Back-to-School Budgets: Not Just For Parents

This year’s back-to-school shopping season will be quite different than years past, thanks to the focus on the economic recession and saving money. For retailers, back-to-school season is considered the second most important shopping season of the year (behind the holidays) and is often used to predict second half sales. Many fear that a tough back-to-school season could indicate an even tougher holiday season.

While retailers are cautiously examining their inventory and sales, consumers are also paying close attention to their numbers. According to the National Retail Federation, four out of five Americans have made some changes to back-to-school plans this year as a result of the downturn. In fact, the NRF predicts that the average family with children in grades K-12 will spend $548.72 on school merchandise, a decline of 7.7% from 2008.

One tactic that many parents are using to deal with a lack of funds is to teach kids how to budget their money while they shop for the essentials. This approach definitely ties in with the sales- and price-focused messages seen from retailers this year. Target is even encouraging parents to make back-to-school shopping “one of the first math lessons of the year” by doing just that. They offer several list-making tools on their website, a Target ‘09 College Facebook page and a 44-page “Smart scholars save dollars” catalog.

I have two children going back to school. Sanaa (11) will start her first year of junior high and Aamir (14) is going into high school. This year, my wife and I developed clear lists and established budgets with the kids. We also selected just one store to buy from (Office Max). Making sure we were prepared with shopping lists, budgets and sticking to one store allowed us to save both time and money. We were able to get everything the kids needed for school and still had money from their budgets left over.

Marketers should take a cue from their customers and use this time to look at their own budgets. They should make sure that their marketing dollars are being spent wisely and on effective programs. The only way to ensure this is to test and learn using analytics. Analysis of current programs and customer behavior can help refine marketing campaigns, increase loyalty and drive profits during this challenging back-to-school season and beyond.

Targeting Teens During A Recession

It looks like anxiety over today’s economy has spread to a younger demographic. While in the past, young consumers were relatively recession-resistant, today’s teens are adjusting their buying behaviors accordingly. This shift highlights the difference between this generation of youngsters and generations before them.

In 2006, Euro RSCG Worldwide conducted a Global Cross-Aging Study, which polled people on their attitudes about aging. The study found that today’s youth is being forced to grow up too quickly and that older people are behaving youthful longer. This key issue is being exacerbated by the uncertainty and angst concerning the economy.

The destruction of net worth is forcing Baby Boomers to work longer. While their parents confidently retired at age 65, the anxiety of diminishing retirement funds is causing Boomers to rethink their plans. Young people, on the other hand, are being forced to mature much earlier. They are dealing with money worries at an age their parents never had to. With the threat of nonexistent social security and rising rates of unemployment, teens and young adults are feeling even more pressure to save money. In fact, 58% of American youths say they regularly save or invest for the long term.

Suddenly, this emotional observation has become a pragmatic reality.

American Student List (a company with the most comprehensive list of students) conducted a study on recession-minded teens and young adults, which was featured in a recent Ad Age article. Interestingly, this study found that while both genders are worried about the economy, males and females are reacting differently. Female teens and young adults are more likely to engage in money-saving activities (41% v. 35%) than males. Additionally, nearly half of females in this age group are looking for sales (48%) and staying home (51%) more often than a year ago, compared to fewer than 43% of males in both categories. On the other hand, almost half (48%) of the males polled buy high-end brands just as often, and nearly one-third (29%) spend money on entertainment more often.

These findings shed light on the immense opportunity for gender-specific behavioral marketing that engages teens and young adults – especially when it targets teens that spend their own money. In this recession, marketers should communicate with male and female youths in a unique way in order to get the best results.

The ASL study also highlights the importance of brand loyalty in today’s economic environment. The study found that when teen and young adult consumers’ store relationships grew stronger, shopping frequency during the past year also increased. For this reason, marketers will benefit most from advertising brand value and finding new ways to become part of this age group’s daily lives.

This key consumer group should be reached on a personal level, taking into consideration age, gender and lifestyle. Now more than ever, young people will be extremely choosy when it comes to where they spend their hard-earned money. Brands need build to Brand Rituals™ among their teen and young adult customer groups in order to engender loyalty and keep them coming back for more – regardless of fluctuations in their piggy bank.

What Can We Learn From Students’ Behavior?

Everyone knows that young people – especially students – center their lives around the internet. This is old news. In fact, today’s average student got their first email address at the age of 13 and currently has a mean number of 2.4 email addresses, according to the eROI Student Survey.

This information would lead one to believe that email is a great way to reach a brand’s young customers. However, that may not be the case. The Student Survey also showed that students, on average, read marketing emails on a “rarely to never” basis and only 16% actually take action on marketing emails.

By looking at the ways students are acting, it is clear that marketers may want to reconsider their use of email to reach young consumers. Their behavior shows that this particular channel may not be as effective as others within the direct marketing space.

Social networking and texting, however, are on the rise. 83% of college students use Facebook, 65% use MySpace and 21% use LinkedIn. Additionally, students named text messaging as their preferred means of communication (according to the eROI study).

We need to reach them in the way they prefer, not how we wish. The biggest challenge is our ability to ensure that the desired behaviors do happen. And that we can monetize our investments. It is a conundrum. Do you agree?