What is your first conscious memory? If you were born in previous generations, it is probably your parents, siblings, or maybe a favorite pet. However if you are part of Generation Y your first memory is more likely to be a heavily marketed toy from The Lion King or Little Mermaid, or perhaps your first pair of Nike shoes or designer jeans. Why? Children are a legitimate and powerful consumer group, particularly in the areas of toys, back-to-school products, candy and snacks, apparel, and to some degree, health and beauty care items. Young people these days are so wealthy that children 4 to 12 years old have a combined annual income of nearly $15 billion, $11 billion of which they spend.
The remaining $4 billion they save. Furthermore, this same group directly influences more than $160 billion in family household purchases, said Dr. James McNeal, professor of marketing at Texas A&M University, an expert on kids’ marketing. McNeal, who noted that his estimate – which was just raised from $150 billion – is ‘conservative,’ further estimated that children indirectly influence between $350 billion and $400 billion worth of purchases a year.
‘I don’t think there is enough respect for this consumer group, given that they have more market potential than any other,’ McNeal said. The wealth of these 34 million children, he noted, has been growing at the rate of 20% a year for the past five to seven years. Recognition of this wealthy consumer group has been slow in coming, but it is gaining attention. McNeal estimated that as much as 40% of retailers currently have some sort of in-store program aimed at children, and more suppliers than ever before are conducting research specifically geared to learning the buying behavior and product needs of this young consumer group. Current retailer programs include kids meals in the food/snack area of stores,credit cards (with parental consent), colorful and playful displays in apparel, and in-store merchandisers such as ‘try-me’ areas for electronic learning aids as well as video game kiosks.
All of this is intended to attract this potent group of future adults, to entertain them and to create loyal shoppers. Kmart has gone one step further than most discounters with its Music & Movies department. This colorful and visually exciting department features an interactive music kiosk in select discount stores and supercenters as a way to appeal to music lovers of all ages but particularly to teens. This department is strategically located in the front of the store to draw the teens through the front door and get them used to being in a Kmart. Executives hope that once the teens are comfortable with purchasing music and movies at Kmart, they will venture into the rest of the store.
Kids said they learn about new products from friends, 84%; TV, 83%; on storeshelf and in catalog, 79% each; magazines, 68%; and from in-store displays – 64%in an open area, 62% on endcap and 58% at checkout. Kids-directed TV spots appear more obvious in recent years, particularly in the areas of toys, kids’ pre-recorded videos and video games. Just like their adult-directed counterparts, these ad spots work to introduce and influence future buying decisions of young consumers. To properly tap the wealth of young shoppers, a number of manufacturers have commissioned market research of the kids’ market as a way to sharpen their focus and create age-specific product lines. Many are also sharing their findings with retailers in the hopes of improving in-store merchandising and signage programs.
In the toy industry, in particular, try-me packages have ushered in a whole new phase of in-store merchandising opportunities to kids that appeals to their need to test new products. At Stuart Hall, the entire 1994 back-to-school program was the result of kids -directed market research and product testing to ensure the designs as well as the specific products were ‘right. ’ ‘It’s not what we like, it’s what the kids like,’ said Jim Schmidt, director of merchandising, Stuart Hall. BerZerk Candy Werks, a novelty candy manufacturing company, developed its marketing strategy on just that concept. ‘Kids look for products that are designed especially for them. They are not interested in miniature versions of adult products,’ the company said.
The flip side to all this is the parents. While products and marketing programs are being created to more directly captivate children, parental efforts to thwart a growing materialism in their children also appears to be gaining momentum, providing retailers and manufacturers with a tightrope on which to navigate. As marketers develop more sophisticated ways of learning about and reaching young consumers, are they running the risk of alienating adults? The general public is skeptical about advertising aimed at kids. Eight in ten adults agree that business marketing and advertising exploit children by convincing them to buy things that are bad for them or that they do not t need, according to a 1994 survey by Roper Starch Worldwide Inc. of New York City.
But adults do not necessarily object to the actual practice, as is indicated in a Roper study from the previous year. Eight in ten adults say it is “all right” to advertise products such as toys, cereal, and clothing on television during children’s programming. American’s do not overwhelmingly object to the way advertisers sell to kids, and an advertiser knows that a lifelong customer is priceless. Thus, it is well worth the effort to understand and anticipate the needs and res of even the smallest consumer.
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Leonhardt, D. and Kerwin, K. (June 30, 1997). Hey Kid, Buy This.
Business Week. McNeal, J. (1992). A hHandbook of Marketing to Children. New York: Lexington Books. McNeal, J.
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