July 01, 2007

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.”
About Burst Media

For more information at http://www.burstmedia.com

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