Papers Point-Counterpoint Marketing to kids– Ethics & strategy Course Evaluation

1. Papers • Point-Counterpoint • Marketing to kids– Ethics & strategy • Course Evaluation Marketing to Children (5:49”)

2. Questions • What advertising to children are you aware of? • What behaviors as a child can you recall being influenced by ads? • What is your attitude toward child advertising? • How much TV or radio do your kids attend to? • Identify areas of unacceptable manipulation and abuse; what is the ethical violation?

3. Kids aged 3-11 comprise about 36 million potential customers who have purchasing power of over $18 million • By 2010 they will have $21.4 billion in disposable income • Annual expenditures for kids by 2010 will reach about $140 billion for consumer goods (e.g., clothing, food, personal care items) • Elementary children spend around $28-billion per year and influence another $500-billion of spending controlled by their parents (Lynn, 2000). http://promomagazine.com/research/kidsspending/

4. What drives shift to youth purchasing power? • kids exert more influence on parent buying decisions • smaller family size, dual income, postponing children until have higher discretionary incomes • splintered families means more gift giving • kids in single parent families mature faster, making purchases a year before other kids • grandparents spend more • latchkey kids need more entertainment • striving for early childhood learning (Little Einstein) • guilt– for time not spent with kids • parents ceded power to kids beginning in the 1980s • kids more assertive–more pester power • parents want kids to be accepted • “good parents” through their kids • values of materialism • kids as collectors • building brand name loyalty

5. Kids believe they have purchasing power…

6. Booming Baby Media • Baby Genius • Baby Superstar • Bilingual Baby • Baby Laureate • Jumpstart Baby • BabyWOW! • Baby Einstein “Series works from the understanding that classical music combined with stimulating images can enhance a baby's intellectual development. Videos combine music with live and animated visual accompaniment. For children ages 0-4.” What are the ethical issues here?

7. An 8 year-old Korean girl was asked to make a drawing about shopping. Note her presence in the store among other shoppers, attention to detail (e.g., shoppers, clerk, special prices, variety of fixtures, shopping bags, etc.)

8. TV for Infants & Toddlers: What are the opportunities? • Children 6 and younger spend an average of two hours a day with screen media • 75% of children six & younger live in homes where TV is on half the time, and 33% in homes where is on continuously • 33% of children <6 have TV in their bedrooms, 25% have their own VCR or DVD player, and 10% have a video console in their rooms • Children who have TV in their rooms spend 14 more minutes a day watching • 25% of children <6 are “heavy watchers” with more than 2 hours/day • 97% have products (toys, clothes, etc.) based on TV characters/movies • 78% of parents see children imitating positive behaviors (sharing, helping) seen on TV

9. TV marketing to kids: The dark side of marketing? • Most children watch an average of 3-4 hours of TV/day, 28 hours/week: the #1 after-school activity for kids aged 6-17 • Each year kids spend 900 hours in classrooms; 1500 hours in front of TV • They view about 58 messages on TV daily, half about food • By age 70, most people will have spent 10 years watching TV • By the end of elementary school kids witness 100,000 violent acts & 8,000 murders (doubles again by end of high school) • Prime time contains about 5 violent acts per hour compared with 26 per hour during Saturday morning children’s TV • Kids who watch more violent TV tend to behave more aggressively, be less sensitive to others, are more fearful, and prefer violent entertainment • Kids see more than 20,000 commercials each year; I million by age 21

10. Dark side cont’d • Most children do not understand that the purpose of advertising is to sell a product and are more likely to believe claims • Teens see 100,000 alcohol commercials before they reach drinking age • the number of advertisements viewed by children had grown from 30,000 to 40,000 messages per year over the last decade—and most of those were for food. • Kids who watch 4 hours or more of TV/day spend less time on school work, have poorer reading skills, play less well with friends, and have fewer hobbies • Hyper-caffeinated drinks are the best selling items in groceries ($10 b/yr) • Channel One in schools has commercial-laden news casts, brand names in math examples; kids don’t distinguish news and ads • Textbook slip covers ads and school-bus bill boards • In school Zap-Me ads mine demographic data from unsuspecting kids

11. Commercialization of Schools

12. School TV • CH 1 is touted as “the leading provider of TV news and educa- tional programs to America’s secondary schools”; it is in 40% of middle and high schools • There are 8 million kids in 12,000 classrooms who watch commercial tv • Most shown in low income and communities of color where there is less funding for texts and other materials • Schools must air CH 1 0n 90% of days in 80% of classes • Advertising rates are as high as $200,000 per 30 sec. ad • 20% of airtime devoted to political, economic, social & political stories; 80% to advertising, sports, disaster, weather & features.

15. Internet Marketing to Kids • Twice as many children live in a home with Internet access (63%) as live in a home with newspaper subscription (34%) • 60% of kids age 8-14 have Internet access, and 76% of them use it regularly • According to Nielson/Net Ratings, in 2005 Nickelodeon pulled in $9.6 million in 12 months just for web advertising • 67% of teens and 37% of children purchased or researched products on the internet. • Kids aged 5 & older spent $1.5 billion online • Some Internet vendors offer Web-only debit cards to teens, good for purchases at an affiliated-Web site.

19. "Brand marketing must begin with children. Even if a child does not buy the product and will not for many years... the marketing must begin in childhood.“ (James McNeal, The Kids Market, 1999) "Advertising has always sold anxiety, and it certainly sells anxiety to the young. It's always telling them they're losers unless they're cool.“ (Mark Crispin Miller, The Merchants of Cool, 2000) "The entertainment companies ... look at the teen market as part of this massive empire they're colonizing. (Robert McChesney, The Merchants of Cool, 2000)

20. Internal Marketing Strategy Memoranda Philip Morris: “Today’s teenager is tomorrow’s potential regular customer, and the overwhelming majority of smokers first begin to smoke while still in their teens. . . The smoking patterns of teenagers are particularly important to Philip Morris.” RJ Reynolds: “Evidence is now available to indicate that the 14-18 year old group is an increasing segment of the smoking population. RJR-T must soon establish a successful new brand in this market if our position in the industry is to be maintained in the long term.” Brown & Williamson: “Kool’s stake in the 16- to 25-year-old population segment is such that the value of this audience should be accurately weighted and reflected in current media programs . . . all magazines will be reviewed to see how efficiently they reach this group.” Lorillard Tobacco: “[T]he base of our business is the high school student.” U.S. Tobacco: “Cherry Skoal is for somebody who likes the taste of candy, if you know what I’m saying.”

21. Not going up in smoke: Tobacco Marketing • Although the tobacco companies lose about 5,000 customers daily (1,200 die), replacements are kids • 90% of smokers begin before age 21; 60% before age 14 • US companies spend $15.1 billion per year ($41 million daily) to promote products; marketing efforts increased 125% from 1998-2003 • The use of Joe Camel propelled Camel cigarettes from a brand used by <1% under age 18, to a 1/3 youth market share & $.5 billion in three years • More than 3,000 teens become regular smokers each day (girls>boys) • 80% of teens consider advertising influential in decision to smoke • In 2000, $59.6 million spent on advertising brands in youth oriented magazines

22. Ethics vs. Profit for Shareholders • Per capita smoking in developing world has >70% in last 25 years • In Hong Kong children as young as 7 years old are addicted to cigarettes • The teen smoking rate in some Latin American Cities is 50% • In Kenya, 40% of primary school children smoke • After the entry of US tobacco companies, Korean teen smoking rose from 18-30% in one year • Marlboro controls 60% of the youth market but only 25% of adult market • 30% of kids own at least one tobacco promotional item (cap, t-shirt, etc.) • Teens are 3x as sensitive to advertising as adults to cigarette ads • Nearly 16% of high school boys are users of smokeless tobacco

23. A number of studies have demonstrated the relationship between tobacco marketing and youth smoking behavior: • 82 percent of youth (12-17) smokers prefer Marlboro, Camel and Newport – three heavily advertised brands. Marlboro, the most heavily advertised brand, constitutes almost 50 percent of the youth market but only about 38 percent of smokers over age 25 • A study in the American Journal of Public Health showed that adolescents who owned a tobacco promotional item and named a cigarette brand whose advertising attracted their attention were twice as likely to become established smokers than those who did neither • A survey released in March 2005 showed that kids were more than twice as likely as adults to recall tobacco advertising. While only 26 percent of all adults recalled seeing a tobacco ad in the two weeks prior to the survey, 56 percent of kids aged 12 to 17 reported seeing tobacco ads • A study in the Journal of the National Cancer Institute found that teens are more likely to be influenced to smoke by cigarette advertising than they are by peer pressure • A study in the Journal of Marketing found that teenagers are three times as sensitive as adults to cigarette advertising http://tobaccofreekids.org/research/factsheets/pdf/0008.pdf

25. The big question: What are the marketing principles and practices used with kid market that make them so effective?

26. AMA Code of Ethics

27. Marketing Ethics • “Marketing ethics” is accused of being an oxymoron– why would this be? • What are marketing ethics? AMA Code of Ethics • Why are they important? • To what extent are ethics discussed in your organization’s marketing efforts?