The U.S. college student market is a growing yet under-served niche market. The U.S. Department of Education expects the U.S. college student market to grow from 15.8 million students in 2003 to 17.2 million in 2008. According to a Harris Interactive study conducted in the spring of 2002, college students spend an estimated $200 billion dollars per year. As of 2003, it is estimated that college students were spending $1.4 billion online.
John Geraci, Vice President of Youth Research at Harris Interactive concludes: "The college consumer is easily overlooked since most information sources that marketers rely on for tracking consumer behavior tend to under-represent college students. However, it is a consumer group that marketers should recognize as offering substantial opportunity. Connecting with consumers during the college years can pay great dividends, both now and well into the future."
4.1 Market Growth
According to the findings from the 360 Youth/Harris Interactive College Explorer Study estimated the U.S. college market will spend nearly $200 billion dollars a year.
University Bookstores The National Association of College Stores estimated U.S./Canadian university bookstore sales to be $11.12 billion for the 2001-2002 academic year and online textbooks sales to be an estimated $1.8 billion. University bookstores sell a variety of items, ranging from textbooks to toothpaste. The following table display the estimate of average product sales in the entire university bookstore market, from largest to smallest segments.
Textbooks The total textbook/course materials market is estimated to be $7.8 billion based on sales data for the 2001-2002 academic year. The textbook market is made up of three segments - new texts, used texts, and custom-published materials(or course packs). The percent of total store sales and estimated market size of each segment is provided below.
Total Course Materials
Online Retail Jupiter forecasts that online retail spending in the will grow by 28 percent in 2003 to $52 billion. The research company estimates that by 2007, online retail spending will reach $105 billion and account for five percent of all retail spending. Jupiter estimates that the online retail will grow at an average annual growth rate of 21 percent between 2002 and 2007.
 National Association of College Stores (2000-2001)
4.2 Market Trends
The follow statistics indicate that college students are receptive to the Internet channel for the products, services and content offered by the College Cafe. The following U.S. college student statistics were based on a report by the Student Monitor and the Harris Interactive Explorer Study.
99% of college students use the Internet
93% of college students use the Internet every month
72% of college students access the Internet at least daily
92% of college students own a computer
13% of college students plan on buying a computer in the next year
15% of college students indicated they are the first to buy a new tech gadget or device
Students average 9 hours per week online
Students average 9 hours per week watching TV
Students average 10 hours per week listening to the radio
According to the Harris Interactive Study, college students spend an average of $287 per month on discretionary items (which is defined as spending on anything other than tuition, room/board, rent/mortgage, books/school fees).
Participation/Spending by College Students on Entertainment and Leisure Activities
Projected Yearly Spending (in millions)*
% Students Participating in Past Year
Purchase Videos/DVDs (not including equipment)
Purchase Music CDs, Tapes, etc.
Purchase Video Games (not including equipment)
Purchase reading material (not for use in school)
Going to Movies
Attending Music Concerts
Going to an Amusement Park
Projections based on Spring 2002 360 Youth/Harris Interactive College Explorer Study; this represents a partial list of categories for entertainment and leisure activities.
The National Association of College Stores estimates U.S. college store sales to be $11.12 billion for the 2001-2002 academic year. College stores sell a variety of items, ranging from textbooks to toothpaste.
4.3 Market Segmentation
The following table illustrates the future growth of rate of college students by age group and sex.
SOURCE: U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P-25, Nos. 1092, 1095, and "National Population Estimates," December 2001, and "Annual Projections of the Total Resident Population: 1999 to 2100," January 2000
18-24 years of age
25-29 years of age
4.4 Target Market Segment Strategy
The potential market for The College Cafe consists of 15.8 million college students enrolled in over 4,180 institutions. For the Phase 1 launch of The College Cafe, we plan to focus our marketing effort on a subset market located in the Southeastern U.S. We plan to expand to new markets with a phased approach focusing on a new region of the country each semester. The Phase 1 target market segment will consist of the following universities:
East Carolina University
Florida State University
Georgia State University
Miami-Dade Community College
Mississippi State University
North Carolina State
University of Alabama
University of Florida
University of Georgia
University of Kentucky
University of Miami
University of North Carolina
University of South Carolina
University of Tennessee
Phase 2 will focus on additional colleges and universities located in the southeast with the addition of colleges and universities in the Northeast.
4.5 Competitive Anaylsis
Competitors of The College Cafe includes traditional university bookstores, online textbook retailers, textbook exchange sites, textbook price comparison sites, online auction sites and online content specific sites targeting the college student market.
4.5.1 University Bookstores
The major objective and strategy of university bookstores is to maintain competitive pricing and customer service. The strengths of the traditional university bookstores are current customer relationships and location to the University. The major weaknesses of university bookstores are the limited product selection and lack of value added services that can be offered online.
The National Association of College Stores estimates U.S./Canadian university bookstore sales to be $11.12 billion for the 2001-2002 academic year.
There are approximately 4,840 college bookstores serving 4,182 institutions in the United States and 170 college stores in Canada. Larger universities will often have several stores to serve students, smaller schools in a local area may be served by a single store, and several schools in an urban community may share multiple retail outlets. While many college stores share a common mission, they vary widely in size, location, ownership, and customer base.
The majority of stores are owned or operated by the university they serve. On-campus stores are mostly institutional, but they may also be contract managed, cooperatives, or student associations. Off-campus stores are typically privately owned.
Sales volume in college stores is determined by many factors, but the major influence on sales seems most closely tied to the size of the institution served. According to the NACS College Store Industry Financial Report 2003, average sales per college store were $6,320,556 while the median was $3,303,062. The majority of college stores have less than $1 million in sales each year.
According to the NACS College Store Industry Financial Report 2003, college stores returned a median net income of 7.3% of net sales to their institutions.
NACS Membership by Sales Volume
Sales Volume in $$
Under $1 million
$1 to $3 million
$3 to $7 million
Over $7 million
4.5.2 Online Bookstores & Retail Websites
The major objective and strategy of online competitors is to maintain brand awareness, offer value added services, product selection/availability, order fulfillment and customer service. The strengths of existing online bookstores and retail sites are current customer relationships and brand awareness. The major weaknesses of online competitors is barriers to entry, concern about security & fraud, shipping charges, on-time fulfillment and returns processing.
Based on the 2003 College Store Industry Financial Report, total online sales at university bookstores for 2001-2002 are estimated to be $150 million or 1.41% of total college store sales. With a "click and mortar" strategy, the university bookstore can offer the convenience of web ordering, paired with:
Ease of returns
The ability to pick up items for immediate use
Accurate information on what textbooks students need for their courses
The trust and security of buying from a well-known source with an on-campus location
The following table lists some of the major independent online retailers not associated with a university bookstore:
Barnes & Noble.com
Allows student to buy and sell textbooks
Buys and sells new and used textbooks
Integrated media and ecommerce Online retail
Discount college textbooks Merchandise Limited content
Online textbook retailer Network of university bookstore for brick and mortar presences
Online student discounts on software
Online retail – various college market merchandise Online research papers assistance
Online retail – various college market merchandise
Textbook price comparison engine
Buys and sells used textbooks Offline buy-back Online sales