Natural Foods Merchandiser

The 'Nag Factor' Nets $10B in Sales

Despite being short and relatively weak, children wield incredible purchasing power.

According to a recent study by New York-based market research firm Packaged Facts, kids between the ages of 5 and 14 influence 78 percent of total grocery purchases. In effect, this age bracket impacts $10 billion in food and beverage spending annually, and will affect the majority of purchases made in this category.

"Kids influence by nagging, mostly," says Don Montuori, acquisitions editor for Packaged Facts. "For younger children, a lot has to do with licensing of popular characters on products and advertising."

Montuori says advertising becomes less effective as kids age and become more skeptical. This older group of "tweenagers"—age 8 to 12—typically has ready cash, whether from a weekly allowance, grandparents' gifts or income from odd jobs such as babysitting or yard care. Many of them can afford to make their own purchasing decisions without having to nag.

Additionally, kids help relieve family time pressures by assisting with meal preparation, according to a report published by Phil Lempert, a food trends analyst. Because of this trend, he notes, parents look for simple, convenient products. Kids, therefore, indirectly drive the convenience-meal market as well as the single-serve, on-the-go segment.

Manufacturers have caught on to these trends. Grocery shelves are lined with cartoon-emblazoned boxes and multicolored condiments that capture children's attention and stimulate the "nag factor." Parents are more likely to cave in to children's demands when purchasing products already on the grocery list, Montuori says.

Tweenagers are far more helpful when they can prepare shelf-stable and refrigerated entrées. Not surprisingly, then, sales of these products are on the rise. Amanda Archibald, a Maryland-based food marketing strategist and trained dietician, finds consumers willingly pay two to three times the price for dishes that could be made more inexpensively from scratch.

The 'Cool' Component
Another consideration with older kids is the "cool" factor. Advertising, using its newest and most effective weapon, the Internet, definitely capitalizes on such concerns. "Advergaming"—advertising through Internet-based games and contests—proves a big draw in getting kids and their parents to try food products, says Montuori. The Schwan Food Co., maker of Tony's Pizza, hosts a typical youth-oriented site. Featuring loud music and myriad opportunities to explore a virtual mall, kids enter various venues, play games and, of course, learn more about Tony's Pizza.

Youth, however, does not thrive on pizza and soda alone. Perhaps one of the most surprising facts revealed by the Packaged Facts survey is the growing number of health-conscious kids. More tweenagers and teens are interested in vegetarianism and natural and organic products. The study finds older kids are more apt to buy natural and organic items than are their parents. And children apparently have success introducing their parents to these products, as 80 percent of parents surveyed said they would buy organic products. However, whether due to price point or availability issues, only 20 percent actually do.

Women As A Target Market
Women today continue to be the primary shoppers. That, in addition to the fact that females make up more than 50 percent of the U.S. population, is causing merchandisers to more carefully consider this demographic when making wholesale purchasing decisions.

Women ultimately account for more than 80 percent of purchase decisions.
According to a recent article published by the Wharton Business School at the University of Pennsylvania, women, however much influenced by the nag factor, ultimately account for more than 80 percent of purchase decisions on products and services. Archibald finds two major influences on women's purchasing choices: the media and product marketing.

"When women have kids, it prompts revised buying preferences. They want the best they can get, starting with baby food and diapers," Archibald says. "Then, because they're doing it for their kids, they think maybe they should also eat organic foods."

As a result of this consumer concern—and as a way to capitalize on this growing market share—many mainstream food manufacturers are offering natural and organic products.

Additionally, an increasing focus on women's issues is surfacing. General Mills' Harmony breakfast cereal with calcium, folic acid and iron, is just one example of products specifically targeting women's health. And, with more women reaching menopause than ever before, the market share aimed at aging female baby boomers also has grown, Archibald notes.

Baby Boomers' Demands
Baby boomers are not only living longer but are in better health at retirement age than any previous generation. They want to maintain their youthful vigor, not while away their twilight years in rockers. Their main concerns, according to the Northern Ireland Centre for Food and Health, are cognitive abilities, skin maintenance, vision and bone health.

Supplements and products such as teeth whiteners and skin creams are popular among both sexes in this generation, Archibald's studies suggest. Baby boomers, she discovered, spend more per capita on groceries than any other group of consumers. They also purchase more than half of all over-the-counter medications sold in the United States, she says. Their purchasing clout, like that of children's and women's, demands retailers' respect.

Rachel Hauser is a freelance food writer in Boulder, Colo.

Natural Foods Merchandiser volume XXIV/number 8/p. 30, 32

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