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Chapter 8

CHAPTER 8 Kids as Future Purchasers.doc

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Western University
Sociology 2172A/B
Gale Cassidy

- CHAPTER 8- KIDS AS FUTURE PURCHASERS - lifetime value is a relatively new term outside of direct one-to-one and relationship marketing that explains what a customer is worth to a business over a long period of time - a lifetime value equation is especially important to companies that can sell many services to one customer - customer relationship marketing (CRM) is one way smart companies manage these customer relationships so they can maximize and protect revenue with each customer - it is less expensive to keep customers than to attract new customers - some companies and individuals are uncomfortable with the notion of marketing to kids - some see kid marketing as manipulation or commercial assault on the unprotected - psychologist and professor Gail Golden says that research shows that children are more suggestible than adults - but she also adds that because we live in a free-market capitalist society she cannot justify banning advertising to children - if a child doesn’t know or like a brand, will they be less likely to buy it as an adult? - no one can really answer that question, but most brand managers can tell a story about a brand loyalist who grew up using the brand they love now as adults - some businesses have difficulty thinking about the impact of kids because it is hard to invest in something when it won’t pay off for a long time - one industry that is looking at kids for the long term is banks - bank accounts for kids may not pay dividends for years, but some banks believe that when a kid opens an account he or she is likely to keep it for life, and that makes the child a valuable business target ➔ “kids are most likely to open an account where their parents bank: - Creating Cross-Generational Appeal - the recent successes of the iMac launch and the VW Beetle relaunch demonstrate the power of appealing across generations - the new Beetle’s launch advertising used overt links to the brand memories and attachments of a previous generation while it was attracting a new, younger clientele - the iMac is another product that transcends generations - Apple found a new way to re-energize the computer industry by adding colour and design to its user-friendly Macintosh brand - Phil Guarascio, VP General Manager of North American Operations at GM in 1999, stated that GM spends 10% of their advertising budget on programs targeted at kids - when asked why they market to people who can’t buy cars, he responded that kids know at the age of 10 what cars they want to buy - beyond seeking young people’s input into their efforts, Ford is bringing youth into their planning process - rather than guessing what they would like in a car and researching it after the fact, they work with the kids to build it - The Branding Age - both academic and media-based research shows that kids are aware of brands from a very early age - research indicates that kids between the ages of 2-5 pay a lot of attention to commercials - because of that, they become aware of many products and services - it has been determined though, that kids at this age don’t know the difference between ad advertisement and the program, so while they are aware of the products they don’t necessarily recognize an ad as a sales pitch or become persuaded by it - James McNeal claims that kids have a brand repertoire of 100 brands by the time they enter first grade - by the age of 10 this repertoire increases to 300-400 brands and as adults we carry over 1500 brands in our repertoire - a brand repertoire is not which brands one is aware of but the list of brands that one chooses fro, or their favourites in each category - a brand repertoire is usually developed by trying different products and brands - this is a function of choice more than it is influence from a mess medium - but the power of a brand is in its ability to provide differentiation for the consumer - James McNeal believes kids as young as 3 and 4 do have brand preferences - his theory is that kids believe the brands they use are better due to the egocentric nature of kids “I use it therefore it is better.” - this preference, he believes, is the formation of brand loyalty - but one could argue that until the brand has meaning to its consumer, it is not a brand - so if a 4 year old claims to prefer a brand but doesn’t equate the liking of the product to a higher brand value like popularity, leadership or personal identification, it is most likely a taste, colour, or look preference more than a discerning brand choice - to differentiate and choose one must have the cognitive ability - interestingly, the stages of child development suggest that children younger than the age of 7 are unlikely to relate on this level because they have not yet developed that part of their brain - Jean Piaget ➔ Swiss biologist who in the 1900s pioneered the most comprehensive account of cognitive development in children, with his unique scientific approach integrating biology, psychology, and epistemology - Piaget believed that kids progress through a series of stages in their thinking, from sensori-motor to pre-operational to concrete operational to formal operational ➔ each growth stage focuses on different areas of cognitive development - from birth to the age of five the brain is creating its structure of knowledge, its “hardwiring” or the brain’s “world view” by processing brain patterns from sensory experience - a child normally has acquired 80% of his or her concrete knowledge at about 3 years of age - the rest of the world view takes 7 years to develop - the physical change comes when the 2 hemispheres of the brain, the right and left
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