DEGREE OF CHALLENGE

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Consumers today are mercurial targets, but few groups present as daunting a challenge to marketers as college students.

The college market is notoriously tough to crack. Students doubt corporate intentions, they want to be catered to and they don't think companies know what they want. And they are poor: Their idea of a good buy is a bargain. Most students enrolled in four-year programs rely on loans and the Bank of Mom and Dad to foot the bill for tuition and basic necessities. Though many have jobs, they earn, on average, less than $5,000 a year and spend only about $173 a month on discretionary items. Despite such modest individual earnings, college students as a whole represent a multibillion dollar market: In 2002, 5.9 million full-time students in four-year institutions spent some $9.2 billion during the school year on discretionary items, up 27 percent from 1997, according to data from Student Monitor, LLC, a Ridgewood, N.J.-based market research and consulting firm that specializes in the college market.

For marketers who can reach college students, there's great potential payoff over the long term, due to the high earning power of adults who hold college degrees. In fact, companies that fail to reach undergrads before they leave college could lose out on billions of dollars in lifetime consumer spending. The allure for marketers is the opportunity to lock in relationships with the future's more affluent consumers while they're still in school, when they're open to experimenting with products and sharing their opinions with their peers. “It's a rich market in the short term and a wealthy market in the long term,� says Eric Weil, managing partner of Student Monitor.

A college graduate's earning power is disproportionately large compared with that of an adult who does not have a bachelor's degree. The 49 million people who have earned a bachelor's degree bring home an average of $59,500 per year, almost twice what those with a two-year college degree (or less) earn on average ($30,200). Educational attainment is big business: Eggheads ages 25 and older earn an aggregate $2.4 trillion a year, and are apt to spend generously.

By the time those who have earned bachelor's degrees are 25 to 29 years old, they earn, on average, 53 percent more than high school grads, according to the Census Bureau. The difference in earnings peaks when the college graduate is 50 to 54 years old. At that point, those with a bachelor's degree (or higher) earn 90 percent more than those without one. And people with BAs (or higher) spend two-thirds more than consumers with less education, according to the Bureau of Labor Statistics' Consumer Expenditure Survey. College grads spend well above average on alcohol, entertainment, personal care and food away from home.

It's important to gain a foothold in this market of future big spenders while they're still young, says Derek White, executive vice president and general manager of 360 Youth, a media and marketing services company based in Cranbury, N.J. The first step is to understand college students' attitudes and purchasing behavior. The college crowd is a skeptical and mistrusting group — and no wonder, as their outlook was shaped during a time of presidential scandals, space shuttle failures and deceptive corporate accounting practices.

Companies that market to college students are reaching them when they're making many purchasing decisions for the first time, choosing everything from soap to banking services. College kids' tastes and preferences for products and services are highly contagious, and their brand loyalties are fluid. “They're still extremely malleable,� says David Morrison, president of Twentysomething, Inc., a Radnor, Pa.-based strategic planning and marketing research company. Melissa Schimke, COO of The James Group, a brand strategy and marketing agency based in New York City, believes that it's the ideal time to attract a lifelong customer: “In college, when you start spending your own money, you develop associations with brands for life.�

Or not. Consider the long-distance market, which has had limited penetration among students. While 69 percent of students reported using a cell phone in the prior week, up 11 percent the from previous year, only 26 percent said they used a non-cellular telephone to make long-distance calls. Telephone companies are not alone in their inability to resonate with the college crowd. Four in 10 students surveyed by Student Monitor believe that companies that try to sell them things don't understand them.

What's more, it's difficult to gain insight into the media consumption and purchase behaviors of college students because scant data exists. Nielsen and Arbitron don't offer ratings for the college market, so one can only make educated guesses about how many students a TV or radio spot reaches, says Jim O'Rourke, group media director of The Richards Group, a Dallas-based brading agency. The same applies to magazines: An advertiser has to extrapolate what four insertions in Sports Illustrated or three in Glamour might deliver.

However, useful resources are available. Each year, Student Monitor issues six industry-specific studies on the four-year college and university market, as well as two lifestyle and media studies. And 360 Youth's College Explorer study, which is conducted by Harris Interactive twice a year, looks at the consumer behavior of students in the 18-to-24 and 25-to-30 age groups. For comparison, it includes some data on 18- to 24-year-olds not enrolled in school.

Generally speaking, traditional media may not be the most effective way to reach college students. Most of them (9 in 10) say they watch an average of 10 hours of television in a typical week, according to Student Monitor. But Gen Y students are consummate multitaskers, intent on squeezing as much activity into their TV viewing time as possible. That means they are not wholly focused on media message. While they watch TV, more than three-quarters (77 percent) of students eat, 58 percent talk on the phone and 56 percent may not even be looking at the TV, because they're doing their homework.

It helps to speak students' language and understand their sensibility since they'll most likely ignore anything that smacks of condescension. “They're tired of being told that a company's No. 1,� says Erik Hauser, CEO and founder of Swivel Media, a San Francisco-based company that specializes in marketing to college kids. “They want to know ‘What's in it for me?’ � And most of the time, what they're after is a good deal. Two-thirds (66 percent) of college students usually try to hunt for bargains, while less than one-third (27 percent) consider it important to stick with certain brands, according to a 360 Youth survey of 655 college students, ages 18 to 30, who were polled last fall.

Today, among the most cost-effective media for reaching students on campus is the old college newspaper. At least 72 percent of college students report having read one of the past five issues, and 42 percent say they read three to five of the past five issues. Lack of ad clutter means individual ads in college newspapers stand out more. The cost: A 6-column-by-10-inch ad that would run in 50 college newspapers in the top 10 markets costs between $75,000 and $100,000 per insertion, according to O'Rourke of The Richards Group.

One company that found such advertising effective is MetroPCS, a cellular phone network based in Dallas. MetroPCS advertised in college newspapers for two weeks per month in its four major markets during the fall semester of 2002. Ads drove students to the company's Web site, to a toll-free telephone number and to local dealers. Sales spiked as a result of the campaign, says Mitzi Mitchell, the company's marketing manager.

In addition to traditional media, guerrilla marketing, or viral marketing, has proven effective in spurring word of mouth. Some marketers not only go on campus, they also go into classrooms. For example, Honda and Citicorp have managed to enlist the help of students in classes to solve their marketing problems, with the assistance of EdVenture Partners, an Orinda, Calif.-based marketing firm. The assignment? Design and implement an on-campus marketing campaign to reach college students like themselves. Homework includes measuring pre- and post-campaign awareness of a product and its brand image, as well as conducting an analysis of the market's strengths, weaknesses, opportunities and competition. The technique offers insight into the college market — from the college students themselves. Such campaigns typically cost $20,000, says Tony Sgro, CEO of EdVenture Partners. And brand and product awareness metrics can increase five- to tenfold over the course of a semester, says Tim Hudgens, regional divisional marketing manager for General Motors. “There's zero waste,� he says. “How many media can I say that about?�

Another way to capture the attention of college students is to appeal to their idea of what's hip. Virgin Mobile USA, which targets 16- to 24-year-olds, stokes word of mouth through creative ad messages for a wireless service it introduced last July (and that already has 350,000 subscribers). One 30-second TV spot, part of its national “Share the Love� campaign created by San Francisco-based ad agency Leagas Delaney (and which ran in February), opens with the view of a car's back window that's all steamed up. In the condensation are the words: “Hello lovers: Get a hot Virgin Mobile cell phone for as low as $59.� A kissing sound and the appearance of a woman's foot thrust out the window suggest backseat action. The ad mentions that anyone who gets a friend to sign up for the service receives a $20 bonus. Word of mouth is key to this campaign. “Kids this age still find out about most things through their friends,� says Howard Handler, Virgin Mobile's chief marketing officer.

In addition, college students are trendsetters and early adopters who may be a first step to reaching broader market segments. After all, they were the first to latch onto the Volkswagen Bug in the late 1960s and were also the first to download MP3s from the Internet. They're perceived to be “on top of the next new thing,� says 360 Youth's White. Though marketers may encounter challenges as they build relationships with these young adults before they begin their financial ascent, the trouble may well be worth it.

COLLEGE DAZE

A majority (56 percent) of college students say they sometimes do schoolwork while watching TV.

WHICH ACTIVITIES ARE YOU SOMETIMES INVOLVED IN WHEN YOU'RE WATCHING TELEVISION?

Eating 77%
Talking on the phone 58%
Schoolwork 56%
Surfing the Web 32%
Sending/receiving e-mail 30%
Sending/receiving instant msgs. 28%
Using computer (not the Web) 24%
Listening to music 19%
Reading for leisure 14%
Working (other than schoolwork) 10%
Other 4%
Source: Student Monitor, LLC, fall 2002

EXTRACURRICULAR ACTIVITIES

Nine in 10 students watch TV and listen to the radio in a typical week.

PERCENTAGE OF COLLEGE STUDENTS WHO:

Watch TV in a typical week 94%
Listen to radio in a typical week 90%
Read a magazine occasionally* 82%
Have cable or satellite TV service on TV watched most often 79%
Read at least 1 of the last 5 issues of the campus paper 72%
Read 3 to 5 of the last 5 issues 42%
Read national newspaper weekly 40%
Watched campus TV in the past month 36%
Read natl. newspaper online weekly 23%
Listened to campus radio station in the past week 13%
*Read one of the past four issues
Source: Student Monitor, fall 2002

PEER PRESSURE

Word of mouth and television commercials are the two ways college students prefer to find out about products and services.

HOW COLLEGE STUDENTS PREFER TO LEARN ABOUT PRODUCTS AND SERVICES:

Word of mouth 67%
Advertising on television 64%
Free samples in a store 42%
Information on the Internet 36%
Catalog in the mail 33%
Advertising on the radio 33%
Free samples of a product on campus 27%
Free samples sent in the mail 26%
Free gift with a purchase 25%
Information from a company's Web site 24%
Source: Student Monitor, fall 2002

PERCENTAGE OF 18- TO 24-YEAR-OLD COLLEGE STUDENTS WHO THINK ADVERTISERS SHOULD ALWAYS DO THE FOLLOWING:

Mention the cost of products in ads 46%
Use humor in ads 37%
Use everyday people in ads 33%
Make ads they and their parents like 17%
Use their favorite song in ads 17%
Use ads that are sexy in their appeal 12%
Place products in TV and movies 11%
Use a celebrity to promote a product 7%
Don't advertise products at all 6%
Make ads that they understand but their parents don't 3%
Source: 360 Youth College Explorer/Harris Interactive, fall 2002
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