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Food and Beverage Marketing to Children and Youth

INTRODUCTION

This chapter considers how food and beverage products are developed and marketed to appeal to the preferences of children and youth and to stimulate sales. It provides definitions of certain commonly used marketing terms and approaches; provides an overview of various target markets such as tweens, teens, and ethnic minorities; and offers a description of the marketing research enterprise directed at children and youth. An overview is provided of the marketing environment, including a profile of food and beverage companies and retailers, full serve and quick serve restaurants, and trade associations. It discusses food, beverage, and meal product development, the implications of the evolving purchasing power of American children and youth, and the general marketing strategies, tactics, and messaging used by industry. The chapter also reviews children’s and adolescents’ media use patterns and advertising exposure, and discusses the range of marketing vehicles and venues used by companies to reach them with advertising and marketing messages. A discussion of company and industry guidelines and policies, including self-regulatory programs, health and wellness advisory councils, public–private partnerships, and coalitions concludes the chapter.

To explore this domain, the committee drew from several different types of reviews, reports and materials, including supplementing the peer-reviewed literature with information from industry and marketing sources. Thus, the evidentiary sources cited in this chapter include articles published



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Food Marketing to Children and Youth: Threat or Opportunity? 4 Food and Beverage Marketing to Children and Youth INTRODUCTION This chapter considers how food and beverage products are developed and marketed to appeal to the preferences of children and youth and to stimulate sales. It provides definitions of certain commonly used marketing terms and approaches; provides an overview of various target markets such as tweens, teens, and ethnic minorities; and offers a description of the marketing research enterprise directed at children and youth. An overview is provided of the marketing environment, including a profile of food and beverage companies and retailers, full serve and quick serve restaurants, and trade associations. It discusses food, beverage, and meal product development, the implications of the evolving purchasing power of American children and youth, and the general marketing strategies, tactics, and messaging used by industry. The chapter also reviews children’s and adolescents’ media use patterns and advertising exposure, and discusses the range of marketing vehicles and venues used by companies to reach them with advertising and marketing messages. A discussion of company and industry guidelines and policies, including self-regulatory programs, health and wellness advisory councils, public–private partnerships, and coalitions concludes the chapter. To explore this domain, the committee drew from several different types of reviews, reports and materials, including supplementing the peer-reviewed literature with information from industry and marketing sources. Thus, the evidentiary sources cited in this chapter include articles published

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Food Marketing to Children and Youth: Threat or Opportunity? in marketing, advertising, or industry trade journals; commissioned papers examining the current and future food and beverage marketing trends affecting children and youth; government, company, and trade organization websites; annual reports of companies;1 foundation or nonprofit organization reports and briefs; popular magazines and books relevant to advertising and marketing; and news releases. Sources also included materials from presentations, testimony, and documents provided during and following the January 2005 public workshop held to consider industry perspectives and activities. To assess the degree to which new food and beverage products have been targeted to children and youth across various product categories, the committee also conducted an analysis of trends in the proliferation of children’s products using ProductScan®, a large commercial database of products (Marketing Intelligence Service, 2005) that has tracked new product introductions in the U.S. marketplace since 1980 (Williams, 2005b). Because marketing research could enhance understanding on the relationships of marketing strategies to children’s food and beverage consumption patterns and diets and diet-related health outcomes, as well as the design of strategies to improve the healthfulness of messages, several market research firms were contacted for information. Some—The Geppetto Group, The Strottman Group, KidShop/KidzEyes, and Yankelovich Partners—provided child- and youth-specific data for the committee’s consideration and use. Others were unable to provide information, either because of time constraints, economic considerations, or on the basis that the data were proprietary and not intended for public use. A summary of the marketing research information considered by the committee is included in Appendix E, Table E-1. MARKETING TERMINOLOGY AND APPROACHES Marketing professionals use a variety of strategies to influence consumer preferences, stimulate consumer demand, promote frequency of purchases, build brand awareness and brand loyalty, encourage potential or existing customers to try new products, and increase sales. From a marketing perspective, businesses engage in a variety of activities that are designed to meet customers’ needs and to create the context where consumers perceive value in exchange for their money. Marketing is defined by the American Marketing Association (AMA) as “an organizational function and a set 1   Many companies and marketing firms discussed in this chapter are incorporated (Inc.). For ease of reading, the Inc. has been removed after a company name in the text, tables, and reference citations. The discussion of trade names or commercial products in this report is solely for the purpose of providing specific information or illustrative examples and does not imply endorsement by the Institute of Medicine.

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Food Marketing to Children and Youth: Threat or Opportunity? of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit an organization and its stakeholders” (AMA, 2005a). Conducting marketing research is a fundamental activity of the marketing process, providing information that helps identify opportunities and problems, refine strategies, and monitor performance (AMA, 2005a). The four traditional components of marketing are as follows: Product (e.g., features, quality, quantity, packaging) Place (e.g., location, outlets, distribution points used to reach target markets) Price (e.g., strategy, determinants, levels) Promotion (e.g., advertising, consumer promotion, trade promotion, public relations) Figure 4-1 shows one approach to a graphic representation of the elements that influence a marketing strategy: defining the target market, determining the marketing mix to meet the needs of that market, and assessing FIGURE 4-1 Elements of a marketing strategy and its environmental framework. SOURCE: Based on Boone and Kurtz (1998). From Contemporary Marketing, 9E 9th edition by Boone. ©1998. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com.

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Food Marketing to Children and Youth: Threat or Opportunity? the relevant competitive, social-cultural, technological, economic, political-legal, and environmental factors (Boone and Kurtz, 1998). Branding A key aim of marketing is product branding—providing a name or symbol that legally identifies a company, a single product, or a product line to differentiate it from other companies or products in the marketplace (Roberts, 2004). Elements of branding strategy may be characterized on several dimensions: (1) brand differentiation, to distinguish one brand from another in the same product line; (2) building brand image (or brand presence) to raise consumers’ awareness about a brand and the competition; (3) developing brand equity (also referred to as brand relevance and brand performance), to build brand familiarity and perceived quality with the intent to meet a customer’s expectations and purchase intent, which is the extent to which a consumer intends to continue purchasing a specific brand; (4) assessing brand momentum (or brand advantage) to determine whether customers think a brand is improving or whether their interest in a specific brand is declining; and (5) building and sustaining brand loyalty (also referred to as brand bonding), which is the degree to which consumers will consistently purchase the same brand within a product category (BrandWeek, 2005; Survey Value, 2005). In effect, the purpose of branding is to promote product sales by taking a product and identifying it with a lifestyle to which consumers aspire (Roberts, 2004). With food and beverage products, product development can be part of the branding process, as with many prepared entrees, baked goods, savory snacks, confectionery, and carbonated soft drinks (CSDs)2. Nonprocessed foods such as vegetables and fruits are more difficult challenges for brand differentiation, and are generally less promoted than processed food brands. This may be beginning to change, however, as there is a developing trend toward branding produce and promoting innovative features such as new shapes or colors, special varieties (e.g., baby or seedless watermelon, champagne grapes) and ethnic fruits and vegetables that help to build consumer awareness, sales, and profits (Pollack Associates, 2004). Processed foods are highly branded and lend themselves to major advertising (Gallo, 1999). More than 80 percent of U.S. grocery products 2   Carbonated soft drinks is a common marketing term used to refer to a category of cold, nonalcoholic, sweetened beverages that uses the process of carbonation to enhance its taste and texture. The complete term, carbonated soft drinks, is used in other chapters of this report instead of CSDs due to the lack of familiarity of this term among nonmarketing audiences.

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Food Marketing to Children and Youth: Threat or Opportunity? are branded whereas only 19 percent of fruits and vegetables are nationally branded (Harris, 2002). Results from a Grocery Manufacturers Association (GMA) survey of 800 consumers found that Americans across all demographic groups consider a product’s brand before making a final purchase selection, and consumers will pay a higher price for perceived quality in premium branded products and will go to a different store if a preferred brand is not available (GMA, 2002; Pollack Associates, 2004). Key factors that influenced their brand selection include experience (36 percent indicated that prior family exposure influences brand choice) and peer endorsement (13 percent) (GMA, 2002). Branding has become a normalized part of life for American children and adolescents (Schor, 2004), as marketers seek to develop positive and sustained brand relationships with young consumers and their parents in order to create brand recognition and foster brand loyalty, brand advantage, and brand equity (McDonald’s Corporation, 1996; McNeal, 1999; Moore et al., 2002). Advertising Advertising is the most visible form of marketing. It is paid public presentation and promotion of ideas, goods, or services by a sponsor (Kotler and Armstrong, 2004), intended to bring a product to the attention of consumers through a variety of media channels such as broadcast and cable television, radio, print, billboards, the Internet, or personal contact (Boone and Kurtz, 1998). Marketers recognize its value by itself, and also view it as contributing to the success of other strategies by (1) building brand awareness and brand loyalty among potential consumers, and (2) creating perceived value by persuading consumers that they are getting more than the product itself (e.g., social esteem, peer respect). Consumer Promotion Consumer promotion, also called sales promotion, represents the promotional efforts that are designed to have an immediate impact on sales. Consumer promotion includes media and nonmedia marketing communications targeted directly to the consumer that are used for a predetermined and limited time to increase consumer demand, stimulate market demand, or improve product availability. Examples of sales promotion include coupons, discounts and sales, contests, point-of-purchase displays, rebates, and gifts and incentives (Boone and Kurtz, 1998). Trade Promotion Trade promotion is a broad category of marketing that targets interme-

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Food Marketing to Children and Youth: Threat or Opportunity? diaries, such as grocery stores, convenience stores, and other food retail outlets. Trade promotion strategies include provision of in-store displays, agreements for shelf space and positioning, free merchandise, buy-back allowances,3 and merchandise allowances,4 as well as sales contests to encourage wholesalers or retailers to give unusual attention to selling more of a specific product or lines (Boone and Kurtz, 1998). Companies usually spend as much of their marketing budgets on trade promotion as on expenditures for advertising and all other consumer-oriented sales promotion, combined (Boone and Kurtz, 1998; GMA Forum, 2005). Market Segmentation and Target Markets Identifying and reaching unique target markets is important for businesses to promote sales in a competitive marketplace. Target markets may be segmented by demographic characteristics (e.g., age, gender, income, race or ethnicity), psychographic features (e.g., values, attitudes, beliefs, lifestyles), behavioral patterns (e.g., brand loyalty, usage rates, price sensitivities), and geographic characteristics (e.g., region, population density) (Neal, 2005; QuickMBA, 2004). As the ethnic, racial, and cultural composition of the U.S. population changes and boundaries among groups become less distinct through intermarriage and cultural adaptation, the criteria that marketers have used to target specific groups of consumers may change (Grier and Brumbaugh, 2004). Companies often alter the types of products and services marketed (marketing mix) for customers in each market segment in order to meet the demand for products and services and to maximize sales. Marketers may change only one element of the marketing mix (e.g., promotional approach), or tailor each element of the marketing mix to a specific population segment—the product and how it is packaged, the pricing strategies, the place(s) or channel(s) through which the product is distributed and made available to consumers in a target market, and the promotional strategies (Neal, 2005; QuickMBA, 2004). Children and youth represent an important demographic market because they are potential customers, they influence purchases made by parents and households, and they constitute the future adult market (McNeal, 1998; Moore et al., 2002). Table 4-1 summarizes the U.S. Census Bureau 3   A form of sales promotion in which retailers are offered an incentive to restock their store or warehouse with the product to the level in place prior to a count and recount promotion offer. 4   Introductory offers and periodic discounts offered by a company to promote and introduce the company’s line of branded products.

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Food Marketing to Children and Youth: Threat or Opportunity? TABLE 4-1 Marketing Categories by Population Sizes Group Age Range Population Size Infants and Toddlers 0–2 years     Girls 5,575,564   Boys 5,841,112 Children 3–8 years     Girls 11,734,700   Boys 12,306,607 Tweensa 9–12 years     Girls 8,159,391   Boys 8,572,920 Teensb 13–19 years     Girls 13,758,399   Boys 14,524,572 aIn this report, the committee characterized infants and toddlers as under age 2 years, younger children as ages 2–5 years, older children as ages 6–11 years, and teens as ages 12–18 (Chapter 1). These age categories and terms differ slightly from what is described in this chapter. Marketers distinguish the tween market segment from children and teens, defining it as young people who have attitudes and behaviors that are “in between” the ages of 8–12 years or 9–14 years (Siegel et al., 2001; The Intelligence Group/Youth Intelligence, 2005). bThe U.S. Census Bureau defines teens as young people ages 13–19 years. SOURCE: U.S. Census Bureau (2000). age categories that differ from the age categories used in this report (Chapter 1 and Chapter 5) and commonly used by marketers. The Census Bureau age categories include infants and toddlers (ages 0–2 years), younger and older children (ages 3–8 years), tweens (ages 9–12 years), and younger and older teens (ages 13–19 years). Children and youth under the age of 19 years comprise more than a fourth of the U.S. population. From 1990–2003, this population increased by 14 percent (U.S. Census Bureau, 2001, 2004). Ethnic minorities represent attractive targets for food and beverage marketers due to their size, growth, and purchasing power (Williams, 2005a). Marketers segment target audiences by age, gender, and race/ethnicity to build brand awareness and brand loyalty early in life that will be sustained into adulthood. African American consumers have been targeted by both mainstream and African American-owned marketers, often using very different marketing styles (Williams and Tharp, 2001). Food and beverage companies market to African American family preferences. An analysis of 2004 Nielsen Monitor-Plus data of food and beverage advertising that appeared in African American media showed significant spending by food and beverage companies for high-calorie and low-nutrient foods and beverages.

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Food Marketing to Children and Youth: Threat or Opportunity? In six magazines targeted to African Americans (e.g., Jet, Ebony, Black Enterprise, Essence, Vibe, and Savoy), the top three categories advertised were regular CSDs ($1.8 million), cookies and crackers ($1.6 million), and fruit juices and fruit-flavored drinks ($1.5 million). Advertising spending for the top three food and beverage categories on Black Entertainment Television (BET) were regular CSDs ($10.8 million), candy and gum ($8.8 million), and fruit juices and fruit-flavored drinks ($5.3 million) (Williams, 2005a). Magazine Publishers of America estimates that 15 percent of teens ages 12–19 years are African American, and are a major influence on youth culture, spending 6 percent more per month than the average U.S. teen, which is estimated at $428 monthly (MPA, 2004b). In 2004, the industry advertising and marketing expenditures were estimated at $260.9 million to reach consumers through Hispanic/Latino-oriented broadcast television networks, cable television, and Spanish-language newspapers and magazines (Endicott et al., 2005). Among the food, beverage, and retailer companies, PepsiCo spent $68.5 million, McDonald’s Corporation spent $65.8 million, Wal-Mart Stores spent $55.9 million, Yum! Brands spent $30.8 million, The Coca-Cola Company spent $27.7 million, the Kellogg Company spent $25.2 million, and Wendy’s International spent $20.4 million to advertise brands to reach Hispanic/Latino consumers (Endicott et al., 2005). An example of an ethnically targeted marketing effort to Hispanics/Latinos is PepsiCo’s Frito-Lay™ Flaming Hot Corn Chips advertising campaign (MPA, 2004c). The Hispanic/Latino teen market is the fastest growing ethnic youth segment in the United States. This market currently represents 4.6 million young consumers, or 20 percent of all U.S. teens. Market researchers forecast that the Hispanic/Latino youth population is expected to grow six times faster than the rest of the teen market by 2020 (MPA, 2004c). Marketers view the Hispanic/Latino youth market as providing a variety of business opportunities across many types of products and services (Valdés, 2000). In 1998, the total annual purchasing power of Hispanic/Latino teens was estimated at $19 billion—4 percent higher than non-Hispanic/Latino teens (MPA, 2004c). This so-called Generation Ñino includes tweens, teens, and young people who are bilingual and bicultural as they retain their Hispanic/Latino identity and navigate comfortably in this culture and American cultures (Valdés, 2000). Cultural influences among different racial/ethnic groups are also possible. For example, “hip-hop” youth culture originated among African American youth in the inner city, and is now embraced by a generation of African American, white, Hispanic/Latino, and Asian youth (Williams and Tharp, 2001). “Urban culture” is a term used to describe a target market that has a particular lifestyle. Urban culture transcends both racial and ethnic boundaries by bringing together a lifestyle of fashion, attitudes,

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Food Marketing to Children and Youth: Threat or Opportunity? street language, and music from all backgrounds (Williams and Tharp, 2001). MTV has been a leading entertainment network partnering with PepsiCo and The Coca-Cola Company to launch advertising campaigns featuring hip-hop culture such as break dancing to market CSDs and urban culture to teens (Holt, 2004; PBS Frontline, 2001). With respect to economic segmentation, there is some descriptive evidence suggesting that ethnic minorities living in poorer neighborhoods have fewer healthier options and neighborhood restaurants heavily promote less healthful foods (Lewis et al., 2005; Chapter 3). Despite concerns expressed that marketers disproportionately target racial/ethnic minorities with high-calorie, low-nutrient foods and beverages, there is a need for greater empirical evidence to support the claim (Grier, 2005; Samuels et al., 2003). The committee was not able to find available evidence to assess whether market segmentation has been a significant influence on children’s food and beverage product development. Embedded Marketing Strategies Embedded marketing strategies blend commercial content with programming or editorial content, or other lifestyle experiences, to add brand exposure and avoid resistance to direct advertising. Product placement, or brand placement, is an embedded marketing technique that refers to the inclusion of a corporate or brand name, product package, signage, or other trademark either visually or verbally in television programs, films, video games, magazines, books, and music, or across a range of these media simultaneously (Babin and Carder, 1996; Nebenzahl and Secunda, 1993; PQMedia, 2005). Product placement is generally arranged in return for a fee payment, although occasionally other quid pro quo accommodations are involved (Balasubramanian, 1994; PQMedia, 2005). Another form of embedded marketing technique used by marketers is known as viral marketing, representing the “buzz,” “word of mouth,” or “street marketing” that occurs when individuals talk about a product to one another, either in conversations or virtual communication via an electronic platform such as the Internet (Henry, 2003; Holt, 2004; Kaikati and Kaikati, 2004). Viral branding and marketing focus on the paths of public influence, including diffusion of innovation, word of mouth, and public relations (Holt, 2004). Measured Media and Unmeasured Media Marketers pay to advertise and promote branded products through a variety of media channels, termed measured and unmeasured media in the marketing literature. Measured media spending refers to the categories that

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Food Marketing to Children and Youth: Threat or Opportunity? are tracked by media research companies such as Nielsen, TNSMI/CMR, and Forrester. Commonly tracked measured media spending categories include television (e.g., network, spot, cable, syndicated, Spanish-language network), radio (e.g., network, national spot, local), magazines (e.g., local, Sunday magazine), business publications, newspapers (e.g., local, national), outdoor, the Yellow Pages, and the Internet (Brown et al., 2004, 2005). Unmeasured media spending refers to the difference between a company’s reported or estimated advertising costs and its measured media spending. Unmeasured media spending includes activities such as sales promotions, coupons, direct mail, catalogs, and special events, and it is not systematically tracked (Brown et al., 2004, 2005). Marketers use a variety of techniques to assess the effects of advertising in measured media on consumers. They measure the cost of advertising or promotion, usually expressed in terms of consumer exposure to advertising messages or “impressions,” representing a message seen by one viewer. Thus, consumers who report that they remember or recall an advertisement have “retained impressions” of the specific advertisement. Marketers also track consumers’ recall, retention, processing of messages, and purchase intent or purchase behavior. A second measure of the impact of an advertisement used by marketers is the increase in sales as a result of the advertising or promotional campaign. Because several factors may influence sales in the marketplace, it may be difficult to isolate the effect of advertising on sales of a particular product during a given time period. Thus, companies and marketers use other measures to guide their decisions, including communications research, an analysis of purchase dynamics (e.g., trial purchase, repeat purchase, frequency of purchase), and tracking consumer awareness and attitudes regarding specific product categories and specific brands (Collier Shannon Scott and Georgetown Economic Services, 2005c). Once the purchase behavior of the exposed and unexposed groups are evaluated for a pre- and post-period, marketers determine brand penetration (the percentage of households that purchased an advertised product), volume (the average number or weight of an advertised product for every 100 households), dollars spent (the average dollars spent on the advertised product for every 100 households), and the dollar share (the percentage of sales that the advertised brand represents of total category sales) (MPA, 1999). Marketing Research Substantial investments have been made in marketing research directed to U.S. children and youth, and this research has grown into a major marketing tool over the past 30 years (Austin and Rich, 2001; McNeal,

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Food Marketing to Children and Youth: Threat or Opportunity? 1999; Schor, 2004). Its evolution and focus on youth has been rapid. Companies and private marketing research and public relations firms currently conduct marketing research that involves children and adolescents of all ages in the stages of product development, market testing, and the design of messages that are delivered to them (Schor, 2004). Examples of selected marketing research firms and marketing reports that the committee considered through its data-gathering process are listed in Appendix E, Table E-1. Marketing research firms use a variety of methods, such as convenience surveys, opinion polls, focus groups, participant observation, photography, and ethnographic studies to collect information about their target markets (e.g., age and income of consumers, purchasing power, spending patterns, consumer attitudes and opinions)—including, in some cases, market research focus groups with early- and preschool age children (Austin and Rich, 2001; Buzz Marketing Group, 2004; Friend and Stapylton-Smith, 1999; Nestle, 2002; PBS Frontline, 2001; Peleo-Lazar, 2005; Schor, 2004; Teinowitz and McArthur, 2005; Yankelovich, 2005). Cultural anthropologists and psychologists have become regular resources for marketing research firms to study the culture of children and youth, and to research how children and teens process information and respond to advertising (Montgomery and Pasnik, 1996; Schor, 2004). Some marketing research is developed for public use but most is proprietary. Public research is conducted primarily by academic institutions and may be financed by public or private funds. Proprietary research is conducted for commercial purposes by private companies, marketing research and public relations firms, or companies that are associated with the marketing industry, and is not publicly available. Appendix E, Table E-1 provides examples of the types of proprietary research focused specifically on the eating habits and lifestyles of children and youth and the companies or marketing research firms that collect and sell these data. Because the majority of nonacademic research conducted by marketing research firms, public relations firms, and companies is proprietary, these data are unavailable to help assess the direct relationship between advertising and sales (Nestle et al., 1998), as well as the impact of advertising and other forms of marketing on children’s and adolescents’ food choices and diet (Swinburn et al., 2004; Chapter 5). Finding: Marketing research can provide important insights about how marketing techniques might help improve the diets of children and youth. Yet, much of the relevant marketing research on the profile and impact of food and beverage marketing to children and youth is currently unavailable to the public, including for use in designing and targeting efforts to improve the diets of children and youth.

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