Kids Advertising: Market Failure and Intervention

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Table of Contents

Abstract
Introduction
Necessity of the Government Interventions: Literature Review
Necessity of the Government Interventions: Survey and Results
Current Policies and Recommendations
Conclusion
References

Abstract

The primary goal of this essay is to determine the potential sources of market failure and the necessity for the governmental intervention to solve the issues in the context of the advertisement for kids. In this, instance political intervention remains a need, as it is an only possible way to avoid the failure of the market and protect the fragile minds of the children from the intensive advertising, which includes the violent content.

The literature review and the survey revealed that there is a necessity for the improvement of the adequate policies to avoid the disturbances in the formulation of the cognitive development of the children and their perceptions of the world. It is evident that the governmental intervention is essentialities since it contributes to the development of the appropriate regulations of the companies without the violation of the human rights and aggressive promotion. Nonetheless, the government should not continuously intervene in the existing structure of the market, as it will negatively affect the competition in this sector. In this instance, the government intervention should be limited and focused on whether the content of the advertisement adversely influences the intellectual advancement of the children.

The policies exist to regulate this issue. They lack the restrictions and have the advisory character in some aspects. However, it is apparent that the promotion of the violence is vehemently restricted. In this instance, the establishment of the new policies remains a necessity. The restrictions have to be also established to the advertisements, which have an adverse effect on the cognitive development of the children. This aspect will reduce the social concern and balance the competition on the market.

Introduction

It was always questionable whether the advertising for kids is appropriate since children have fragile minds and tend to be easily affected by the bright images on TV and computer screens. It is evident that nowadays children are considered as a separate consumer group, and a high number of companies has a tendency to choose kids as a primary target audience for the advertisement (Nylund, 2015). In this instance, the substantial concern is the vulnerability of the children’s minds and free access to the violent and the pornographic content in the media and the Internet.

Nonetheless, the primary source of the market failure is the agency dilemma, which defines that one entity is responsible for the decision-making of the other one (Clarke & Branson, 2012). In the context of the kids advertising, the final decision is dependent on the perceptions of the parent about the product. It is evident the initial message might be misinterpreted, as it is aimed that the other target audience. Another source of the market failure is the fact that the inability to follow the policies in the advertisement leads to the appearance of non-competitive markets. In this instance, the companies, who do not correspond to the rules while advertising for children, create disturbances and cause damage to the flow of the mainstream competition (Rajagopal, 2015).

The inability to correspond to the morals rises the social concern, decreases customer’s loyalty to the brand, intensifies the competition, and question the company’s mission and corporate values. It is a primary implication of the market failures. In this instance, the companies lose the market share and client base due to the misinterpretation of the delivered messages. It is evident that agency dilemma contributes the existence of this phenomenon. Lastly, the disturbances in the flow of competition also affect the presence of the products and services and their prices. It is apparent that the negative implications and effects of non-following or not restricting the policies related to the children’s advertisement strongly affect the population from the economic and social perspectives.

It is apparent that these aspects are the primary causes of the generation of the negative attitudes regarding the particular products and brands. Moreover, the implications of the market failures strongly affect the variety of the consumer’s choice and the decision-making. In this instance, it could be assumed that the government intervention remains a necessity since it is the most suitable instrument to introduce new policies, balance the completion, and generate positive attitudes towards the advertisement for kids and the actively promoted products. Nonetheless, the introduction of the new policies and restriction of the old ones are the only suitable solutions, as the stronger intervention will disturb the market forces.

The primary goal of the essay is to determine the necessity of the advertisement for kids and essentiality of the governmental intervention to find the solution to this problem. The literature review and survey are used to determine the significance of the issue. Moreover, the current policies are evaluated, and the new ones are recommended. In the end, the conclusions are drawn.

Necessity of the Government Interventions: Literature Review

The literature review and survey were used as a primary research instruments to determine the need for the governmental interventions in the context of kids’ advertisements. The combination of the literature review and survey will contribute to the coherent understanding of the issue. Nonetheless, the issue has to be analyzed with the help of the literature review.

Firstly, it is necessary to determine whether the advertisement has an adverse impact on kids. The article Advertisements Spoil Kids by Siddiqui focuses on the fact that the advertising has an adverse effect on the children’s perceptions of living and their abilities to evaluate whether they are acting in agreement with the social norms (Siddiqui, 2015). The findings prove that the advertisements should be restricted as they have an adverse influence on the cognitive development of the children. Nonetheless, it is evident that the policies are the necessary attributes of the regulation of the current situation.

In turn, the article The Tricky Business of Advertising to Children by Watson mentions that choosing children as a primary audience for the advertisement campaigns remains challenging, as it is unclear whether it is harmful to the children’s development or contributes to the improvement of the critical thinking and decision-making patterns (Watson, 2014). The article reveals that despite having significant drawbacks, the companies still have to advertise for children. Nonetheless, the content has to be vehemently regulated by the policies, as the topics, which are mentioned in the advertisements, might violate the human rights and promote violence and pornography.

Furthermore, the article Ireland’s Innovative Governmental Policies Promoting Internationalisation by Rios-Morales, Brennan, and Brennan underlines the fact that the governmental interventions can be utilized as the instrument to cultivate various beneficial actions in business for the economic growth of the country (Rios-Morales, Brennan, & Brennan, 2009). It is evident that governmental institutions aim at the development of the regulations, which will contribute to the solutions of the problems such agency dilemma and insufficient competition. It is evident that the intervention is a necessity since it helps develop the coherent regulations for the companies to protect the human rights and prohibit the aggressive promotion.

Lastly, the article Macroeconomic Governmental Regulation and Self-Regulation of Market Equilibrium by Dunaev supports the fact that the government interventions are necessary (Dunaev, 2006). It is evident that the regulations ensure the growth of the GDP and are essential determinants of the sufficient economic growth (Dunaev, 2006). However, it is apparent that the government should not intervene in the existing market structure, as it is a self-functioning sophisticated system. It could be said that this article emphasizes the necessity of the governmental intervention to propose the additional restrictions to the kids’ advertisement, solve the agency dilemma, and improve the level of competition. It is evident that in this case, the government intervention should exist. However, it should focus on the particular matters such as its content.

It could be said that the literature review revealed that it the advertising for children should not be forbidden. Nonetheless, the governmental intervention remains a necessity, as it contributes to solving marketing failures such as agency dilemma and insufficiency of the competition on the market and maintaining the economy in balance. Nonetheless, the scope of the intervention has to be limited to the content of the advertisements and vehemently control whether it has any influence on the cognitive advancement of children. However, the government should not strongly affect the flow of the processes on the market, as the market is a self-regulating mechanism. In this instance, the vehement intervention might have an adverse impact on the national economy.

Necessity of the Government Interventions: Survey and Results

It is evident that the literature review provided only the background and the short presentation about the existing problem. In this instance, it is obvious that survey has to be introduced to determine the audience’s opinion about the children’s advertisement and necessity of the governmental intervention as a tool to ascertain the flow of the national economy and find the solutions to the existing problems such as agency dilemma and insufficient competition on the market.

It is evident that it was necessary to conduct to survey to determine corporate and public opinion about the governmental intervention and necessity of the kids’ advertisement. In this instance, it will be easier to prove the relevance of the thesis statement. Moreover, it will underline the information, which is mentioned in the literature review. Lastly, the qualitative approach was the most suitable method to acquire the findings since the detailed information about the necessity for the intervention and the acceptance of the advertisement for children.

Firstly, the questions and the responses and questions of the first survey were analyzed. It is evident that the first survey was targeted at the professionals from the various companies. In this instance, ten people were interviewed. The first question is ‘Is it challenging to adversative for children? Why?’. One of the respondents claimed, “it remains challenging. It is hard to find a suitable approach to reach the target audience” (M. Lamar, personal communication, Oct. 22, 2015). The rest of the respondents supported this statement since it is apparent that profound knowledge is needed to construct the relevant marketing technique, which will correspond to the governmental policies. The next question was ‘Does the governmental intervention remain a necessity for finding the solutions to market failures in the context of the advertisement for children? Why?’. One of the respondents replied, “the governmental interventions are critical. They help to develop sophisticated marketing strategies without the violation of the human rights.” (J. Leonard, personal communication, Oct. 22, 2015).

Moreover, a significant number of the respondents claimed that the policies in the context of the advertisement are potential drivers for innovation and help avoid the issues regarding the violation of the children’s rights. However, it has to be limited as it disturbs business processes. The next question is ‘Does the governmental intervention contributes to the solution of the agency dilemma and clarifies the imperfections of competition in the context of the kids advertisement?’. The companies’ representatives claimed that intervention is one of the contributors to the solution to these issues. The last question ‘What do you think about the current policies? Are you satisfied with them? What do you want to change?’. In this case, the respondents mention that the policies are rather vague and should pay exquisite attention to the content of the advertisements. It is evident that that the companies’ representatives underline the significance of the governmental intervention, as it is one of the drivers for innovation and able to contribute to the finding the solution of the agency dilemma and insufficiency of the competition. However, they claim that it has to be limited, as it will affect the processes of the organization.

The second survey was aimed at the general public and was rather short since the general public lacks the profound knowledge about the matter. Ten respondents also participated in the study. The first question is ‘What do you think of advertisement for children?’. One of the respondents replied, “it is one of the ways to learn about new offers for my child” (H. Abadi, personal communication, Oct. 22, 2015). The next question is ‘Do you think that this type of advertisement has to be prohibited?’. In this instance, none of the respondents mentioned necessity in this restriction. The last question is ‘Do you think the government should intervene in this issue? Why?’. In this instance, one of the respondents mentioned “I think it is, it helps to protect human rights” (M. Daher, personal communication, Oct. 22, 2015). The results of this survey revealed that it should not be prohibited, but the restriction play a significant role in this case.

In conclusion, it could be said that the findings underlined the aspects, which were mentioned in the literature review. It is evident that the opinions from the companies representatives revealed that the governmental policies contribute to the development of the effective strategies without the violation of the human rights and promotion of pornography. Nonetheless, it became evident that despite remaining a challenging task, the advertisement should have control over the situation. In this instance, the governmental intervention has to be limited to the content and its influence on the maturation of the children. Moreover, the companies’ representatives underlined the imperfection of the current policies and claimed that they have to be more precise. As for the general public, it was revealed that the advertising is one of the sources to acquire information and learn about the new products. Nonetheless, it could be said that no particular opinion about the prohibition of the advertisement for kids was revealed. Finally, the general public also supports the opinion about the necessity of the governmental intervention since it contributes to the protection of the human rights.

Current Policies and Recommendations

It is evident that the policies, which are aimed to solve the inconsistency of the competition and agency dilemma, exist. Nonetheless, these policies try to control the advertisement for kids and establish suitable ways to enhance the current situation on the market. It is evident that the portrayal of violence is restricted in the advertisement for children (Federal Trade Commission, 2009). It is obvious that introduction of the policies and restrictions regarding the advertisements for kids is the highest concern in the world. For example, in Italy vehement attention is paid to the child’s protection and safety, as children do not have sophisticated perceptions about the particular products and do not have well-developed critical thinking (Cassandro & Hofer, 2004).

This policy remains a necessity from the social and economic perspective, as children are strongly affected by the advertisements (Canadian Paediatric Society, 2003). For example, the prohibition of the usage of the violent content and pornography contributes to finding the solution to the agency dilemma and brings balance to the current competition. In this situation, following the rules is beneficial for the society and the companies, as both of them acquire social and economic benefits.

Moreover, the particular actions were done in the food advertisement sector. For example, the EU Pledge on Food & Beverages contributes to the cultivation of the preferences towards the healthy dieting among parents (Nylund, 2015). This matter contributes to solving the agency dilemma, as now both parents and children are chosen as the target audience. Nonetheless, it is apparent that the issues related to the relevancy of the kids’ advertisement still have a tendency to exist since the current policies do not pose substantial restrictions to the actions. It could be said that their intentions are more advisory than obligatory.

In this instance, the establishment of the new policies remains a necessity.

The primary suggestion is to introduce the restriction to the advertisements, which have an adverse effect on the cognitive development of the children. Moreover, in this instance, the advertisement for children will not be forbidden. However, the actions of the marketers will be vehemently restricted by the fact that children’s cognitive development is easily affected by the variety of factors, as some of the advertisement techniques might be inappropriate and damage the kid’s way of thinking (Curran & Hyman, 2014). The introduction and restriction of this policy will contribute to solving the agency dilemma and balancing the current competition. Implementing this limitation will fill in the gaps in understanding the appropriate advertising techniques, increases the level of fairness of the competition, and increases the customer’s loyalty to brands (agency dilemma).

Nonetheless, the extensive research related to the influence of the advertisement on the cognitive development has to be conducted before the introduction of the policies. It could be suggested that the procedures will be precise and provide particular restrictions regarding the advertisement for kids to eliminate the possible negative consequences. In this, instance the advertisement for kids should be allowed since the children are the important part of the society, and advertisements contribute to their abilities to the rational decision-making and critical thinking.

Conclusion

In conclusion, it could be said that advertising for kids should exist, as it is one of the ways to deliver the information to the customers, in this case, to the children and their parents. Nonetheless, the companies have to follow the advertising standards while introducing new advertising campaigns on the social media and TV. The precise content, which promotes violence and pornography, has to be prohibited, as the children’s minds are vehemently affected by the external influences and images. The policies will help eliminate the potential sources of market failure since the non-violent advertisement will contribute to the support of the children’s choices by the parents. In this case, the competition will remain on the sufficient level, and the companies, which operate in this sector, will be able to compete. The current policies emphasize the support of the children’s rights and prohibition and monitoring of the advertisement activity regarding the propaganda of sexual content to children via advertising. Moreover, the research has to be conducted to determine the particular aspects of advertisements, which disturb the cognitive development among children. Introduction and restriction of these rules will contribute to the systematic evolution of the advertisement for the children and eliminate the adverse risks of the advertisements on the cognitive development of the children.

References

Canadian Paediatric Society. (2003). Impact on media use on children and youth. Paediatrics & Child Health, 8(5), 301-306.

Cassandro, L., & Hofer, F. (2004). Children and advertising in Italy. Young Consumers, 5(4), 74-80.

Clarke, T., & Branson, D. (2012). The SAGE handbook of the corporate governance. London, UK: SAGE Publications Ltd.

Curran, C., & Hyman, M. (2014). Children and advertising: The influence of cognitive development models on research questions and results. Web.

Dunaev, D. (2006). Macroeconomic governmental regulation and self-regulation of market equilibrium. Cybernetics & System Analysis, 42(5), 702-713.

Federal Trade Commission. (2009). Marketing violent entertainment to children: A sixth follow-up review of industry practices in the motion picture, music recording & electronic game industries. Web.

Nylund, V. (2015). Marketing and advertising for children: the issues at stake. The Guardian. Web.

Rajagopal, N. (2015). The butterfly effect in competitive markets: Driving small changes for large differences. Hampshire, UK: Palgrave MacMillan.

Siddiqui, A. (2015). Advertisements spoil kids. Pakistan Observer. Web.

Watson, B. (2014). The risky business of advertising to children. The Guardian. Web.

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