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How to be Rational, Rather than EfficientDiagnosing University Students’ Consumption Habits Through Discounts and Mileage Point Benefits
Jeong Seon-ju  |  sunju630@hanyang.ac.kr
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[319호] 승인 2013.09.30  
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A college student by the name of Lee recently agonized about what kind of gift to get for his girlfriend on their first anniversary. “I always want to give my girlfriend the best, but since I am a student who cannot afford expensive gifts, I decided to buy her some cosmetics which I heard would be on sale,” he said. However, when Lee arrived at the shop, he was shocked to witness the overly aggressive behavior of many female students who were eagerly stocking up on whatever items they could get their hands on, presumably just because they were on sale. “It looked horrible. I know that everyone likes to get a great bargain, but still, their behavior was appalling,” Lee said, grimacing at the recollection of that day.
When many university students seek goods or services, frugality is at the forefront of their minds. Thus, they consciously search for discounts and mileage point systems. According to a recent survey conducted by The Hanyang Journal (The HJ), 70 percent of the Hanyangian respondents has purchased products at a discount during the season for bargaining sales, 68.75 percent of them has used mileage points for efficient consumption, and 64 percent of them has purchased through social commerce (the use of electronic media such as SNS for purchases) for efficient spending as their reason for shopping. Not surprising then, as thrifty consumers, university students would naturally be attracted to discount sales and mileage point events which they would perceive as being practical. However, whether these types of gimmicks truly lead to more thoughtful consumption behavior by normally rationally thinking university students is questionable.
 
Why Twenties are Becoming Stingy
As a result of the 2007 Economic Crisis in Korea, some say that a trend towards more responsible spending began to gain momentum particularly among college students. This mentality is believed to have persisted leading those in their twenties to automatically lean towards being thrifty in their spending habits even today. Thus, these consumers use various and diverse methods of searching for affordable prices for the goods and services they want. Han, Sang-lin, a Professor in the School of Business at Hanyang University(HYU) pointed out how young people in their twenties have become conspicuously active patrons of the discount and mileage point schemes. “The spending patterns of young people today reflect a particular characteristic, which is activeness. They are aggressive in their consumption activities, and with the development of IT (information technology), young students in their twenties who are quick to adapt to technological developments of Smartphones and the Internet, have become proficient hunters of various bargains. This is why young people are more interested in the discount promotions and mileage point offers than their older counterparts.”
In addition, a consumer profile for a “university student” can be described by analyzing their spending habits. According to The HJ’s survey, 28.25 percent of the respondents said their money came from an allowance from their parents as well as from part-time jobs, while 11 percent claimed their money was solely from part-time jobs. This reveals that for some university students, their source of income was not limited to an allowance from their parents, but from earned income as well. “University students tend to exhibit a higher rate of spending on a wider variety of goods and services than adolescents. However, as they are not financially independent yet, many students in their twenties try to sustain their consumption habits by working part-time,” Professor Han said. This change in their income source (previously their allowance was their main source of income) has led more young people in their twenties to be engaging in what they consider to be more efficient consumption. Ahn So-jeong, a Sophomore in the Division of Economics at HYU said, “Whenever I receive my allowance from my parents, I always feel a bit apologetic. Even though they still think of me as a child, I am in fact a legal, able-bodied adult. So in addition to my allowance, I also work part-time at a cafe, and I always try to spend reasonably.”
Further commenting on those who have “university student” status, Professor Han commented, “Those in their twenties are at an economic transition period where they are not fully independent or dependent. So it has become more common for university students in their twenties to be more sensitive to pricing and related cost-saving ideas. This combined with inquisitive dispositions has led to more efficient spending habits by some.”
 
The 20-somethings’ Choices for Efficient Consumption
As revealed in the aforementioned The HJ survey, the conscious efforts of university students to save what limited earnings they have has led to three categories that describe the motivations behind their spending habits: discount events, mileage systems, and social commerce.
“I was excited when I checked the “Discount Calendar in August” that I got which shows the dates when most cosmetic shops have their discount events in August. I feel like I’m wasting money if I buy anything that is not on sale or being offered during the bargain sale period. So I always purchase goods during the discount periods, which includes this month. I’m looking forward to the events. I never miss them!” said Nah Ji-young, a Senior in the Division of Business Administration at HYU. As Nah said, many cosmetic shops attract customers by having frequent sales events. According to the “Discount Calendar in August” of the popular online shopping site GMarket, 12 days a month are reserved for sales. That means basically, customers can buy cosmetics on sale about every other day. The same can be said for the SPA brand, which stands for “Specialty store retailer Private label Apparel brand.” Kwon Soo-ra, a Professor in the School of Business said, “In the case of brands, such as cosmetics and apparel brands whose main customers are young people in their twenties, the marketing schemes are more aggressive. To be competitive, many companies provide various bargain promotions targeting young customers. Still, I think these ploys are creating a more responsible spending mentality in young people who are ever cognizant of their expenditures.”
In addition to discount events, the mileage point system is another attraction for university student consumers. According to statistical data of 25,000,000 customers by Lotte Card, young people in their twenties use mileage point systems more actively than the older generation. Professor Han commented on the reason behind the their obsession with mileage points saying, “Because university students do not have a regular income, most of them are not eligible to have their own credit cards, which provide regular discounts and/or mileage point benefits compared with check cards (debit cards). Consequently, this is causing youth in their twenties to be become increasingly interested in mileage point benefits that many retail shops offer by giving their young customers their own shop cards.” In fact, according to The HJ survey, the number of students who uses credit cards accounted for only about one fifth of the number of students who use debit cards.
Moreover, making consumers think that they are reaping huge benefits from various companies is the key to those companies’ popularity among young people in their twenties. Thus, a number of companies have banded together to create a mileage point system that allows customers to accrue mileage points from purchases made at different movie theaters, cafes, bakeries, etc. This is basically the same system that various airlines have employed to promote more patronage by their customers. By accumulating points, customers can then use them like currency to acquire certain goods or services. “I use the mileage point service because it can be used at various shops that are affiliated. The points I gain at one bakery can be used at a different but affiliated business like a theater, coffee shop, or even family restaurant. So I never go to places where I cannot get points and instead, usually go to specific places I know that will give me points,” said Seo Kyung-hoe, a Junior in the Division of Economics at HYU.
The last category that explains the motivation for university students to spend more efficiently is social commerce. The most popular form for students is to visit websites where they can get discount coupons. This preferred method began back in 2005 by a website called “Shoposhere” in which Yahoo provided a Pick List of services it recommended to its users. Soon the idea of group purchases online became popular and before long, various coupon offering sites began to appear, which have become particularly popular with those in their twenties. According to statistical data by Dawonday, a website that puts together information on social commerce sites, the scale of social commerce markets reached about one trillion won (US$1 is approximately W1,110) last January, 2012.
The greatest advantage of using the social commerce system is the regular discounts provided on goods and services that are in demand. “I am set on all the things I needed during this summer because I took advantage of discount events on social commerce websites. From swimsuits to accommodations and facilities, everything can be prepared in advance by just one click.  Also, because of access to these sites by Smartphone, most of my friends use these sites too,” said Lee Ju-lee, a Sophomore in the Department of Policy Science at HYU.
Since the main customers of social commerce websites are those in their twenties, many social commerce companies having been providing specific discount benefits that target this demographic for a number of years. The Jisan World Rock Festival is an example of an event that is organized for mostly those in their twenties, whereby tickets are sold through social commerce at discounted prices. Kim Kyung-min, a Senior in the Department of Korean Language and Literature at HYU said, “In social commerce websites, there are lots of events for people in their twenties such as water park specials and other bargain-sale events. Since these events are being offered at affordable prices, me and many of my friends use social commerce websites much more actively than other age groups.”
 
Are You Sure it is a Rational Spending?
According to The HJ survey, about 80 percent of the Hanyangian respondents answered that the discount and mileage point systems are appealing, since a wide range of products can be purchased inexpensively. Despite the number of positive evaluations however, some say that these benefits are not really providing a good rationale to consume. Professor Han emphasized the need for university students in their twenties to distinguish between rational consumption and efficient consumption. “Many students view spending money due to low pricing as positive, and think of it as efficient consumption. However, what is needed more is rational consumption which requires a different approach; it is thinking about purchases on a mature level on the basis of need versus want,” he said.
Furthermore, some have a distorted idea of what satisfaction means, believing that spending more money on discounted goods or services is satisfying, when in fact, it can be very inefficient and even wasteful. “Honestly, I realize that sometimes I spend too much money during the discount periods than I normally would. Although I can recall a number of times when the purchases I thought I was getting were a good deal, in reality, they were not really bargains. But still, I would not say that I am an excessive spender because I was at least initially satisfied with those purchases,” commented Yoon Seong-eun, a Junior in the Division of Economics. Professor Kwon however, disagreed saying, “Of course, purchasing something with a discount or through mileage points is one way of saving money and it may seem like efficient consumption behavior to most university students. But in reality, excessive gratification at making those purchases, such as gaining a sense of accomplishment, empowerment, and/or recognition by peer groups, can blind these young consumers to their insensible overspending. They may think they are getting deals but when it causes overconsumption, obviously it is not rational spending at all.”
The mileage point system can also lead to unnecessary consumption. Professor Kwon pointed out, “There is a catch to the mileage point system, namely the validity date. As that date approaches, customers who have accumulated points feel they have no choice but to use them as quickly as possible. They believe that their accrued points are equal to money and thus not using them would be tantamount to losing money, so they feel pressured to consume goods or services that might be unnecessary.”
There are those who have been voicing their concern over the prevalence of discount and mileage point systems, arguing for instance, that such ploys may create a sense of distrust by consumers toward items that have fixed prices. Kim, Da-bin, a Sophomore in the Department of Policy Science views these marketing methods negatively saying, “While I agree that the advantages of those systems can seem attractive, I have my suspicions that these companies simply overinflate the prices of their products in order to then comfortably appear to be significantly marking them down for the benefit of their customers. People should be able to conveniently purchases goods and services at reasonable prices and not have to be tempted by offers of so-called discounts or bargains. This is not a rational consumption at all but rather just a sneaky marketing scheme by companies to give consumers a false sense of temporary satisfaction.” Regarding the doubts of these supposed benefits, Lee Seung-yoon, a Professor in the Division of Business Administration at HYU said, “Discount systems or events are surely good business strategies for companies to attract their customers. However, I agree that lots of competitive discount events can bring about customers’ mistrust towards the fixed price system, which in turn can hinder rational consumption.”
 
To Be a Rational Shopper
According to a survey conducted by the Center for Free Enterprise in Korea, 47.6 percent of university students responded that they can understand economic recession in relation to a high unemployment rate. As a result, many university students are apprehensive about the future and are trying to live frugally. “Since our freshman year, my friends and I have been studying hard to get a job in the distant future as well as receive scholarships for the foreseeable future. I think a lot of students are trying like us to be thrifty by spending money less and trying to find ways to pay for college,” said Lee, Hae-rim, a senior in the Department of History at HYU.
Although it seems like more students are becoming more mature, responsible consumers, there are still growing concerns about young people’s spending habits, particularly those who appear to be over-relying on discounts and mileage point events. All the professors whom The HJ interviewed agreed that to be a truly rational consumer, it is necessary to carefully consider whether spending on a purchase is necessary or not, even before considering any discounts or mileage point privileges.
Professor Lee in particular emphasized the need for mature consideration on the purpose of one’s spending beforehand. “Individual spending habits that are formed when a person is in his or her twenties can greatly influence their future spending habits. Therefore, university students should avoid being tempted and manipulated by all kinds of discounts and mileage point promotions, and instead focus more on engaging in consistent rational consumption, by ruminating on necessities,.”
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