The Baby Bonus

12 July 2012


It was the puree that did it.
 New mother Alexandra Wardle, was trying to feed her son, Tyler. In pureeing food and introducing him to solids, she went through container after container.

"I was preparing a lot of food and I was putting it into an ice cube tray and I just couldn't get it out of the ice cube tray," she says. "Once you've pureed baby food, it becomes very dense. I ended up breaking the ice cube tray – with potato cubes it was – flying all over the room."


Watching TV later, she caught a program about mums who had successful businesses.

"I thought, why don't I make my own ice cube tray? Without really giving it a lot of thought, the idea kind of sprung from there and then it was a matter of, well, how do you make an ice cube tray exactly?"

Previously a specialist sales representative for pharmaceuticals giant Pfizer, Wardle didn't have any background in manufacturing or product development, or ice cube trays for that matter. But she did have the drive to have a go. 
She contacted one of the mothers who had appeared on the show, who gave her a rough idea of what she needed to do.

"From that point I started ringing factories in Perth and taking Tyler in the pram to factories and a lot of them had a good old giggle and pretty much told me to stop wasting their time."


A year later Wardle had the design and factory sorted and went out to baby stores in Perth and Melbourne with samples of her product, Qubies. 
Produced by her company, Miinki Moop, Qubies are containers with soft silicon lids, that have dividers moulded into the lid. That means when the contents of the trays are frozen, they freeze in separate sections, which can then easily be popped out.


"The original pilot run was only supposed to be 800 units and I sold 2000 units in the first two weeks," she says.
"Within a month I'd already placed my second order with the factory and I was up and running."


Wardle now distributes to hundreds of stores across Australia and beyond.


"We've gone literally from, 'it was just a little idea,' to, 'it's now a business,'" she says.


Wardle's entrepreneurial success demonstrates the demand for products that cater to new parents' needs. Tap that market right and there's money to be made.


Babies are big business. Market research analyst IBISWorld estimated in November last year that revenue from baby products would reach $4.38 billion in 2011-12. It predicts average growth of 3.1 per cent a year for the next five years, with revenue reaching nearly $5.1 billion in 2016-17.


A new sector is growing in the industry, which is high-end baby goods. Underpinning that part of the market are social trends – a lower overall birth rate, which means that mothers are having fewer children and tend to have more to spend on each child, more women in work with therefore greater spending power and rising birth rates among older parents who tend to be more financially secure.


"Cashed-up parents have been buying up big for their newborns, with only the best in mind," IBISWorld reports.

When it comes to spending on their child, there are those for whom cost is not the first consideration and companies are targeting this sentiment.
 Baby food company Rafferty's Garden came to market with an expensive brand and the cost didn't dissuade its customers.

"They realised that this product was almost twice the price of the conventional baby food, but saw that the nutritional benefit and quality of this food was just second to none ... they clearly wanted the best for their baby," Rafferty's Garden founder Adrian Pike says.


Since starting in 2008, Rafferty's Garden has grown fast. The company made fourth place in the most recent BRW Fast Starters list released in April, with 2010-11 turnover of $33.4 million.

"I remember when I was doing the budgets for the following year, my accountants would look at me and say, 'You're mad, it's never going to happen' and I remember the year would close and ... we'd overachieve them," Pike says.


From a marketing perspective, new parenthood and pregnancy offer a set of conditions ripe with opportunity. Even those who know the most about marketing are susceptible. Take Melbourne Business School associate professor of marketing Jody Evans.

"I don't think I had ever been as easily influenced by marketing as when I was pregnant, because you're terrified," Evans says.
 “You're terrified of doing something wrong. There's this overwhelming sense of responsibility for a new life and so you feel this personal pressure, or at least I did, to make the right decisions."

"That fear is incredibly motivating from a consumer aspect, around your willingness to research product choices and so if you're in that really active, information-seeking role then you are naturally going to be much more receptive to any marketing messages."


When consumers don't know enough, marketers can easily step in, Evans says. This doesn't have to be in a manipulative way. Providing information can be helpful for consumers who are looking to make purchasing decisions they haven't encountered before.


"As a pregnant woman, I don't think there's any other market where so much material is delivered to you. Brochures and brochures and brochures ... At any baby club you join, at the doctor's surgery, on the hospital visits, at the prenatal classes, they all give you brochures."


Either faced with, or groping through, parenthood, people are often terrified simply of screwing up their kids, she says. Not knowing what do to, they often reach for a brand they recognise.


"You look for products that are going to make you feel better and you look for trusted brands that will make you feel secure.
"

We remember the brands our mums used and so our future children will also remember the brands that we had in our home and that we used and that we talked about.

"
But it's not just converting the consumers of tomorrow to a brand that makes new parenthood and pregnancy such a powerful time for marketers.
 This is also a time at which adults change their consumption habits. Chances are that a couple having a child for the first time haven't ever really considered the relative merits of different brands of breast pumps, prams or silicone nipple protectors.
"

Marketers love this segment because it is one of the very few times you get an adult coming into a brand new category," University of NSW Australian School of Business lecturer Dean Wilkie says.
 "This is almost like a totally new situation and so as marketers you go, 'Well this is an opportunity to get our brand and our product in front of this totally new audience'. "
That means brands have a "first user" type benefit, Wilkie says.


Take for instance a type of nappy. If that is the first nappy a consumer has put on their baby and it works satisfactorily, then they can associate its attributes with those of the ideal product, or think the brand works and that they don't want to switch for another.


"If you're the first product they try, most of those consumers will then stick with you, if you deliver the product that they expect," he says.


That's why companies often target mothers to be and new mothers with product samples.

"Essentially it is that if I get this product in their hands, they try it, it works, they will buy it," Wilkie says. "If I include a pamphlet about my product, that talks about its benefits, why to use it and so on, they are more likely to read it because they are engaged in the category."


Beyond that, there's the opportunity for brands to make an emotional connection with a consumer, Wilkie says. Positive association may come from the product's use at a joyous time in the consumer's life, or simply being there when it is needed. 
For instance, companies might hand out samples of a heartburn relief product, nappies or baby wipes.


"Often a pregnant mother experiences heartburn, it's sort of that emotional, 'OK, they understand me'. It's not a great emotional connection like, 'I love this brand' but just that connection like 'they understand me', or 'they seem like experts'," Wilkie says.

The other big advantage of targeting new mothers is that as they set up the family household they are often the primary decision-maker on which brands come into the house, which creates a big business opportunity: To remain in a consumer's life once a product is no longer needed for the baby or pregnant woman.
 At The Woolmark Company, which owns the Woolmark brand and markets wool, turning new parents into buyers is part of a larger strategy.

"We know that the majority of purchasing strengths of a family unit lies with the mother," The Woolmark Company chief executive Stuart McCullough says. "We believe that if new mothers understand the benefits of wool at an early stage of their pregnancy [and] birth of their child, they will become a lifelong advocate and user of wool."


Wardle says Qubies was designed originally just for baby puree but once she started selling it, customers began to use it for freezing things such as leftover sauces, ice cubes and espresso coffee.

"A cot can only be used up until two years old for example ... Qubies can go literally from day one, from breast milk, to introducing purees, to making little desserts, to then adult uses ... so it's a product that they're going to have forever."


For Rafferty's Garden, the aim is to move into the market for feeding adults, too.

"The whole vision for Rafferty's is to grow it out of baby," Pike says. "Absolutely, if you trust the brand to feed it to your children, you are going to eat it yourself."


If Rafferty's Garden manages to execute that move, the company will have successfully parlayed a well-liked baby brand into products that should cater to a family's needs over lifetimes.
 This has the potential to take Rafferty's to a new level of financial success and shows that while babies are big business, they are no means where the business ends.

MOTHER OF ALL SELLERS


Marketers can go to a number of places to target parents and new parents to be. One of those is social media. eMarketer, which publishes information on media, digital marketing and commerce, forecasts that in the United States this year, nearly 28 million mothers will be using social networks. 
Social media is a key part of Alexandra Wardle's marketing push for Qubies.

"We literally just have a list of the mummy bloggers that are either referred to us or we find, because when you are in the industry you do start to get to know of the good ones and the ones that have a reasonable following," she says. 
"If somebody actually tries the product and gives an honest review of the product, I think it has a lot more weight to it."


Ecommerce company CatchOfTheDay group is planning to launch a new website – mumgo.com.au – this month aimed at mothers. On the site, mums will be able to shop for themselves, their babies and their children, a company spokeswoman says. Beyond discount deals, the company is also building an online community.


"Mums are very active on forums and social media sites, they do a lot of research online," a CatchOftheDay spokeswoman says.
 Another method of targeting consumers is through statistics. Some companies use statisticians to try to predict when customers may change their consumption habits, with pregnancy a key moment in a consumer's life.

An entertaining story in The New York Times Magazine explained how Target in the US became very good at identifying when consumers were expecting a baby through their product choices. This enabled the retailer to target potential customers with enticements to get them to try new products.
 In one case, this happened with unforeseen consequences: a father stormed into a store asking if they were trying to encourage his still-at-school daughter to get pregnant. He then later said to the store manager who had called to apologise: "It turns out there's been some activities in my house I haven't been completely aware of. She's due in August. I owe you an apology."

Target Australia, which shares the Target name and logo with the American outfit but is a completely separate company, would also like to get into this area but will tread carefully, Target managing director Dene Rogers says.
 "The trick is to make sure that you're not becoming invasive when you market to the mother . . . that the person doesn't feel like they're getting stalked," he says. "We're fortunate that we have a pretty large database in the flybuys loyalty program that [we participate in] that we can use to . . . connect a little bit more with our customers."

Initially Target will investigate sending customised emails, then customising web pages based on who the customer is, if that can be identified, Rogers says.
 The Woolmark Company, which owns the Woolmark brand and markets wool, has as a key strategy of turning new parents into buyers.

As well as developing new products targeted at newborn infants and naming photographer Anne Geddes as an advocate, it has used academic research to complement its marketing efforts to new parents.
" We started academic R&D because we wanted to understand clearly the basic benefits wool has to newborn babies," chief executive Stuart McCullough says.

Research undertaken in Australia and China explored the relationship between the health of a newborn baby, body core temperature and sleep patterns, as well as dermatological work to look at young children's allergies to natural fibres.
" Expecting and new parents are usually highly engaged in researching anything to do with newborns and the products they're looking to use," McCullough says.

Baby clubs are another key way of connecting with consumers. The Coles Baby and Toddler Club offers its members benefits including free products, an e-newsletter with information specifically for the consumer's stage of pregnancy or the age of the child and a quarterly magazine to collect in stores.


"It's a really, really massive marketing tool, because basically, you join the club, Coles gets the data on you as a new parent," Melbourne School of Business's Jody Evans says.

A Coles spokesman says the company's baby and toddler club has been running for more than 12 years and has more than 300,000 members. "The club is very well regarded and we believe this is due to the quality of the information and special offers that our members receive," the spokesman says.


"Mums to be and parents are certainly important customers to Coles. Their life stage typically means they are bigger than average spenders in store and they are buying products they've not previously purchased, such as nappies, infant formula and baby food."

Coles says it doesn't use customer purchasing data to help it find who to approach for the club. Rather many elect to when they join customer rewards program flybuys. Many also join through word of mouth recommendations. Coles is set to soon update the club's website to also offer forums, a blog and polls for members, the spokesman says.