reminding them the brands and products whenever they are at school to increase kids ‘addiction to the products.

Commercialization in TV shows    

Companies also attract kids to buy their products by showing the products in kids TV shows. For example, they will sponsor those kids TV shows like “Good Night Kids” in Russia with the companies ‘products like drinks, toys or stationery. When the kids watch the TV shows, they can also see the products.

As they usually like the characters in the TV shows, it is very likely that they will buy the same products which are used by the characters. It is how the marketing strategy in TV shows work. The most convincing example is Walt Disney Company. Walt Disney Company produces lots of Disney cartoon series and movies and show them on the Disney Channel to make its characters like Snow White, Winnie the Poon and Mickey Mouse popular among kids. When the kids like the characters because of the cartoons and movies, they will also buy the toys, dolls or stationery of those characters in Disneyland or other retailing shops.

Placement strategy in supermarket

Since the companies have noticed that kids now have their own purchasing power too, they are trying to directly reach the kids regarding them as independent customers. For example, companies use placement strategy to attract children’s attention of their products in the supermarket. Companies require the supermarket to put their products such as chocolate, candies and potato chips in the lower level on the shelves so that the kids can see their products regarding their heights. By this special placement of products, it is easier for kids to pick the products up and buy them. Some supermarkets also provide children trolley for the kids to shop on their own without accompany their parents. This can let the kids feel like to be a customer and put what they want to buy into their own trolley without permission from their parents. These placement strategies in supermarket can increase the possibility that kids will buy more products.

The media industry is also targeting this potential segment. Children Magazines such as Sports Illustrated, National Geographic Kids Magazine and Discovery Girls are published for the kids’ market.

The newspaper like The Standard also diversifies its product lines like the Student Standard Goodies for primary school students. Companies can place advertisement in the kids’ magazines and draw their attention to buy them. 

Ethical Concern

Marketing directly to children is controversial. Different perspectives of related parties are provided in this session.

Children

Children purchase goods in order to satisfy their needs. According to James U. McNEAL (2001), there are two levels of satisfaction. The basic satisfaction is produced by the items they bought themselves. For example, candies and some simple toys can make them feel very happy. The second dimension of satisfaction is the “purchase behavior” because it may indicate an evidence of “grown-upness”. As children growing up, the first type of satisfaction is increasing while the other is decreasing.

Parents

Parents concern about the impact of advertisement directing at their children. They criticize the promotion of materialism, persuasion of people to buy unnecessary goods, and provision of misleading information (Pollay and Mittal, 1993). Some parents worry about the hidden messages that delivered through advergames and product placement. (Quilliam and Rifon, 2009)

Researchers and experts

Many researchers and experts have concern on direct marketing to children, too. Many experts think it is unethical to advertise to children at early age because they question their ability to understand advertisements and evaluate advertising claims.

l   According to Richard Mizerski, “their cognitive structures are beginning to form and they are most sensitive to external influences.” Children interact with external parties and learn from them. Parents, teachers, peers, and even people they do not know may influence how they percept the world. At the early age, children usually cannot tell right from wrong. It is also hard for them to evaluate goods rationally.

l   According to Karpatkin and Holmes from the Consumers Union, “Young children, in particular, have difficulty in distinguishing between advertising and reality in ads, and ads can distort their view of the world” Advertisements targeting at children are usually made to be fancy and attractive, children in their early age are easily been attracted and mix them with reality.

Harris study conducted a survey concerning the ethical issues on marketing to children among 878 professionals from youth marketing and research agencies, educational and non-profit institutions, and traditional advertisement and promotion firms. Below is the table summarizes the discrepancy in their perceptions of the appropriate age to market to children.

Questions	Opinion on Average Age
Appropriate age to begin marketing to children	7
When children can view advertising critically	9.1
The age of distinguishing fantasy and reality in media and advertising	9.3
When can make intelligent choices as consumers	11.7

In addition:

l   72% of the professionals think companies are putting pressure on kids to “grow up faster than they should”.

l   61% agree that the beginning age of targeting at children is too young.

l   58% think too much marketing has been directed at children.

Industry

It is suggested that self-regulation is very important for advertisers. For example, the Children’s Advertising Review Unit (CARU) of the self-regulatory National Advertising Review Council has provided guidelines on advertising to children (Better Business Bureau 2006; Martin 2006). They also created a voluntary program Children’s Food and Beverage Advertising Initiative which is supported by 15 major food and beverage marketers aiming at promoting healthy lifestyles to children.

Management

Regarding children as a marketing segmentation and directly marketing to children is controversial and should be paid significant attention by management. Corporations should participate in managing the issue rather than just responding to the public. (Jaques, 2009) Fail to manage the issue may create a social responsibility gap, which is one of the sources of reputational trouble. (Greyser, 2009)Hence management should be very careful when they marketing directly to children. When designing the marketing campaign and advertisements, companies should balance the trade-off and concern more on their social responsibilities.

References

Greyser, Stephen A.. corporate brand reputation and brand crisis management. Management Decision, 2009, Vol. 47 Issue 4, p590-602, 13p; DOI: 10.1108/00251740910959431

Grimm, Matthew, Is Marketing to Kids Ethical? Brandweek, 10644318, 4/5/2004, Vol. 45, Issue 14

Jaques, Tony. Issue and crisis management: Quicksand in the definitional landscape Public Relations Review, Sep2009, Vol. 35 Issue 3, p280-286, 7p; DOI: 10.1016/j.pubrev.2009.03.003

McNeal, James U.., The Child Consumer: A New Market, Journal of Retailing, Summer69, Vol. 45 Issue 2, p15, 8p

Quilliam, Elizabeth Taylor; Rifon, Nora J.. Trick or Treat: Children, Advertising, and Social Responsibility, American Academy of Advertising Conference Proceedings, 2009, p30-32, 3p

Sharon Beder, 'A Community View', Caring for Children in the Media Age, Papers from a national conference, edited by John Squires and Tracy Newlands, New College Institute for Values Research, Sydney, 1998, pp. 101-111.

 http://www.media-awareness.ca/english/resources/special_initiatives/wa_resources/wa_teachers/tipsheets/online_marketing_strategies.cfm

Marketing to Children, Sharon Beder