How children select brands, products and drive consumption

What might be the size of the under-18 Indian population in 2020? Well, 476 million! Large enough to be the third most populated country in the world, and larger than the nation of the United States. In percentage terms, it would translate to almost 34% of the Indian population and 21% of China’s.

India is a young, growing country, a cliche; often used in discussions about ‘demographic dividend’ that will drive the workforce and hence the supply side of the economy. The part that is less understood and much less talked about is the demand side. That is to say, the role of “children” (if teenagers could be called that) as consumers.

This is important. Not just for their sheer collective size - 476 million in 2020, remember? — but because Indian households tend to be very child-centric. In a recent survey with a sample of over 6,000 respondents across the country, the Boston Consulting Group found that almost 35% of all household expenditure in an average household is earmarked for children. This spend is relatively inelastic - almost 60% of respondents said that they would not decrease spend on children’s health and education even if their income was to drop by 10-25%. And 70% of respondents cited children’s education in their top three reasons to save money.

These statistics, while powerful in establishing the importance of children in consumption, tell only a part of the story. What is even more interesting is the behavioral impact of children in the consumption of a household. The BCG research suggests that this manifests itself in three ways.

First, children drive bulk of the household consumption of specific categories. For instance, almost 90% of households buy biscuits and confectionary primarily for children. The corresponding number for fresh fruits is almost 80%. In many cases, children end up introducing new categories into the household. For example, one 50-year-old gentleman we interviewed in a small city in Uttar Pradesh told us how his daughter introduced him to cheese and now he really relishes it.

Second, children play a significant role in influencing the choice of the brand in several categories. For instance, regarding biscuits, of which children are the primary consumers, almost 70% of respondents said that they allow the children to select the brands of choice. Interestingly, this influence extends into many categories where children are NOT the primary consumers. For instance, in clothes and footwear, 55% of respondents indicated that children played a major role in selecting the choice of brand not just for themselves but also for their parents.

Third, children end up driving what we call “disguised consumption”. This is basically products and services that are supposedly bought for children but are consumed by adults in the household as well. One example that came up repeatedly during the BCG research is Western snack food like Pizza or potato chips. Several consumers the BCG interviewed admitted (sheepishly!) that while the products were purchased for the children to start with, they enjoyed consuming it just as much!

All of this is in the backdrop of the fact that children today are significantly more aware and independent than their parents ever were. TV and internet have played a major role in this. Compared to the single, time-restricted TV channel 20 years ago, children are now exposed to more than 500 twenty-four hour channels across languages. Internet penetration has climbed to over 100 million even though ownership of personal computers is almost half the number. Parents are also realising the importance of exposing their children to different things and acknowledge this rise in awareness and independence. As one parent proudly told the BCG research team, “We didn’t even know one-tenth of what our kids today know when we were children.”

So what does all this mean for manufacturers and marketers? First and foremost, the question they should ask themselves is whether they fully understand the role of children in their category. As stated earlier, many supposedly ‘adult consumption’ categories are either influenced heavily by children or even consumed by adults at the behest of children. So this understanding is a critical first step.

Once this understanding is established, the next step is to make sure that the entire gamut of activities across consumer research, product development, marketing and shopping experience be tuned to the needs of children. Of course, responsible marketing requires that every company must set clear norms for how and when they will and won’t market directly to children. However, while staying within the guidelines, it is important to think of children as key consumption drivers and make sure that they are given the importance they deserve.

After all, 476 million is not a small number.

The writer is a partner and director at the Boston Consulting Group. He leads BCG’s marketing and sales practice in India. Views are personal