Food Marketing: Impacts on Consumer Choice

I keep hearing people say that advertising doesn’t drive demand for certain, mostly highly processed food products. They claim that everyone has the freedom to choose. That no one is holding a gun to their head to eat Twinkees or Doritos.

Granted, most of the people I’m hearing this from are defending a position in today’s industrial food system that will likely be negatively impacted if status quo shifts, which partially explains the defensive reactions.

In fairness to them, and to make sure that everything I learned in business school and nearly 20 years of marketing, I found data to help people better understand the massive role advertising plays in building demand. Consider the following information from AdvertisingAge’s Marketer Tree 2009 survey (2008 data), which includes the more popular brands these dollars are supporting.

Food Manufacturers

  • Unilever: $2.4 billion on advertising; $59.6 billion in sales (Bertolli, Slim-Fast, Hellman’s, Ragu, I Can’t Believe It’s Not Butter, Bryers, Klondick, Ben & Jerry’s)
  • Kraft Foods: $1.3 billion on advertising; $42.2 billion in sales (Oscar Mayer, Oreos, DiGiorno, Ritz, Chips Ahoy, Lunchables, Nabisco, Kool-Aid, Cool Whip)
  • PepsiCo: $1.3 billion on advertising; $43.3 billion in sales (Gatorade, Quaker, Lays, Tropicana, Tostitos, Sun Chips, Doritos, Cheetos, Frito-Lay, Fritos)
  • Nestle: $1.2 billion on advertising; $101.8 billion in sales (yes, >$100 billion!; Stouffer’s, Lean Cuisine, Juicy Juice, Hot Pockets)
  • General Mills: $1.2 billion on advertising; $13.7 billion in sales (Yoplait, Pillsbury, Progresso, Betty Crocker, Totino’s, various cereals)
  • Kellogg Co.: $820 million on advertising; $12.8 billion in sales (various cereals, Eggo, Cheez-It, Pop-Tarts, Town House)
  • Coca-Cola Co.: $752 million on advertising; $32.0 billion in sales (Minute Maid, Simply, Powerade, Sprite, Fuze)
  • Campbell Soup Co.: $711 million on advertising; $8.0 billion in sales (Pepperidge Farms, Swanson, Pace, Prego)
  • ConAgra Foods: $352 million on advertising; $11.6 billion in sales (Healthy Choice, Hunt’s, Reddi-Whip, Pam)

Food Retailers/Supermarkets

  • Wal-Mart: $1.7 billion on advertising; $401 billion in sales (yes, sales >$400 billion)
  • Kroger Co.: $532 million on advertising; $76 billion in sales
  • Safeway: $420 million on advertising; $44 billion in sales

Leading Fast Food Companies

  • McDonald’s: $1.2 billion on advertising; $23.5 billion in sales
  • YUM Brands: $960 million on advertising; $11.3 billion in sales (KFC, Long John Silver’s, Pizza Hut, Taco Bell)
  • Wendy’s/Arby’s: $453 million on advertising; $3.6 billion in sales

Looking at this list and considering the incredibly sophisticated advertising and marketing methodologies being employed by these companies and their respective ad agencies, are there still questions regarding the huge influence this has on “choice?”

Yes, people have free wills and Constitutional freedoms, but we’re also highly susceptible to outside influences, e.g., >$15.o billion spent by these companies to build profitable demand for products (see Billion Dollar Club below for list of Top 100 food companies).

To suggest otherwise is naive or, worse, deceiving.

Related Information:

Rob Smart is a food entrepreneur focusing on regional food systems and consumer retail experiences. He blogs on alternative food systems at Every Kitchen Table and Civil Eats (guest blogger), and micro-blogs on Twitter as Jambutter.

23 responses to “Food Marketing: Impacts on Consumer Choice

  1. Your implication is that people would never eat convenient/fast food if McDonalds didn’t advertise to them is naive. (I’m using the word because you did)

    McDonalds produces a product which there is demand for. When they advertise they simply inform you of what products they have available in hopes that those products meet your unique needs. They don’t lie and tell you it’s a low-calorie dieting solution. They tell you it’s fast, they tell you it’s delicious, they tell you it’s consistent. No lies there, no demand is being magically created.

    The same is with Nestle, PepsiCo, or whatever company you want on your list. Nestle took Grandma’s chocolate treats, shrunk them down, made them easy to purchase, easy to eat, and easy to carry somewhere. They didn’t CREATE demand for sweet treats, they made it more available and tried to convince you to eat THEIR treats, not the competitions.

    Many of the companies on this list simply made every day products that we all consumed more available, more affordable, more tasty, etc.

    They do not pretend to be ‘good for you’, or to make you lose weight, but all of the nutrition facts are right on the label, decide for yourself.

    • Must be Derek, since you are putting words into my mouth yet again. Find in the post you commented on anywhere that I say “people would never eat convenient/fast food if McDonald’s didn’t advertise.” You can’t.

      Regarding McDonald’s, I imagine you haven’t read Fast Food Nation, but if you have then you know that the product McDonald’s started with was a fresh, local burger with all the fixins. Once the original founders sold out to Ray Kroc, the chain went industrial and changed fast food forever. What goes into making the products is not transparent in ads, product packaging or in the stores. Like GE ingredients, McDonald’s knows that telling people what’s really in their food will significantly hurt demand, so the do everything thing they can, including massive advertising expenditures, to distract consumers’ attention.

      With that, I will agree that you and I disagree, and move on.

      • I hope I didn’t misrepresent what you were trying to say, that was certainly not my intention. I make it a point not to do that, because it makes conversations ever so difficult.

        You said: “They claim that everyone has the freedom to choose. ” and you’re opinion contrasts with this (or else… why the article?), so obviously you’re belief is that consumers DON’T have the freedom to choose and that demand is being created out of thin air when a company advertises their product.

        What you’re missing is the most obvious part here. People don’t eat fast/convenient foods simply because they saw an ad for it, they eat it because they want fast/convenient foods, and were made aware of a way to meet this need by the ads. There are all sorts of ads for slow restaurants and they have their own consumers too…

        I know all about Fast Food Nation. The bottom line is that it doesn’t matter if McDonald’s started out serving fresh steak sandwhiches right off of the steer, the reason they’re huge now is because they made consistent product, that people enjoyed eating, and they could make it fast/convenient! They saw a demand for fast convenient food, and built themselves as the ‘obvious’ choice to meet this demand. As with all free market companies that provide what consumers demand, they were rewarded with wealth and the ability to grow their business.

        Some people, me included, try to avoid fast food restaurants because the food isn’t what my lifestyle needs. For others, McDonald’s is a great asset providing them with affordable food that they can grab on the run. Whether that food is good for them is their own concern. They’re aware of the calories involved. They’re aware that eating celery would be better for them, etc.

        What I find particularly concerning is that if you follow your thought process along to the logical conclusion, it would seem that you would support advertising for your ‘healthy foods’ but not for their ‘unhealthy foods’ which would seem to be a form of fascism to me. One group of people deciding what’s best for another group of people and using the government as a strong arm to ensure that it happens that way. Please, if I’m wrong, I really want to know it. I hope no one thinks like this, but I can’t see a way out of it.

        And if this isn’t true, then why go after farmers? Why go after corporations producing food? Why not go after consumers and try to change their mind? We will grow, we will produce, whatever consumers demand… that’s a business fundamental. I only ask that you don’t use fear (as people have done with GMO’s even though there is no scientific evidence (via WHO) that they hurt anyone at all) as your main sales method.

        You make it sound like there were no sweets or unhealthy treats around before corporations got involved. Is this your real opinion? Please discuss what I brought up earlier: “The same is with Nestle, PepsiCo, or whatever company you want on your list. Nestle took Grandma’s chocolate treats, shrunk them down, made them easy to purchase, easy to eat, and easy to carry somewhere. They didn’t CREATE demand for sweet treats, they made it more available and tried to convince you to eat THEIR treats, not the competitions.”

      • Derek: I don’t see things in black-and-white terms, e.g., no junk food before industrial food. The point of this post was to show the massive annual investment (>$30 billion per year) made by food manufacturers (primarily junk food, snacks and sodas), food retailers, and fast food companies, all motivated to achieve the same thing: sell as much mostly processed food (provides highest profit margins) as fast as possible.

        The problem with your argument (and others repeating the same worn out defense) is that you overly simplify choice, so that you can hang your hat on it. You also underestimate or avoid talking about the rapidly growing negative impact that processed foods are having on Americans’ health. At some point, the downward spiral associated with the Western diet you continue to defend will pull us down unless we break free.

        I am not willing to let things crash around us without a substantial effort to change things for the better. That is what’s behind the emerging “Pro Food” agenda I and others are advocating. An agenda, by the way, that is evolving and gaining steam through the collective efforts of farmers and consumers.

        So, I guess we still don’t agree, and I’m fine with that, primarily because I am confident things are trending favorably toward Pro Food. I just wish conversations like ours could stop wallowing in the weeds and instead focus on solving problems. Perhaps that day will come, hopefully sooner than later.

  2. Does anyone really eat at McD’s because they think it is healthy? It is a choice and for one, I chose to have a greasy double cheeseburger with fries and a coke today. That was my choice. Do I eat this everyday? No. Do I eat this every week? No. Do I even eat this every month? No. But today, that is what I wanted. No one has the right to dictate to me what I can or cannot eat. I choose, for me.

    And before you even say so, yes I know exactly what goes into their food. I am a food processor.

    All business’ spend heavy amounts on advertising. You are only pulling out the ones that you want to make a point with.

    Large or small, healthy or not, food or not, advertising is a necessary expense in order to remain viable. Business101.

    A better marketing strategy for you would be to convince consumers of your argument. Business only sells what consumers buy. Word of warning, scare tactics do not work on the majority of the population. You will need to back with sound science and not “junk science” to get mom on board.

    I’m mom, by the way.
    My choice! Not yours!

  3. Turn off, disconnect and throw away the TV.
    Disable Javascript and plugins to stop web ads.
    Ignore the newspaper and magazine fliers and ads.
    Make rational choices.
    Very doable.

    Advertising is wasted on our family. Meanwhile we can thank those big corps for injecting all those billions of dollars into the economy to keep all those people employed. :)

  4. This information is amazing! I just got in from baling hay and now I have a great idea for how I am going to sell it! I am going to spent alot of money in advertising to people that it is the best thing to eat since slice bread! it taste great, and raised in a field in the country by a local farmer.
    I think that I will package it in bags and label it “dried salad” it is a perfect substitute because it will have a lot larger shelf life.

    Okay, I am being really dramatic and sarcastic here, but get my point? It dont matter how much I spend in advertising, if people dont want to eat hay they are not going to buy it!

  5. I am not sure the advertising is as persuasive as the food science. Sure, humans like sweets and fats and individuals cannot shirk their responsibility for eating too much of those things.

    But the real change in the modern food system is the massive amount of products that were precisely engineered to contain the perfect amount of sugar and fats to make folks crave another serving of those things: our brains can shield themselves from TV ads, but engineering foods to make them cravable is a whole nother thing.

    I respect Rob but by focusing on marketing he misses the thing that makes marketing successful – food science – and what makes that science successful – deceptive or nonexistent labeling.

    • Margie: I caught your comment just before going to bed, and wanted to quickly respond. I agree. The ability of food science to create Pollan’s “edible food-like substances”, capable of standing in for real food in terms of taste, texture, etc., gives food companies products to market in the first place. Great point!

      Mike: All I can say for now is that I’m glad you had a great day haying. And that your idea to create “dried salad” from hay has potential if you apply the right food science first, followed by a multi-million dollar ad campaign. Cheers!

      Walter: As always, I appreciate your comments, especially since my family is very much like yours as you described advertising being a waste on your family.

      Amy: Not sure how you got “scare tactics” and “junk science” from my post. Perhaps you can further enlighten me and my readers.

  6. stonybrookfarm

    Rob,

    I actually don’t think your argument is supported by the numbers you have included in this post. While it might seem like a lot of money — ie, >$15 billion — it only amounts to 1.7% of sales of all the companies you listed, if my math is correct. That is about half the average of all industries. Tobacco companies spend 6% of sales and pharmaceutical companies spend 20% of sales on advertising. These numbers suggest to me that demand for highly processed food products (using the companies you’ve listed) is actually not advertising driven.

    It seems that Margie might be more on track (again, according only to the numbers that you’ve included in this post) — manufacture foods that people get hooked on and let the cravings do (most of) the selling.

    Just to be clear, note that I am not trying to say that advertising doesn’t sell highly processed food (“Snickers really satisfies”). I am just saying that according to the numbers in this post, demand for highly processed food is not *driven* by advertising.

    • In the interest of a good, constructive debate, I’ll give you the point that as a percentage of sales, these expenditures are below average. But according to the information I found on advertising as a percentage of sales, the overall average is just 2.0%, with consumer products on the high end at 7.0%.

      But I would like you to consider a couple things in return.

      First, my post never suggests the demand is exclusively created by advertising. In addition, I agreed with Margie on something I hadn’t considered in creating demand – food science. My point is that advertising of food products, especially to children, has played an important role in “hooking them” on salty, sweetened, cheap foods. As a parent, I know that such a “hook” can be very difficult to undo.

      Second, consider the saturating impact from combining all food industry advertising. While the percentage of sales may be slightly below average, the overall dollars spent saturate the airwaves, Internet and print with constant reminders to eat processed foods.

      Third, within each of these companies there is a tremendous amount of new product development going on, which is where a disproportionate amount of advertising dollars are funneled. The established cash cows don’t see much, since they have established customer bases.

      Food for thought…

    • One more data point for you and other readers regarding children’s exposure to food ads.

      According to studies conducted by the Kaiser Family Foundation and Federal Trade Commission, our nation’s children (ages 2-11) are exposed to approximately 5,500 food commercials a year on television alone.

      Of those ads, around 50 percent are for restaurants, fast food, desserts, sweets and snacks.

      Summary: http://www.kff.org/entmedia/upload/7654.pdf

      This is the type of data I should have included in the original post, since it shows the sophistication of highly targeted media campaigns, which are able to reach very specific segments of the population virtually whenever they want.

  7. I’ve read that the new digital TV signals don’t reach as far or into hollows, behind mountains, etc so more people will now have the benefit of going without television. Perhaps this will help, at least in rural areas. Hmm… But that may not be where the most help is needed.

  8. It must be one of those mornings, but I had another thought to share on the subject.

    In addition to $30 billion dollars of overall food advertising per year, the government also subsidies core ingredients of cheap processed foods, i.e., commodity crops, to the tune of $20 billion per year.

    So, we get lots of advertising, especially targeting our children, of cheap, unhealthy foods that taxpayer dollars help make “affordable”.

    Please tell me I’m not alone in thinking that is simply awful.

  9. One more example of why we need to get rid of subsidies. Subsidies artificially lower the apparent price of some foods. Big Ag is the beneficiary of this boon. Using these falsely low prices they compete with those of us who farm without subsidies. Thus not only do they get the economies of mega-scale but also a government handout every year. Eliminate the subsidies and force them to market on a level playing field. Initially it will feel like the costs will go up but this also means our tax dollars aren’t being wasted on subsidies so we would, theoretically, keep more in our pocket or use it to pay down the national debt thus evening up the score.

    Realize there are a lot more subsidies than just food. There’s also oil, housing and others. Let’s eliminate all subsidies. Very unpopular idea as people tend to have pet projects they want to pork barrel.

  10. Rob, nobody has to choose fast food but the companies would not spend billions advertising if it wasn’t effective. I see McDonald’s targeting young adults in their reproductive years. In poorer neighborhoods there is less choice and people less educated than us trust that the food is healthy. In Food Inc they revealed that McDonalds is the largest consumer of beef, pork, eggs, and poultry in the country. Therfore they drive the industrial model that ends up in our grocery stores, too. I was appalled while watching Obama’s health plan discussion last night to see a McDonald’s commercial. We cannot fix our healthcare system until real food is more readily available. These corporations would not survive without hefty subsidies paid by our tax dollars and if consumers were aware that they are eating GMO food because our government refuses to label it. There is definitely a link between advertising dollars and sales.

    • Cathy: Excellent points, esp. regarding food companies not spending billions on ads if they weren’t effective. Did you read Fast Food Nation? If not, try to find some time to do so. It is primarily about the history of fast food and how its incredible growth fundamentally changed our food system, i.e., accelerated and refined industrialized processes. I also agree that our rapidly growing healthcare crisis cannot be averted until we make more whole and minimally-processed foods available to more people, from children in elementary schools to hospital cafeterias to food deserts in low-income, urban centers.

      On a lighter note, I thought you might appreciate my variation of Karl Marx’s quote: “Sell a man a fish, you feed him for a day. Teach him to fish, you ruin a wonderful business opportunity.”

      My version: “Sell a man a Happy Meal, he eats for a day. Teach him to cook, you erode industrial food profits.”

  11. Hey Rob, great post. I’ve been thinking about it for the past few days, wanting to comment, but not quite sure if I wanted to jump into the fray. I decided that I’d mention this. Before I started back to school to study food crop production I received a degree in marketing. One of the first things that I learned about marketing was that it drives market demand. This seemed to be exactly your point. I am surprised that people misunderstood what you wrote. Marketing and Advertising goals are to sway consumers to buy their products and draw a larger market share. To suggest that you were saying that people wouldn’t eat fast food if it weren’t advertised is silly, the advertising budgets those companies spend is for consumers to spend money in their drive-thru’s, not on “fast food” in general. They aren’t advertising “fast food” because the market already exists for it. But they are trying to separate themselves from the rest by telling people that they now have “fresh” food or that their meals can be considered a healthy option.

    New products are initially pushed through advertising. They show up because of tons of work put in at the marketing level to anticipate what the consumer will “need” next. Months can go into deciding which color “brown” the next chocolate milkshake should be. The milkshake is sent through test markets to see if it will be received well or rejected. All of this is done, for the most part, out of the public’s eye in case the new product isn’t received well. The choices that people are making when they order at a drive thru window have already been assumed and made for them, they get the illusion that asking for no onions means they are making it “their way.”

    Rob, great post. Thanks for becoming a strong voice in this conversation. I’m excited about the “Pro Food” push. I think it will help filter out the endless arguments over convention/organic foods. Let’s talk about real, healthy food and how we can help inform people of the choice they are making. -cheers

  12. Check out this article by Elizabeth Kolbert addresses a wide swath of books on the current obesity epidemic.

    http://www.newyorker.com/arts/critics/books/2009/07/20/090720crbo_books_kolbert

    Her general thrust (she’s covering a lot of territory, here — there’s no single thesis she’s aiming at) is that price alone can’t explain the astounding increase in obesity — if it’s cheaper to eat Coke, ice cream, and Dollar meals, it’s even cheaper to cut back and eat less.

    So something else is at play and the writer puts several books before us that address physiology and psychology and conclude that we are hardwired to eat, eat, and eat.

    Kolbert does address marketing, but differently than you do, Rob. Tt’s definitely part of the obesity discussion (especially the gimmick of “supersizing” and how it speaks to the hungry chimp in all of us). By the end of the article it got me thinking very differently about obesity and our relationship to food in this Epoch of Opulence. I think spiking obeisty and diabetes rates have more to do with unprecedented surplus, than price, per se. It’s more about the ocean of sweet/fat calories than big m Marketing.

    But it’s all of a piece: We can’t say no. Good reading. And I have a slew of new books on my list.

  13. Pingback: 10 Things We Should Teach Every Kid about Food | Farm To Table

  14. We cannot deny the impact of marketing through advertisement, the statistics had showed it. To deny this would make a lot of reactions from the advertising companies. How come people tend to get influenced by advertisements? I am against it but I just can’t help to buy those that had special offers, coupons , freebies and a lot more influential promotions. I’ve tried and tried to go organic and sometimes need to be reminded by your kind of post from getting to be influenced by these ads that keep on popping anywhere I looked. Great post. Keep it up!
    Sherman Unkefer

  15. Pingback: Let them eat marketing | Toban Black

  16. Good post. I learn something totally new and challenging on blogs I stumbleupon on a daily basis.
    It will always be helpful to read content from other writers
    and use a little something from their websites.

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