Marketing to kids is no child's play

The kids segment in food & beverage offers opportunity of over Rs 19,000 crore in India by FY21

Food and beverage (F&B) categories such as biscuits, fruit drinks, savoury snacks and packaged curd have seen tremendous growth in the last few years. While these categories have national as well as regional and local brands, national brands outshine the rest with huge marketing budgets, aiming for dominant market share. This necessitates smaller players to find innovative ways to differentiate themselves to gain a strong footing. While premiumisation, health and wellness and gifting have been tried, an underdeveloped route is through segment-specific product development, especially targeting kids.

In the US, products targeted at kids form four per cent of all F&B, and up to 13 per cent of categories such as dairy products, snacks, beverages and cereals. Globally many brands have been developed exclusively on this plank. Eg. Danone’s Danonino is a billion-dollar brand.

Almost 20 per cent of India’s population lies in the age group of six-15, frequently consuming products targeted at adults from various impulse and staple categories. An estimated Rs 6,000 crore of pocket money and gifts is spent by kids on F&B—branded and unbranded. If players focus on developing the segment, the branded opportunity itself could reach Rs 19,000 crore by FY21. While biscuits, chocolates/confectionery and savoury snacks might lead the opportunity by sheer size, categories like fruit juices, nectars and drinks, curd, yogurt drinks, etc. offer immense potential for innovation.

Our research indicates there are three levers which are important to specifically influence kids’ purchase and consumption.

First, brands need to build “engagement” by motivating kids to perform an activity before/during/after consumption. This transforms the product beyond just a food/beverage into an activity with which the kid interacts. For example, Oreo’s twist-lick-dunk ritual or Danette Choco Chack, a pudding with crunchy cookies, make the activity an essential part of consumption. Second, association with an animated character, either franchised or independently created, increases the stickiness of the product. Studies have shown three in four kids are influenced by such characters, more so in the younger age group.

Lastly, freebies are known to entice kids, as they look forward to adding them to their repertoire of toys. While a promotional freebie run helps only in trials, innovation and surprise elements within freebies drive repeat purchases. Drinkable yoghurt brand Anchor Uno provides clickable caps to build Lego-like toys. Kinder Joy, for instance, has a team of inventors to develop toys and increase the “surprise” element.

One or multiple levers can help brands create an appeal, build engagement, drive trials as well as repeats through a strong pull. They also trigger word of mouth among kids, creating peer influence and reducing dependence on mass media.

Consumption of F&B categories is increasing across age groups but there are limited players targeting kids. It thus provides a large white-space opportunity for those who foresee a challenge in entering such categories through the traditional route. This will enable companies to build successful brands commanding strong loyalty. With such innovation, a player can potentially build a Rs 300-crore brand in a large category, or Rs 800-1,000-crore through multiple categories within five years.

Author is a senior practice head, consumer and retail, Tata Strategic Management Group

Seshadri Narasimhan, engagement manager, TSMG, contributed to the article