Price and peers drive student purchase decisions.

Discretionary spending of college students in the United States is funded largely by today’s baby boomer parents. Today, nearly half of male (46.1%) and female (50.9%) college students fund personal expenses with parents or guardians fund. Only one in five students (18.7%) work full time to fund spending and about two fifths (39.4%) work part time.

However, if hypothetically given a $500 windfall, students are first inclined to save an average of $330, allocating remaining funds in descending order towards travel, clothes, doing something with friends, electronics, and music. The monthly discretionary spending also varies depending on a student’s gender. Two-thirds (69.1%) of male college students say they spend $250 or more in a typical month on personal expenses. Only 50.2% of female college students spend $250 or more in a month.

During the last week of June 2007, Burst Media, a leading provider of advertising representation, services and technology to independent Web Publishers, conducted a quantitative study of 18-24 year olds attending two or four year college programs this coming fall. The web-based survey examined student finances, and purchase intention for a number of product categories. Questions also examined brand switching behavior and media usage among the student population. Responses were collected from 443 students with a margin of error of +/-4.6%.

The survey also highlighted other student spending habits including:

– New school clothing is a major purchase prior to starting the college year: Before returning to school in the fall, nearly half (46.7%) of college students will purchase casual clothing. Not surprisingly, female college students are slightly more likely than male college students to say they will purchase casual clothing, 50.2% vs. 43.8%, respectively. Other apparel items to be purchased before returning to school includes; casual shoes, dressy clothing, sneakers, and dressy shoes.

– Technology spending is also a priority for many students: Most students will purchase technology products before returning to campus. In fact, nearly one in four (23.3%) say they will purchase a laptop computer; and one in five will purchase a cellular phone (21.5%) before returning to school this fall. Other technology products to be purchased before returning to campus includes; desktop computer (15.2%), digital music player (15.1%), video game console (13.7%), and laser printer (6.7%).

– Online shopping is not the dominant means of purchasing products: The survey found that students expect to make three-quarters (77.3%) of their purchases offline in a mall or other retail outlet, and only about 22.7% of their purchases online. Male college students will spend more of their dollars online than female college students (26.6% vs. 16.7%, respectively).

Brand loyalty of the college-bound “Net Generation” demographic is also examined in this survey. Better price is the number one answer for what influences a brand switch, cited by 66.3% of college students, and recommendations from friends was second at 56.0%. Far behind these two factors in influence on students’ purchases is seeing others using a brand (25.9%), and general buzz about a product (21.0%). Paid endorsements carry little weight with this demographic. Only about 18.6% say they respond to advertisements, 18% to packaging, 14.2% to press stories, and a mere 9.8% are influenced by a celebrity endorsement. Female college students are more likely than males to cite friends’ recommendations as an influence on brand switching (60.4% vs. 52.5%). Males are more likely than females to cite general “buzz” as an influence on brand switching (24.5% to 16.8%).

The survey also looked at the Internet usage of this group and media interaction. One third (33.0%) of college students spend more than ten hours per week on the Internet, and 19.6% spend more than 20 hours per week online. Among college students, Internet usage levels surpass those of television and terrestrial/satellite radio. Whereas one in three college students are heavy consumers of the Internet, only one in six (16.6%) watch more than ten hours per week of television and merely 5.5% listen to terrestrial/satellite radio more than ten hours per week. Instant messaging, downloading music/MP3 files and school work dominate the usage. Full usage rates are available at: www.burstmedia.com/newsletter/current.asp.

“Understanding student spending habits and relationship to brand influencers is critical to targeting this demographic group,” said Jarvis Coffin, co-founder and CEO of Burst Media. “What Internet advertisers must take from this survey is the importance of cross-channel marketing decisions that build word of mouth appeal. Offers to students that include personal interaction with products will create demand and long term brand loyalty.”
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