The baby bonus: making money out of mums

Babies are big business. For marketers, new parenthood is a time ripe with opportunity.

“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’.”

It is an audience primed to spend. Researcher IBISWorld estimated in November last year that the baby products industry revenue would hit $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.

Inside that business a new area is growing: High-end baby goods. Underpinning that part of the market are social trends – a lower overall birth rate, which means 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.

That means there are lots of parents for whom cost isn’t the first consideration. Companies are targeting this sentiment. Baby food company Rafferty’s Garden came to market with an expensive brand. It didn’t put people off. “They realised that this product was almost twice the price of the conventional baby food but they realised 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.

Another big advantage of targeting new mothers is that as they set up the family household they are the major decision-maker on which brands come into the house. The business opportunity: To remain in a consumer’s life once their 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 believe that if new mothers understand the benefits of wool at an early stage of their pregnancy/birth of their child, they will become a lifelong advocate and user of wool,” chief executive Stuart McCullough says.

For Rafferty’s Garden, the aim is to move into the adult market, too. “The whole vision for Rafferty’s is to grow it out of baby, absolutely, if you trust the brand to feed it to your children, you are going to eat it yourself,” Pike says.

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