Sustained Advertising Promoting Unsustainable Consumption

Sustained Advertising Promoting Unsustainable Consumption - Transcript

BRIEFING PAPER

CONSUMER UNITY TRUST SOCIETY No 2 April 1996

Sustained Advertising Promoting Unsustainable Consumption
Introduction
Dramatic changes have taken place in India s market place in recent years At one end of the spectrum even poor Indians are snapping up various consumers goods in millions every year At the other end thrift is no longer a virtue even among middle class Indians The buy now pay later culture has taken roots in India mainly due to innovative marketing strategies and aggressive advertising Result the consumption patterns of Indians are slowly moving towards unsustainable levels while resources as domestic savings are depleting at an alarming rate This Briefing Paper analyses the adverse impact of advertising on consumption patterns and suggests measures to regulate the same so as to enhance sustainable living

Advertising And Creating Needs
Considering the pace of change in telecommunications it is possible for people living across the seas and continents to simultaneously receive the same kind of advertisements As it happened for the first time in the world in 1990 when love thy neighbour or thou shalt not kill ad of DRINK COKE took the world by surprise Total global advertising expenditures multiplied nearly seven fold from 1950 to 1990 They grew one third faster than the world economy and three tie faster than world population In real terms spending rose from 39 billion in 1950 to 256 billion in 1990 This is more than the gross national product of India or than all third world governments spend on health and education Measured in per capita terms the total of 5 5 billion people representing nearly 6 000 distinct cultures are now soaking in the same gentle bath of advertising The growth of advertising is equally marked In 1950 advertisers spent 15 for each person on the planet while in 1970 they spent 27 and in 1990 48

Owing to skillful and persistent marketing the Coca colonization has perhaps reached more third world villages and slums than has clean drinking water or oral rehydration formula Advertising is fast growing in the third world though it remains small scale by western standards Expenditures in China are less than 50 cents per person Yearly ad billings in India jumped fivefold in the eighties surpassing 1 per person for the first time In Latin American countries such as Mexico and Brazil ad outlays are about 25 per capita

900 Million Consumers In India
Here are some facts on India A path breaking study Indian Marketing Demographics conducted by the Delhi based National Council for Applied Economic Research NCAER and released in Feburary 1996 provides some interesting figures There are over 900 million Indians Nearly 780 million users of cooking oil Over 760 million consumers of tea 450 million buyers of casual footwear Forty million television owners Twoand a quarter million automobile owners All these numbers are growing in double digit percentage every year

How much of the growth is influenced by realising the potential of the facility sustained advertising Researchers funded by the advertising in print and electronic media sold it International Development Research Centre as the convenience card In one of the IDRC of Canada attempted to find this out among advertisements a popular teenage sports star children in India s capital exhorts television viewers city in early 1996 The with this line I have got Thumbs down results were revealing my Visa card You go get Almost 75 of children in Here is a tragic example of how ads influence yours the 8 15 age group say they children In an advertisement of Thums Up a want to own products cola drink marketed in India by Coca Cola a It is not only credit cards advertised on TV Asked to male model performs a bungee jump from a hill but easy instalment name their ten favourite to pick up a soft drink bottle from a passing schemes for purchasing ads they named detergent truck He bounces back to the cliff with a automobiles which is and even airline ads rather thumbs up sign and a bottle to the wild cheers spurring an upwardly than those for toys games of his friends mobile population Scores sweets or food products of buy now pay later Six year old Akash the only son of a middle companies have sprung Many parents living in class couple in the Indian city of Lucknow tried up with hire purchase crowded Delhi slums felt to imitate the model on his birthday in early schemes which offer they knew little about the April He jumped from the third floor balcony cheaper credit than the India they see on TV of his house to amuse his friends and pick up a traditional hire purchase Frustrated they admitted soft drink bottle from a passing truck This time financing firms Result they now encouraged their there were no wild cheers from friends but Indian roads are getting children to watch TV rather consternation For he crashed onto the choked with automobiles hoping it will prepare them road and died His grief stricken parents are while accidents and for the world they must inconsolable pollution are increasing at grow into One can a very fast rate Delhi is imagine the impact of advertising on the poor now considered to be more polluted than even Mexico City and the national road accident death rates one of the highest in the world Buy Now Pay Later Culture Nothing illustrates the changing consumption patterns better than the swelling numbers of credit cards or plastic money holders in India Five years ago the number of credit card holders in the country were just a handful At the end of 1995 India has over 1 2 million credit card holders concentrated in just five of India s 400 large cities New Delhi Madras Calcutta Bangalore and Mumbai formerly Bombay The number is growing at the rate of 25 per cent a year in the last five years With the penetration level among potential users just 25 per cent the industry is optimistic about the number of credit card holders zooming to at least 7 5 million in the next four years The impact of this phenomenon on consumption patterns is dramatic With the absence of constraint of having to find money before buying Indians have been in a splurging mood these days In the 1990 the billings from card holders was just Rs 2000 million about US 100 million At the end of 1994 it has increased ten times to Rs 20 000 million US 700 million at current exchange rates How did this transformation occur Initially credit cards were marketed as a status symbol But
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Boom Times For Ad Industry
The boom in India s advertising industry provides a clue to the changing consumption patterns The industry is growing at an amazing 35 per cent rate every year since 1991 when India began to liberalise her economy A company that spends Rs 10 million a year for advertising was considered a big spender in 1990 But today India s top five advertisers spend five to 15 time that amount in a single year For instance India s top advertiser is the Unilever group the international consumer goods giant which spent Rs 1500 million on ads in 1995 The other top spenders were domestic consumer electronics leader BPL Rs 600 million Procter and Gamble Rs 550 million tobacco giant and BAT subsidiary ITC Ltd Rs 400 million and electronics major Videocon Rs 300 million Substantial increase in media costs too have not deterred the advertising spree in recent years The cost for inserting a black and white advertisement for each column centimetre in Delhi s largest selling daily The Hindustan Times increased by 58 per cent in the last one year And that for the country s largest selling national daily newspaper The Times of India has increased by 47 per cent Yet the ratio of editorial to advertisement in these newspapers has not changed significantly from

55 45 It costs nearly 20 000 for a half page advertisement in India s No 1 business newspaper The Economics Times and the cost is increasing approximately by 30 per cent every year From a standard 16 page newspaper till five year ago The Economic Times today comes out in atleast 32 pages on an average each day with many colour supplements as add ons to accomodate to demand from advertisers

Mapping the ownership and purchasing patterns of a stupendous 281 768 number of people and 18 730 genres of consumer goods and services it reveals the dynamics that rule the vast Indian market place The structure of the Indian society has an impact on the consumption patterns According to the NCAER study Indian society is essentially divided into five categories At top of the Diamond structure is the Very Rich comprising six million the Consuming Class accounts for 150 million the Climbers contribute 275 million the A spirants number another 275 million and the Destitute comprise 210 million
Note About one million households at an average of 5 6 persons per household

Modernity Overtakes Tradition
But what is creating this boom Take for instance toothpaste Till recently in rural India people used neem twigs as a paste less tooth brush And some use medicinal preparations as tooth powder Today the colour TV ads hardsell the healthy advantages of using angled plastic toothbrushes made from Du Pont bristles and mint flavoured toothpastes to the virtues of using foaming fluoride based tooth pastes Some 250 million tooth brushes were sold in india in 1995 Tooth paste consumption increased from 39 610 tonnes in 1993 to 43 000 tonnes in 1994 The rural share of toothpaste is now 38 per cent an increase of 10 percentage points in six years According to a McKinsey report on India s consumption patterns Indians have given up many of their traditional items used as soaps shampoos or medicinal remedies Now there are 100 popular premium soaps 60 shampoo brands and cough lozenges Very few Indians used these items few decades ago From a handful now there are 60 packaged teas available in India India the world s largest producer and exporter of tea now plans to import tea to cater to the rising domestic demand Slick advertising has definitely played a major role in promoting the consumption of these items The national advertisement spends on toilet soaps on Indian television has increased from Rs 230 million in 1993 to Rs 370 million in 1995 In the case of tea the TV ad spend was Rs 130 million in 1995 against just Rs 75 million in 1993 Ad spends on toothpaste has doubled to Rs 220 million in 1995 from Rs 110 milion in 1993

Over the years the bottom layer will narrow further while the top expands thus approximating the diamond shape even more closely This shape is indicative of a larger workforce with lower dependency levels than today s because of fewer childern under 15 Indian government s latest National Sample Survey indicated that based on a certain definition of poverty the number of households living below the poverty line has declined from 40 per cent in 1988 to 25 per cent in 1995 But the proportion of products owned by households in the lowest income level indicate a different type of consumption Forty per cent and above own portable radios mechanical wrist watches and bicycles Between 30 and 39 per cent own table fans Between 20 and 29 per cent own mono cassette recorders black and white TV sets pressure cookers electric irons quartz wrist watches ceiling fans and sewing machines Between 10 and 19 per cent own motorcycles mopeds colour TVS and mixer grinders Ten per cent own scooters and refrigerators



The New Indian Classes on the Basis of Consumption
The NCAER study cannot be taken lightly It is the most comprehensive survey of India s consumption patterns to date The study covered 515 cities and 182 599 households in urban areas Further surveys were done in 820 villages across 410 districts and 99 169 households in rural India





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Just take the case of refrigerators One of the earliest durables introduced in India the sales grew at a snail s pace till mid 1985 There was little to differentiate between the products of the top four manufacturers In fact in the first two years of the 1990s the sale of refrigerators actually fell to 1 04 million units However introduction of new models and competitive advertising changed this The sales grew 15 per cent each in 1993 and 1994 and is now estimated at 1 5 million units With manufacturers launching more ad blitz the industry expects sales to grow 20 22 per cent a year to at least 4 million units by the year 2000 In 1990 India accounted for less than 3 per cent of the world s consumption of ozone depleting chlorofluorocarbons CFCs used widely in refrigerators But if the current growth rate of the industry continues the CFC emissions will also increase dramatically unless substitutes are used Similarly very few households can afford airconditioners with just 230 000 units sold nationally in 1995 even though India s climate is dusty and hot for a major part of the year About 90 per cent of the buyers were from the corporate sector Marketers have now through aggressive advertising enticed many households to buy airconditioners Introduction of small models of 0 5 and 0 75 tonnes to fit the smaller Indian households is likely to lead to a boom in sales to 750 000 to 900 000 units in another four years It is difficult to visualise the impact on the highpolluting and power starved national economy due to this factor at this point of time

Impact The honey gatherers who are mainly tribals and other small producers get very little return for selling the commodity and the corporate sector will reap the rewards of their toil Soon there may even be a shortage of honey because the unorganised production sector cannot cater to a rapidly changing market 2 Electric Rice Cooker For over 50 per cent of India s 900 million population rice is the staple diet Rice is normally just boiled in aluminium or stainless steel vessels or in pressure cookers Rarely fried In the 1990s a Japanese electronics giant National introduced an electric rice cooker in the country backed by aggressive advertising promoting an easy life style Now a large number of urban households are switching over to the Japanese way of cooking rice in electric cookers In 1993 atleast 125 000 electric cookers were sold Each cost about US 60 or about one fourth of the average income of an urban middle class household It has increased to 200 000 units in 1994 A leading marketing agency has predicted that its sales will increase to 7 8 million units by the year 2000 Just another item that will add to the everincreasing demand for electricity and the associated problems of environmental pollution India is a power starved country Nearly 80 000 MW is not enough and power outages is a frequent occurrence throughout the country Portable and big diesel generators hum throughout Indian cities whether it is summer or winter According to current estimates India will have to produce at least 300 000 MW by the year 2020 to cater to the rising electricity demand 3 Baby Foods Indian babies are usually breast fed for upto 18 months and traditional cereal based foods are given from the age of six months In 1989 a Swedish food processing multinational firm introduced its milk based cereals It is a major advertiser in both the electronic and print media Flexi packaging and other gimmicks now help the company sell 11 000 tonnes of this cereal every year Mothers find this packaged food more easier to give to their babies rather than prepare the traditional cereal food 4 Soft Drinks A popular Indian thirstquencher is lime juice In summers it is sugarcane juice or just plain water Thanks to the widespread availablility of a variety of fresh fruits round theyear Indians normally consume large quantities of fruit juices

How Advertising Has Changed Consumption Patterns
There are some case studies which indicate how advertising has changed the consumption of some traditional items used by Indians 1 Honey This commodity is available in plenty in the informal markets of India This forest produce provides considerable income to large number of tribals Indians used honey as a cough palliative skin conditioners and as an ingredient in many ayurvedic preparations indegenous medicine system The annual market is estimated at 8 000 tonnes Things changed in 1980s when a Delhi based company started to package and sell it under its brand name Dabur Aided by aggressive marketing the company sold 247 tonnes in the first few years Ever since it started national advertising the sales have zoomed to 1 200 tonnes a year
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Not any longer Since the entry of the world s two soft drink rivals Coca Cola and Pepsi Indians no longer rely on their traditional thirst quenchers These two soft drink majors are known worldwide for their aggressive marketing They sponsor everything from national to school level sports events music concerts or cultural events bus and traffic kiosks You name it So they along with few India s home made bottled soft drinks sold over 120 million cases of 24 bottles each in 1995 The market has been growing at 56 percent a year The growth will be sharp at a compound rate of 17 percent and experts expect Indians to guzzle more than double the volume of fizz they do now about 250 million cases Nearly 90 percent of these drinks are consumed at the point of sale Now the companies have turned their attention to promote home marketing And that should increase the sales even more dramatically 5 Chocolates Till recently chocolates were promoted as a sweet reward for children Now it is marketed also a nutritious snack among adults Doing away with the guilt grown ups feel about eating chocolates which they feel is akin to stealing a child s food is the new trend The impact is already felt Sales grew by 13 percent to 10 000 tonnes between 1992 and 1993 The market size is expected to zoom to 18 000 20 000 tonnes by the year 2000 at a compounded annual rate of 15 percent

cuts across various regions and language groups and runs into a few hundred million for each week s telecast No wonder the rural share of talcum powder consumption is now 44 percent The purchase of wrist watches increased from 3 5 million in 198687 to over eight million by 1994 with the rural share increasing from 43 to 50 percent As the purchase of mechanical wrist watches grew from 6 2 million to 10 5 million rural buyers maintained their share at 75 percent The rural share of cigarette purchases too grew from 53 to 60 percent There are many products for which dominant purchases are now from rural India Over 70 percent of bicycles portable radios and mechanical wrist watches Between 60 and 70 percent of table fans and sewing machines Between 50 and 60 percent of black and white TVs quartz wrist watches and cassette recorders Between 40 and 50 percent of mopeds motorcycles pressure cookers electric irons and ceiling fans



The biggest increase in rural purchase in 1993 was of black and white TVs colour TVs and pressure cookers all products with large increases in the proportion of rural purchase between 1985 and 1993

Impact on Rural India
In the 1990s increased urbanisation has blurred the urban rural divide Increased migration to cities and industrial townships has increased the knowledge of rural consumers about modern consumer products Further the reach of national terrestrial television which transmits from over 650 locations and more than a score of popular national and transnational satellite television channels too bring the colour images of modern living into the remotest corners In March 1996 the telecast of a popular Hindi movie on the national television network Doordarshan during a weekend stretched for over 240 minutes Because the 150 minute film was interspersed with ads of a variety of consumer goods every few minutes There was a record ad insertions which totalled 90 minutes Each 10 second ad spot costs about half a million rupees But there are no dearth of advertisers To keep the ads down because of strindent criticism from viewers the network had raised the ad rates many times in past 12 months But nothing seems to deter the advertisers because the viewership

Conclusions
The trend is clear Aggressive advertising is altering Indian consumption patterns irrevocably More dangerous is the focus on children in advertisements According to a study in April May 1992 35 percent of all TV ads were using children to attract consumer interest and a large proportion were targeting the child viewer specifically Advertisers in India are frank about their strategy of instilling brand loyalty in the minds of young children They are preparing children to become dutiful consumers tomorrow So children sell two minute noodles latest electronic gizmos such as cellular phones or stereo systems soft drinks and foot wear on TV The Paris based International Chamber of Commerce the biggest membership body of business has also published a 19 article code of advertising practices in 1980s aimed at promoting high ethics by self regulation also provides for guidelines for advertising addressed to children Like most of ICC s solemn guidelines it has no teeth and its members have no desire either to follow them
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An equally dangerous trend is the displacement of less affluent viewers who no longer identify with the imagery people scenarios language dress and lifestyles of characters on television For most of the television soap operas and serials and the advertisements are set in the backdrop of well equipped affluent upper middle class or middle class homes So the TV ads are excluding already marginalised people and pushing them to the fringes of the society The United Nations in a report of a study done in Asia Pacific developing countries in 1990 warned governments of the need to protect consumers

from exploitative advertising describing the existing system as pernicious Even with the consumerist revolution touching only less than a fourth of India s population the unit number of many consumer products sold are staggering As consumerism catches up aided by aggressive ads the levels will go up even further More importantly as more and more Indians try to catch up with their western counterparts the consumption levels of natural resources will become more and more unsustainable This may soon lead to breakdown of social systems and catastrophe

Recommendations
Concerned by the chaotic trends and mounting unsustainability of consumption patterns as a social action group CUTS demand that The international community develop analyses and synthesis of the impact of advertising on consumers which promote unsustainable consumption patterns and develop regualtions to curb them Governments and regulatory agencies stop advertisements and marketing efforts that aim to create needs of products instead of just informing potential customers Governments ban advertisements worldwide that use children to promote products which are remotely connected with their needs Ban advertisements that accentuate class differences and promote unsustainable lifestyles of the rich and the famous Ensure that advertisers follow an enforceable code which provides opportunities to portray various segments of the society and not marginalise the already dispossessed people Ban ads that accentuate gender race income inequalities and those which rely on violence gimmicks and glamour to promote products





This is the first of a series of briefings on advertising and unsustainable consumption patterns Contributions and comments on this draft are invited which will enable us to take forward this movement
CUTS 1995 These briefing papers are being produced by CUTS under a grant from the Friedrich Ebert Stiftung for a programme the South Asia Watch on Trade Economics and Environment SAWTEE to inform educate and provoke action Readers are encouraged to quote or reproduce material from this paper for their own use but as copyright holder CUTS requests due acknowledgement and a copy of the publication
This briefing paper was originally written for a presentation at a parallel meeting during the UN Commission on Sustainable Development April 1996 by Mr N Suresh of The Times of India for Consumer Unity Trust Society 3 B Camac Street Calcutta 700 016 India Ph 91 0 33 297391 292786 Fax 91 0 33 297665 4662785 Email CUTS LWBBS COM

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