Download Dr. Patrick Kenny, School of Marketing DIT Opening Statement

Joint Committee on Health and Children
Opening Statement
Dr Patrick Kenny
School of Marketing, Dublin Institute of Technology
Tuesday 24th March 2015
Good afternoon. I am very grateful to have this opportunity to address the
Committee and to discuss the marketing elements of the Public Health (Alcohol) Bill.
I believe that this is an important and timely piece of legislation that deserves
support.
By way of brief introduction, I am a lecturer in strategic marketing and management
in the Dublin Institute of Technology. My PhD, from the University of Stirling, is on
the impact of alcohol marketing on young people.
In my opening statement I wish to address a number of fundamental principles that
legislators should bear in mind when considering the marketing components
contained in the Bill.
1. Marketing is more than just advertising. There is a tendency for non-marketers
to focus almost exclusively on advertising as if it was entirely synonymous with
marketing. In reality advertising is just one part of what is known as the
“marketing mix”. At its most basic level, marketers refer to the “4 Ps” of
marketing – Product, Price, Place and Promotion. Each of these 4 Ps can be
manipulated by marketers to bring about a change in sales and brand
positioning. Advertising is one part of the 4th P – promotion – along with
sponsorship, sales promotions, direct marketing, personal selling and public
relations. And in turn, advertising can be further sub-divided according to the
communications channel used – television, newspapers, outdoor, online etc.
Marketing is considerably broader and more complex than the single issue of
advertising.
2. The different elements of the marketing mix are closely integrated. The many
different elements of an effective marketing plan are not considered in isolation,
but are designed in an integrated and mutually reinforcing manner.
3. Marketing is changing as technology offers new communications channels. The
days when television advertising was the dominant communications channel are
long over, especially when it comes to alcohol marketing. For example, in 2010
Diageo announced that 21% of its marketing budget would be diverted to online
marketing. Other alcohol companies and brands have followed a similar strategy.
There are a number of reasons for this. In the first instance, it allows for more
effective targeting of consumers, especially via social media. For this reason,
some brands have shifted most of their online marketing budget away from
traditional websites and towards social media. Secondly, its interactive nature
makes it arguably more effective than traditional passive advertising methods. It
is worth noting that digital marketing operates largely “below the radar” of
policy makers because they do not form part of the target audience. This means
that there may be many digital marketing initiatives that regulators and policy
makers are completely unaware of, making it is significantly harder to regulate.
4. Marketing and advertising are not a form of corporate philanthropy. Marketing
exists to drive sales. It may have other objectives related to brand positioning,
but these sub-objectives are a means to an end, not an end in itself. The ultimate
aim is greater market share, revenue and profit. These increases in market share
and sales revenue can come about through (i) attracting customers away from
competitors; (ii) by recruiting entirely new consumers or (iii) encouraging existing
consumers to buy more of the product.
5. Marketing works. It’s not hard to find those who argue that marketing doesn’t
work because they think they themselves are not influenced by it. In reality we
are all influenced by marketing to a greater or lesser extent. Often it is those who
are younger who tend to be most influenced by marketing, perhaps because they
haven’t formed individual consumption habits or because marketing, and the
media more broadly, is used as a guide to “fitting in”. Globally, there are tens of
billions of euro spent every year on marketing. These data-driven marketing
campaigns are carefully researched, designed and executed and they work.
6. In particular, alcohol marketing works. There really is no longer any debate on
this matter. Some may argue that alcohol marketing works merely by stealing
market share from competitors. This is partly correct, but it is only one way in
which marketing works. We now have a range of longitudinal studies from
different countries that have followed young people over time, tracking their
exposure to marketing and their subsequent alcohol consumption. Longitudinal
studies are important because they can establish causal relationships. These
studies clearly indicate that the more alcohol marketing young people are
exposed to, the more likely they are to start drinking and the more they are likely
to drink if they are already drinkers. From a scientific perspective, there is no
longer any serious debate about whether alcohol marketing drives consumption.
7. Young people are especially susceptible to the influence of marketing. More
needs to be done to protect children from the influence of marketing in general.
This really is an important children’s rights issue. Specific steps that can be taken
in the alcohol field include lowering the advertising audience profile threshold
for under 18s to less than 10%; implementing the proposed ban on outdoor
alcohol advertising and initiating a ban on the sponsorship of sport by alcohol
brands. These last two – outdoor advertising and sports sponsorship – are
especially important because they are indiscriminate in nature and in the
absence of a ban it is not easy to protect minors from exposure to marketing.
8. Commercial sponsorship is not a form of charitable giving. It is a carefully
designed and well-resourced commercial activity aimed at brand positioning and
increasing sales. To give some idea of the commercial significance of
sponsorship, in 2013 approximately $60 billion was spent on traditional product
advertising in the United States, while $20 billion was spent on sports
sponsorship across all product types. Sponsorship is serious business.
Sponsorship works by appropriating the image of the sport or team and applying
it to the brand in question. It is arguable that sponsorship is even more effective
than traditional passive television advertising precisely because of the strong
emotional link fans have with their sport or team. The influence of sponsorship
may also be compounded by the exposure to branded merchandise that
accompanies many sponsorship deals.
9. On a related note, there is much media comment at the moment about
responsible drinking campaigns sponsored by the alcohol industry. These
marketing campaigns are part of the political and PR background against which
the debate on the Bill is taking place, and as such are worthy of comment. It is of
course possible to interpret these initiatives as a genuine attempt to tackle
Ireland’s problematic drinking culture. But it is also possible to come to a
different interpretation. It is worth remembering that the tobacco industry
adopted a defensive and reactive stance when it first came under public scrutiny
some decades ago. It is now tightly regulated. The alcohol industry may have
learned from the experience of tobacco regulation. It has adopted a more
proactive stance, especially whenever new statutory regulations are on the
horizon. The worthwhile Central Copy Clearance system was proposed by the
industry in 2003 at a time when alcohol advertising was coming under heavier
scrutiny. In 2005 the co-regulatory codes agreed between the Department of
Health and Children and the alcohol industry were agreed on the eve of
legislation being published to control alcohol marketing. As a result of this
initiative, the planned legislation was shelved. And now a new high profile
campaign has been launched concurrently with the publication of the Public
Health Bill. Perhaps the timing of all of these initiatives is coincidental. But an
alternative explanation is also possible, namely that they are timed and designed
to placate policy makers and to brand the alcohol industry as responsible
stakeholders who should not be too tightly regulated.
10. If alcohol companies wish to promote a safe drinking campaign, they could more
credibly do so by opting not to have seats on the board of the social aspect
organisations they fund and by not having corporate logos associated with these
campaigns. Failing to take these steps naturally invites one to assume that it is a
clever exercise in corporate branding. In any event, the alcohol industry might
also wish to explain how it can simultaneously maintain that tens of millions of
euro spent promoting alcohol does not lead to increased drinking but that one or
two million euro promoting safe drinking will lead to less drinking. It seems hard
to reconcile two such contradictory positions.
This concludes my opening statement. I thank you for your attention and I look
forward to answering any questions you may have.