Marketing Regulation

Marketing to Children

Children’s exposure to commercials

watch an average of 3 to 4 hours of TV per day

spend 1500 hours in front of the TV annually

900 hours in the classroom

average child sees > 20,000 commercials each year

American children will have viewed ~360,000 commercials on television before graduating high school

Food and toys are the two most commonly advertised products.

Concerns related to children watching

commercials

Most children younger than 6 do not understand that

the purpose of advertising is to sell a product

Children up to age 8 cannot distinguish advertising

from regular television programming

Children who watch 4 or more hours of TV a day are

more likely to believe advertising claims than

children who watch TV less often

9 out of 10 food ads on Saturday morning TV are for

sugary cereals, candy, salty snacks, fatty fast foods

and other junk food.

Regulation of commercials aimed at

children: FTC regulation

1970's, FTC proposed a regulation banning

advertising of candy and sugared cereals on

shows targeted to children under 13

Calling FTC a "national nanny," Congress in

1980 prohibited the FTC from issuing rule

FTC has brought individual actions based on one of two theories:

1. Ads might deceive children, even though they would not have the same effect on adults

toy ballerina standing alone and twirling

toy vehicle appearing in the ad to operate under its own power

2. Ads showing children engaged in activities that are potentially hazardous, even though adults might reasonably avoid injury

cooking hot foods

using a blow dryer next to a sink filled with water

1990 Children's Television Act (CTA)

Enforced by the FCC

Requires broadcast stations to serve the educational and informational needs of children 16 and under

Requires stations to carry at least three hours a week of such programming

FCC Rules adopted under CTA limit commercial time during children's programming to 10.5 minutes per hour on weekends

12 minutes per hour on weekdays

"Program Length Commercials"

FCC Rule

Entire program is counted as commercial if

program associated with a product; and

commercials for product air during show

Compliance with FCC Rule considered in

determining whether to renew license

Children's Advertising Review Unit

(CARU)CARU Guidelines

Five General Guidelines:

Communicate in truthful manner using understandable

language

Address advertising to positive social behaviors

Present positive pro-social role models

Contribute positively to the parent-child relationship

Avoid marketing inappropriate products directly to children

Marketing junk food to children

Obesity the major health issue of the day

“tobacco of the 21st century”

2000--diet and physical inactivity accounted

for 400,000 deaths

16.6% of total

200--tobacco caused 435,000 deaths

18.1% of total

Smoking rates are dropping

Americans are increasingly overweight

Obesity likely to overtake tobacco as the leading

cause of preventable deaths as early as 2005

March 10, 2004 House passed bill protecting food

industry from lawsuits based on weight issues

Key sponsor of bill is from district home to Darden

Restaurants

Owner of Olive Garden and Red Lobster

Food companies spent $15 billion on

advertising to children in 2002

Up from $12.5 billion in 1998

Advertising used to be limited to Saturday

mornings

Now it’s everywhere

television

movies

school

Promotional tie-ins and licensing have

become significant marketing tools

Rugrats Fruit Snacks

Flintstones Jell-O

Scooby-Doo cheddar crackers/macaroni & cheese

2003--45% of fruit snacks had licensing

agreements

1996--10%

Advertisers use characters from shows to

market products on television

SpongeBob SquarePants used to sell Kraft

Macaroni and Cheese, Popsicles and fruit snacks

SpongeBob SquarePants show--more than

half the commercials are about food

“The programs have become advertising for

the food, and the food has become

advertising for the programs”

Some companies deny marketing to children

Coke says it targets teens and adults

2001--Coke signed tie-in with Harry Potter

character

Increase in food marketing parallels increase

in children’s weight

Since 1980, number of obese children

doubled to 16%

Where does the responsibility lie?

Food companies?

Parents?

Marketing Regulation

Marketing to Adults

20-19

Regulation and Marketing to Adults

Marketing Communications

Product Issues

Pricing Issues

20-20

Marketing Communications

Advertising and Values

Consumer Information Accuracy

Adequacy of Consumer Information

Advertising and Values

•There is a concern regarding the long-term effect of a

constant flow of messages, emphasizing materialistic or

narcissistic values on both individuals and society.

•For example, the portrayals of

beauty

casual attitudes toward sex

women in stereotypical roles or as decoration

Consumer Information Accuracy

•Various businesses, consumer groups, and

regulatory agencies are deeply concerned with

the interpretation of marketing messages.

•Regulating the explicit verbal content of ads is

difficult, and regulating the more subtle

meanings implied by the visual content of ads is

much more difficult.

Adequacy of Consumer Information

•A number of laws have been passed to ensure information

adequacy, e.g., the Nutritional Labeling and Education Act

(NLEA) of 1990.

•Marketers, consumer groups, and public officials would like

consumers to have all the information they need to make

sound choices.

One approach is to provide all relevant information to the

consumer.

However, a risk is information overload.

Product Issues

Two major concerns of consumer groups:

Are the products safe?

Are the products environmentally sound?

Pricing Issues

Consumer groups want prices that are fair and accurately

stated.

The FTC is the primary federal agency involved in

regulating pricing activities.

An external reference price is a price provided by

the manufacturer or retailer in addition to the actual

current price of the product.