College come-ons

American Demographics, March, 1998 by Tibbett L. Speer

Do you remember the first time you did it? There you were, naive and independent, away from your parents' prying eyes for the first time. Most likely you were a college student, blissfully ignorant of the long-term effects of what you were about to do. You reached out and bought, all by yourself, a box or bottle of laundry detergent.

It never occurred to you that the brand you selected more or less randomly might stick with you for the rest of your life. It occurs to consumer-products companies, though. They realize that where buying is concerned, college students lose their virginity over and over again. Plot our college purchase "firsts" on a chart, and they are many and ongoing: first laundry soap, first credit card, first long-distance service in one's own name.

"Transition periods are key times to get consumers to change previous behaviors," says Gary Marcus, senior vice president of New York City-based American Passage, a marketing firm focusing on 12-to-30-year-olds. "In college, there are several--dorm to apartment, apartment to apartment, apartment to first job. After that, there aren't so many rapid changes in life."

Yet the transitions that make college students and recent graduates a fertile market also create a serious problem for marketers, one that discourages many companies from targeting the group. Students' lives change so quickly that it's practically impossible to hold their attention. And no one seems to know definitively whether people reached in their college years become life-long customers. Marketers believe students have potential both to spend now and spend later. College graduates have higher-than-average lifetime earnings, and they spend more money on virtually everything. That explains the jaw-dropping array of marketing programs fired at them. "If college-educated people represent the most attractive market, why wait until later to go after them?" says young-adult marketing expert Stuart Himmelfarb, president of Himmelfarb Marketing Group in New York City.

License to Spend

The college market is a good-sized target, and it's growing. More than 14 million students are projected to enroll in U.S. higher-education institutions in 1998, according to the National Center for Education Statistics. The number may grow 13 percent by 2007, to 16 million by 2007. In 1998, there may be 5.8 million students enrolled in four-year colleges and universities, 4 million of whom study full-time. Part-time students in four-year and two-year schools and graduate students make up the balance of enrollees.

College campuses are populated by more women and more older students than they once were. Between 1984 and 1994, the last year for which final data are available, the number of women enrolled in college increased 24 percent, compared with 9 percent for men. The number of students under age 25 may increase 14 percent between 1992 and 2007, to more than 9 million.

"All of this bodes well for marketers," says Himmelfarb. But how much companies benefit depends on whether students have cash. Observers say they do, and they use it. "This generation spends more money than the ones before it," says Jeff Jones, associate publisher of The Source, the seminal magazine of hip-hop music and culture. Jones is aged 43, but The Source's audience is young adults. "I'm around this culture, so I know it's acquisitive," Jones says. "They'll say, I want the best shirt. Not just a shirt, but the best shirt.' They don't want just jeans and a T-shirt."

Campus Concepts, a Baltimore college marketing and advertising firm, estimates the spending power of college students at more than $90 billion. Full-time, four-year enrollees alone may spend an aggregate $30 billion a year, money they get from personal earnings and parents, says Himmelfarb. He divides the $30 billion into two parts: $23 billion in essential purchases, such as rent, food, gas, car insurance, tuition, and books; and $7 billion in nonessential "beer and pizza" money.

Eric Weil, publisher of Collegiate Trends, a newsletter for advertisers and others with an interest in the college-student market, says that a typical monthly college student budget resembles the following: food, 32 percent; debt, 18 percent; automobile, 13 percent; clothing, 8 percent; telephone, 6 percent; and other, 23 percent. However it's divided, students have enough dollars to spend that colleges are getting in on the act. Expanded campus bookstores, coffee shops, and photocopy centers help them get a share of student spending.

Middle-aged marketers who remember themselves as cash-strapped students, existing for weeks on peanut-butter sandwiches, need to recognize that today's college students are both different from them and rapidly changing. Every fall, about one-third of the nation's college students are new to school. They sweep onto campuses, bringing with them new fashions, fads, and attitudes.

They also bring money, credit, and plans to spend. More than half of students at four-year colleges have cars, two-thirds carry credit cards, and two-thirds have telephone calling cards, according to the spring 1997 Student Monitor. The study comprised in-person interviews with more than 1,000 full-time undergraduates on 100 campuses nationwide.