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The birth rate may be sliding, but the baby market is booming.

Some of the nation's fastest-growing retail chains have launched baby clubs in the past year, wooing new parents with gifts and coupons in an effort to win their loyalty. And marketers -- of products from baby food and diapers to contraceptives -- are stepping up the frequency of their direct-mail programs and upping the ante on coupon values for new parents.

All the attention -- and expense -- might seem odd when the U.S. birth rate is on the down slope. But families with newborns spend twice what families with teens do at supermarkets and mass merchandisers, said Burt Flickinger, a retail consultant with Reach Marketing. That's why the shrinking pool of consumers still is so valuable to marketers, he said.

The birth rate has declined to two children born per 100 U.S. citizens vs. 2.4 per 100 in the late 1980s. But today, families with children spent $5,000 per year in supermarkets vs. $2,500 for empty nesters, for example.

Research showing that 80% of families stick with the first baby-care brand they choose just sweetens the deal.

"Families with children are establishing households and establishing their brand choices for retailers and products," said David Olsen, VP-marketing for Drypers Corp., which participates in Kroger Co.'s Atlanta baby club program.


Baby clubs solicit parents to sign up for special offers on private label and branded merchandise.

"The clubs give us a chance to combine our resources to target them," said Mr. Olsen.

When Procter & Gamble Co. and Kimberly-Clark Corp. largely eliminated couponing via free-standing newspaper inserts for their disposable diaper brands five years ago, they moved to more targeted direct mailings that now sometimes include samples and coupons for up to $2 -- double the value of the old FSI coupons.

In 12 months, P&G sent 12 mailings with samples and coupons for its Pampers diapers and wipes, plus another two for Luvs.

P&G also started sponsoring Lamaze classes organized by On Target Media, Cincinnati.

Baby-care brands aren't the only ones interested in babies. When Cox Direct launched a new Carol Wright co-op mailing targeted at families with newborns this year, one surprise was participation from P&G for Tide laundry detergent and Colgate-Palmolive Co. for its Murphy's Oil Soap.

At least some funds for the targeted efforts come from existing promotion budgets, such as diaper makers' switch to direct mail from FSIs. But whether marketers actually are shifting ad dollars is less clear.

Measured media spending for P&G's Pampers brand hasn't risen significantly in the past two years despite a series of major product launches, according to Competitive Media Reporting, leading to speculation P&G is shifting funds to unmeasured marketing programs.

However, a P&G spokesman said Pampers ad spending has actually risen significantly in recent years, though he wouldn't provide spending figures for

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