A critical analysis of how ethical factors concerning children as consumers affect Disneys advertising strategy.

by goldenbear (student)

University Degree Business and Administrative studies

N0216099

A critical analysis of how ethical factors concerning children as consumers affect Disney’s advertising strategy.

Word Count: 3228

The theory and disciplines of marketing recognise many separate and distinct segments of consumers with homogenous needs, wants and attributes. One such sector comprises those members of the public who look for the demonstration of ethical principles from the suppliers of the products they wish to purchase.

The application of marketing principles creates controversy when it comes to the question of ethics (Nantel and Weeks, 1998). Consumers and pressure groups stress the necessity for businesses to pursue ethically sound operations which puts pressure on enterprises to demonstrate that they are meeting this expectation while also generating the profit and acceptable economic returns necessary to remain in business. Consumers are interested in not just the economic value the corporations add, but also on the environmental and social values. In the following paragraphs I will critically analyse how Disney’s recognition of the consumer power of those seeking a track record of ethical performance from their suppliers, has influenced their communication mix. With this term I refer to the coordination and selection of promotional activities to produce a unified, customer focused promotional message (Kurts, Mackenzie and Snow, 2010). This paper will explore the ethical considerations of Disney’s practice of targeting children with their advertising and consider how their communications mix balances the twin imperative of developing their business and maintaining the goodwill of the public who are increasingly concerned with corporate commitment to ethical practices. I will discuss firstly the ethical concerns and pressures surrounding advertising to children, the laws and regulations in effect to meet these concerns and then how Disney have revised their strategy to counter these restrictions and still target children as consumers.

Marketing ethics can be defined as an inquiry into the nature and grounds of moral judgments, standards and rules of conduct relating to marketing decisions and marketing situations (Vitell, 1986). With morality being such a subjective and culturally determined matter, the perception of what is right and what is wrong varies with different organisations and environments. As the evolution of economics, business processes, and technology has unfolded, the definitions and domains of ethical business practice have become more ambiguous and seemingly less categorical (Vermillon, 2002). Notwithstanding, a failure to properly consider ethical guidelines in the conduct of business run the risk of specific practices being adversely judged with the attendant likelihood of consumer backlash and its negative economic consequence.

Since its founding in 1923 by brothers , the Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment based on the rich legacy of quality creative content and exceptional storytelling (Disney, 2011). The company is probably best known for the products of its film studio and has enjoyed popular acclaim and commercial success with such releases as; Snow White and the Seven Dwarfs (1937), Pinocchio (1940), Fantasia (1940), Bambi (1942),Cinderella (1950), The Lion King (1994), Toy Story (1995), Hannah Montana: The Movie (2009) and Toy Story 3 (2010).

These iconic stories, all developed in the Disney tradition over three generations have done much to shape American popular culture and define the Disney brand. The fact that Disney remains committed to family movie entertainment is evidenced by the current Disney president and CEO Robert A Iger’s recent announcement that “The 2010 fiscal year was a financial and strategic success for The Walt Disney Company with performance driven by great content like Toy Story 3 and the way we benefited from that content across our many businesses.”(Disney, 2010). Due to its commitments in the field of family movies and family oriented marketing the corporation has reached of$USM 38,063 in revenue with net income of $USM 4,313 in the year ending on October 2, 2010 (Disney, 2010).

The Disney group owns and operates the ABC broadcast television network and cable television networks such as Disney Channel, ESPN, and ABC Family. Each of their business segments exploits the power of the Disney brand and the iconic characters and content that they have created that reinforces the core brand values of “fun, story-telling, innovation, quality, community and optimism"(Hille, 2003).

An early example of how Disney leverages its creative content can be seen in how it managed its well-known cartoon creation “”. Disney encouraged children to join their local Mickey Mouse Clubs with the aim of building brand identity and loyalty but also with the intention of selling merchandise related to its films. Disney continues to excel with its merchandising and each new family film is heavily promoted through merchandising and advertising and will often feature in its theme parks as well. It is the integrated nature of the Disney business model that continues to produce successful financial performance as their recent results demonstrate.

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The essential element of Disney's marketing success has been its ability to connect with the young and the 'young at heart'(Ali, 2003). It is no surprise that Disney’s products and services are targeted primarily at children and young adolescents given their core promise of unparalleled family entertainment. Disney appeals to our childhood and must continue to appeal to our children if it is to prosper. The success of Disney will be determined by their ability to make sure that their merchandise and films remain contemporary and relevant and although the types of products marketed to children have broadly remained the same, the affluence and buying power of children and adolescents has increased dramatically. McNeal (1992) argued that teenagers and children are a market in their own right and an influential one given their impact on parental household purchases (cited in Gunter and Farnham, 1998). Experts’ estimate that 2-14 year olds have sway over 500 billion dollars a year in household purchasing (Calvert, 2010). In addition to being highly influential this consumer group is also growing rapidly. In the United states there were almost 37 million children aged 5 to 13 years in 1967 and by 1985 this group had grown to more than 40 million (Gunter and Farnham, 1998). According to McNeal (1992) American children’s average annual income grew from $137 in 1984 to $229 in 1989 (cited in Gunter and Farnham, 1998). The affluence, influence and growth of the child consumer group have made this sector incredibly attractive to businesses with advertisers successfully positioning their campaigns in order to appeal to children.

The concept of advertising directly to children is one that has provoked an on-going debate for several decades. Due to the rapid increase of television sets, television stations and online platforms it has never been easier to reach and influence children with advertising messages. Because children begin television viewing at a very young age, they inevitably encounter advertising messages much sooner than they develop the ability to effectively recognize such content as commercial persuasion (Singer, 2001). With the advancement of technology and a resultant increase in the channels available to advertisers, children now come into contact with media on a day to day basis. According to a recent national study of 3000 2-18 year olds, the average American child spends 5.5 hours per day exposed to a variety of media (Strasburger, 2004). Given media’s ubiquitous presence, parents, regulatory bodies and politicians are concerned that children are not sophisticated in their level of understanding of the advertisements directed at them. In a recent study, only one third of 4-6 year olds understood the selling intent of advertisements (Strasburger, 2004).

Although children may not understand the intent of what is broadcasted to them, media messages do indeed have a profound impact. According to Bandura, children learn behaviour by observing others, both directly in real life and vicariously through the media. Indeed, the most effective way to teach a child certain behaviour is to demonstrate the behaviour and have the child model it, which is precisely what television advertising initiates (Strasburger, 2004). The messages being depicted through advertising serve to promote materialistic values with the result that children are prone to regarding these values as the norm. In the case of Disney this promotion of materialism is seen in their illustration of the character Hannah Montana who is an idol for both children and adolescents. Hannah Montana leads a secret life as a pop singer and after recently moving to Malibu has to adapt to a new education based lifestyle. With a pop singing background Hannah lives a very materialistic life, owning all the latest clothes and devices. The outcome of this commercial exposure is an increased emphasis on consumerism; children want to wear all her clothing, own all of her accessories and essentially model themselves on someone who is seen as fashionable, popular and “cool”. They become convinced that they are inferior or aberrant if they do not keep up to date with the endless array of new merchandise. This provides evidence of the cultivation hypothesis in which; those who spend more time watching television are more likely to perceive the world in ways that reflect the most common and repetitive messages of the television world (Signorelli, 2005). It can be quite a shock when later in life it is learnt that this is in fact not the reality.

Deiner and Crandall (1978) (cited in Brymand and Bell, 2007) describe four ethical tests for advertising and suggest that to determine whether advertising is ethically acceptable you must consider:

whether there is harm to participants,
whether there is lack of informed consent,
whether there is an invasion of privacy and,
whether deception is involved.

On the basis of these inferred principles I have reached the opinion that Disney’s advertising to children is not ethical. I believe that as their advertising distorts children’s perception of societal mores, there is harm to consumers and I would describe Disney’s marketing strategy as fraudulent deception. This is due to the fact that Disney successfully influences children’s patterns of consumption while being fully aware that the majority of children lack the cognitive skills to understand the intent of their advertising. The Collins English Dictionary (2010) defines fraud as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage” and I believe that Disney’s advertising satisfies this definition. As children are not sufficiently mature to choose their own level of exposure to media influence I would also argue their informed consent to the philosophy of Disney marketing approaches has not been obtained and so Disney has failed Deiner and Crandall’s ethical tests.

The issue surrounding the effect that advertising has on children has become so prominent in recent times that Disney has had to employ damage control techniques to avert negative media attention. The problem of obesity and diabetes is one that is growing, especially in USA, and is regularly associated with excessive advertising of fast food products. Disney market their characters throughout the majority of fast food chains, with McDonalds happy meals containing the latest Disney endorsed character as well as character associated meals such as Burger King using iconic Marvel comic’s character Incredible Hulk as the theme for a burger meal. It is clear that large profits are being generated by Disney endorsing its characters through fast food chains; however the company is well aware that to deviate from these particular practices, major sections of Disney’s fan base will be alienated and the promise of the brand itself will become diluted.

In reaction to the pressure surrounding this issue Disney announced that they would be placing nutritional guidelines on licensed food products aimed at children. The new policies call for Disney to use its name and characters only on ‘kid-focused’ products that meet specific guidelines, including limits on calories, fat, saturated fat and sugar (Disney, 2006). By setting these nutritional guidelines they reduce the pressure to completely eradicate character endorsed food (the food is being promoted by the character it’s not a separate character brand of food) and continue to display its brand in front of children. Now Disney has in fact created a market opportunity for themselves in which their characters are marketing healthier food to children. In doing so they are ensuring parents continue to purchase their products as well as publicising that the motivation behind their efforts is to address and improve children’s health.

Thankfully due to increasing sensitivity to the ethical issues surrounding advertising to children, there has been an increase in regulatory attention. Quebec, Sweden and Norway prohibit all advertising directed at children of less than twelve years of age whereas Greece bans toy advertising on television until after 10pm (Strasburger, 2004). In Iceland, television advertising may not cause moral or physical harm to minors, while in Italy advertisements in cartoons are banned altogether (European Commission, 2011). In 1990, the Children’s Television Act was passed which limited the permissible commercial matter in children’s television programming on both cable television and network television to ten and a half minutes per hour on weekends and twelve minutes per hour on weekdays (Paglen, Hobson and Rosenbloom, 1999). These regulations have been successful in tackling the problem of exploitive television advertising targeted at minors and have allowed the punishment of those who violate such terms. In 2004, the FCC imposed a half a million dollar fine against Disney for showing more commercial material then allowed by the CTA (Calvert, 2010). Disney had over thirty instances in which advertisements of products were in some way associated with an episode which is deemed illegal in children’s programming. This regulation has forced companies such as Disney to use less heavily controlled methods of media.

With the advancements in today’s technology, online marketing is pervasive across all computing forms and is thriving on mobile phones as well as laptops and desktop computers. Mobile internet is an important channel for Disney to market through. According to (Ali, 2010) Disney.com is ranked as the number one entertainment mobile site with roughly thirty-one million unique visitors per month. Furthermore, Disney took fourth place in the 2009 Mobile Marketer of the Year with Mobile Marketer describing the organisation as a role model for outstanding use of mobile advertising and marketing (Mobile Marketer, 2010). Disney released a free application for the iPhone and iPod touch which installed a mobile gateway to all of the company’s online initiatives such as the provision of movie information, games and shopping tools. In addition to this, they released a number of applications which promote merchandise from films and famous characters such as the latest released “TronApp” and “Toy Story Mania”. Mobile Marketer (2010) comments that; Disney has found that ads promoting a specific TV show or movie are more successful than general Disney-branded ads. This can be seen as use of an effective marketing tool termed autobiographical referencing. Advertisers play off consumer’s memories and can cause consumers to focus less on rational production information and more on the feelings evoked by their recollected memories (Sujan, Bettman, & Baumgartner, 1993). By releasing applications that can be used on a daily basis involving the characters and the stories that consumers have enjoyed in the past, it reignites the connection between Disney and the user and encourages further consumption of Disney products and services.

Calvert (2010) commented that online environments are now and probably always will be less heavily regulated than more traditional forms of media. Disney has taken advantage of this lack of control in the online world by using it as an avenue for their advertising campaigns. In 1998, Disney acquired a 43% interest in Internet search engine Infoseek and by 1999 had acquired the remainder of the company (Ecommerce, 2001). This acquisition coincided with its strategy of broadcasting content over all available sources of media and propelled the redesign of the Disney website. With the re-launch of the website, Disney found a way in which it could maintain a connection with younger consumer groups with the addition of “Club Blast”. Subscribers can join Club Blast for $40 per year and gain access to premium content within the website, including BlastPad, a proprietary kid-safe instant messaging service that parents could control, and the Mouse House Jr., an area designed for children too young to read (Ecommerce, 2011). By introducing elements to the website that parents can monitor and control it is clear that Disney has adapted their advertising strategy taking into account particular ethical dilemmas when targeting children. To further target parents, Disney purchased several websites from Kaboose Inc. including popular websites such as Babyzone.com and Kaboose.com. This acquisition was predicted to more than double the traffic for Disney’s parent-oriented sites and reach nearly one in five mums online (Reuters, 2009). As mothers have a large say in household buying decisions they are an ideal target. With babyzone.com attracting mothers with babies and kaboose.com attracting mothers with young school kids, Disney are attaining a new demographic while still reaching their target market without facing any negativity when advertising to children.

Furthermore, Disney has taken a comprehensive interest in internet marketing research. Their approach is to study users who choose not to click the online advertisements rather than those who are frequent visitors to the advertised websites. This study is carried out in labs in where participants’ facial movements, heart rate and skin temperate are monitored in reaction to the provided web content. The researchers are not actually interested in the subject’s reaction to the reading content; they are watching the unconscious reaction to advertisements that are presented along with the content they are viewing (Esources, 2009). Through the tracking equipment used the researchers can see which adverts attract more attention than others and can measure the duration of a viewer’s focus on the advertisement. Upon evaluation, researches can then determine which form of advertisement is more captivating, for example video clips or picture banners on a website, and whether the level of attraction is enough to release the advertisement. Evidently Disney are investing a large amount of time, money and resources into ensuring that their advertisements appeal to as much of their target audiences as possible. Advertising Age estimated the global measured expenditure of $1.44 billion in 2009, making Disney the world’s twentieth largest advertiser (Ad brands, 2011).

Lantos (2001) defines the practice of being ethical by avoiding societal harms by fulfilling the corporation’s ethical duties, when taking this into consideration it is evident that Disney are not meeting these duties. Disney aggressively target children and young adolescents with the use of sophisticated advertising strategies broadcasted across multiple forms of media. The essence of the brand is to support family values, and recognising a change in society’s reaction to the pervasive influence of advertising on children have adapted there strategies to at least appear to be aware of the ethical considerations it should be implementing. Disney have reacted to this pressure by seeking out new forms of media which are less regulated to advertise through, this is a cynical reaction in which Disney are protecting the image of their brand while still unethically targeting children. In addition, Disney moderate their advertising in support of the fast food industry by withholding their endorsement of products which fail to meet their stringent nutritional guidelines, while still promoting endorsed products that do meet their nutritional guidelines thus still using their brand image to reach children. It is clear that Disney has altered its communications mix in response to society’s increasing ethical concern but remains intent on aggressively promoting itself to children and by so doing I believe it is continuing to operate unethically.

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