1) Summary (of what you did and found)
This study explores the spending patterns of college students. It is now a well known fact that college students are part of the special segments which are targeted by businesses. (Tech Times, 2004) This is because they have the capacity to buy and they have specific preferences for the goods and services they buy. For instance, a study found out that "college students spend an average of $287 a month on discretionary items (spending on anything other than tuition, room/board, rent/mortgage, books/school fees). This is equivalent to a significant buying power of $200 billion dollars a year nationally. (Ibid.) Locally, the impact of this buying power is significant to the local communities because the neighboring communities are affected by the economic contributions of these students.
This study focuses on the spending pattern of college students in the local economy. It studies what the seniors, juniors, sophomores and freshmen students of Central Michigan University spend the most on. It also explores the effects of this spending in the local economic contexts. Generally, the study found out that there are differences between the spending patterns of males and females students in Central Michigan University. There is also a marked difference on the spending patterns according to their class standings (senior, junior, sophomore and freshmen) and in their residence (on campus and off campus residence). Statistically, however, the significant level of difference is lower than 95%. Hence, we confirmed the null hypothesis and concluded that the spending patterns are equal.
The main data source used in this study was the descriptive case study samples prepared by the Professors of the Department of Economics at Central Michigan University. These samples were culled through a telephone survey. The survey for this study was conducted during one week in March 2005 using all undergraduate students that were enrolled in Spring 2005 semester. The randomly selected students were asked on the telephone to participate in the survey and answer the questions. About 57% of those students called participated in the survey. The survey instrument was composed of four parts for four separate research projects. A sum of 247 students was taken as representative samples. There were 57 freshman, 45 sophomores, 52 seniors, and 93 seniors included in the sample. In terms of gender, there were 147 females and 100 males while in terms of residence, about 121 live on-campus, 110 live off-campus and 15 live with their parents.
Through descriptive research, the study found out that based on class standing, freshmen and sophomores spend significantly less than juniors and seniors on a variety of items including recreation, food and other items that they purchases. On the other hand, seniors spend substantially more than underclassmen on recreation. They spend 69 percent and 95 percent more than freshmen and sophomores, respectively.
In terms of gender, the study found out that male students spend more money on recreation whereas female students spend more on books and supplies. On average, students living off-campus, but not with parents, spend about twice as much as on-campus residents on recreation and stores and nearly three times as much in local stores on food items. There may be legal issues such as the age for drinking and other factors that could also be compared in terms of students who live on campus and those who do not live on campus. These may well reflect the lifestyle choices that students may be indulged in.
2) Discussion (explanation of findings - why do you think you found what you did?)
The representation of the mean spending expenditures of college students is a fair assessment on the overall spending pattern over a 9-month period for other colleges. The researchers did an analysis of the differences in spending patterns based on class standing, gender and living place. In all these three categories, the study accepted the null hypothesis because there is not a significant difference in the spending expenditures among class standings, between female and male students or the place they live at.
The largest difference in total spending is between sophomores, who have a mean spending of $5,500 in a 9-month period, and freshman, who, on the average, spend $8,488 during a 9 month period. This difference is mainly due to the fact that freshmen are required to stay on campus and there many more sophomores who choose to stay in dormitories that are situated on campuses. Thus, the findings of our analysis do not support the assertion that there is a significant difference in the mean spending expenditures among class standings or gender or the place where the students live. This can be attributed to the total samples gathered which may be relatively small compared to the total population of the local university from which it was derived from. (Babbie, 2005) A larger body of samples may have different results. The time duration of the survey may also have an impact on the results.
The mean spending for the four levels of class standing is different. The mean spending for freshman is higher than that of the other three class standings and seniors spend more than sophomores and juniors. This reflects a very accurate and generalized picture because all of the total class standings were taken into account. The five selected spending categories also show the main differences in the usage of money in each class standing. This is also a very good finding. The larger mean of the lower class standing (freshmen and sophomores) may be attributed to the more sophisticated buying patterns of the junior and the seniors as would generally assume because they are much older and more experienced already. They have more specific buying preferences and tastes compared with the younger students.
The basic difference in the spending patterns of male and females reflects the universal differences in men and women’s consumption patterns. As shown, female college students spend less money on recreational purposes than the males. On the other hand, they spend more on supplies for school work than males. Again, this reflects the general attitude and buying behaviors of women compared with men. Even outside college, men are more likely to be engaged with recreation and women are more likely to buy things as their preoccupation.
Lastly, there is a difference in the spending pattern of students who live on campus, off campus or with their parents. This is primarily because the students who live on campus have lesser buying power as they have to pay rent compared to students who live with their parents. Also, students living on-campus may have a meal plan included in their tuition payment plan and would not spend as much money on groceries as if they have to provide for themselves. This implies that college students who live on campus have been more discerning in their spending due to some practical considerations.
3) Recommendations (based on your findings)
It is evident that the local economy is affected by the buying patterns of the college students and by students, in general. However, it is interesting to note that the amount a senior or a freshman student spends may not be prudent enough to impact the decision making process of local business owners. Thus, one recommendation based on the researchers finding could be that local business owners look at the over-all population of a campus and their overall spending patterns because college students can have a strong overall impact on local spending when they represent a large portion of the local population. Also, the students may have a stronger impact on the mix of spending if their demographic characteristics substantially differ from the local population. To know about the spending pattern of college students will allow local businesses to offer the right products and help them in forecasting their budgets.
Another recommendation would be that local business should offer specials based on the student population they are serving and thus, their businesses would increase their sales margins more dramatically. To directly offer to the students will allow the local businesses to control the spending expenditures of college students since the students would be more inclined to buy from these businesses than to shop online or leave the campus.
Even though, the analysis showed that there is not a significant difference in the spending pattern of college students, they may want to still offer products that are designed for certain groups of students (i.e classes, gender etc) based on past sales. The final recommendation would be to make sure that local businesses work together with the university administration to form a partnership with the Campus cafeteria or other student offices. This would give the campus community an opportunity to interact with the local community and local businesses will be able to market their products in a more direct way.
Generally, the local business would benefit from the information on the buying patterns and buying power of students. It will help increase their sales and they find their niche markets by offering the needed products to the students. It is important that the local business owner will not put too much focus on the different groups of students i.e. their class standing, their gender, and their residences but rather focus on the overall population. This will allow their businesses to adapt their marketing strategy and change their product offerings when needed.
They need to come in close contact with these markets. Snce they are very mobile, businesses need to offer access to their product or website through cell phones. (Williams, 2010) According to Ashli Norton of SimpleLeap, their experience in utilizing SMS text and cell phone browser access are the most effective ways of reaching the college students. (Ibid.) Students are very active with website searches and personal buying. Local busnesses must be highly visible online. They must have creative, user friendly and effective online selling tools. Being price senstitive, the businesses should also mainly consider targeting the students with their parents (and parents’ buying power) in mind. Another best way to reach them is, as mentioned earlier, by networking with their schools administrators for product introduction and promotions.
Babbie, E. (2005). The Basics of Social Research. Thousand Oaks, CA: Sage Publications.
Tech Times. (August 27, 2004). Students' discretionary spending patterns changing, say merchants. Retrieved on April 30, 2009 from http://www.tntech.edu/techtimes/2004/04_08/08_27/spending.html.
Williams, G. (September 24, 2010). Five Tips for Marketing to College Students. Entrepreneur Online. Retrieved on December 7, 2011 form, http://www.entrepreneur.com/article/217344.