Consumer Behavior of College Students

in the Czech Republic

▪ Horáková Monika
Abstract
This contribution is a follow-up to the topic of consumer behavior which is analyzed from the
economic theory perspective on microeconomic as well as a macroeconomic level. The main
objective of the article is to reveal the structure of college students’ consumer basket determined
according to disposable income and its changes. In this article, the methodology of a consumer
basket was used. The division of it was done by Czech Statistical Office to calculate the inflation
rate in the environment of the Czech Republic. In this article, the analysis of college students’
consumer basket was done. The pressure on having a higher qualification in tertiary education
is a typical trend across Europe, which is also one of strategic goals of EU Strategy 2020 and
its concept. There is clear evidence of a growing segment of college students that represents a
significant demand group on the product and service market. The knowledge of their consumer
habits is definitely beneficial for companies regarding their competitive advantage and reach-
ing higher incomes from the products offered. The market product consumption is dependent
on the total disposable income mainly. That is fundamentally dependent on hours of paid work
or other fund contributions. The current disposable income shows the differences regarding
consumption expenditures of a consumer basket and its various categories. A lower dispos-
able income is typical for flowing the highest consumer expenditures from class 1 (Food and
non-alcoholic beverages) to class 4 (Housing, water, electricity, gas and other fuels) of a higher
disposal income. If the current disposable income of college students increases, there would be
higher consumption expenditures regarding classes 9, 3 and 5 (Recreation and culture; Clothing
and footwear; Furnishings, household equipment and routine household maintenance). On the
contrary, a lower disposable income would mean lower expenditures regarding classes 3, 2 and 9
(Clothing and footwear; Alcoholic beverages and tobacco; Recreation and culture).

Keywords: college student, disposable income, consumer basket, consumer expenditures

JEL Classification: D12, E21

1. INTRODUCTION
Final consumption expenditures of households are one of macroeconomic components of na-
tional as well as international methodologies to measure the economy product. There is an ex-
penditure approach use in the Czech Republic. (Czech Statistical Office, 2015a) According to the
statistics, these expenditures form about half of the final GDP sum. Therefore, it is not possible
to ignore this national component. (Eurostat, 2015c) Although there are about 10.5 million peo-
ple (households) in Czech economy, only one part (about 59% of them) are within the category
of being economically active. The rest of population is represented by seniors mainly, children
and handicapped people. (Czech Statistical Office, 2015c) The economic activity on the labor

68 Journal of Competitiveness
Vol. 7, Issue 4, pp. 68 - 85, December 2015
ISSN 1804-171X (Print), ISSN 1804-1728 (On-line), DOI: 10.7441/joc.2015.04.05

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 market is connected with incomes, which can be even higher by adding other finances from
state or other persons. We can call this a disposable income. Subsequently, these incomes are
used to buy products and services, and this can be called consumer expenditures. It is essential
to monitor distribution of these financial incomes by the state as well as companies in practice.
The consumer expenditures support better economy performance (growth of GDP), and the
companies have better possibilities regarding potential market for their production. A growing
consumer interest in companies´ products means having higher sales, profit, and the companies
are becoming more competitive.
Strategy Europe 2020 accepted by EU countries has set the goal in 5 key areas to reach an eco-
nomic growth and a higher employment rate. This concept supports the present focus of the
article on the field of education where the percentage of people with a university degree (age 30
– 40) should reach 40% respectively 32% in Czech Republic. (Eurostat, 2015b) Therefore, the
group of college students represents a significant market potential nowadays and for the future
as well. Results of the research show behavior of current group of college students within con-
sumer behavior depending on disposable income.
College students´ behavior is part of microeconomic as well as macroeconomic scientific disci-
pline. In the following subchapters, the bipartite view on these issues will be presented.

1.1 Consumer Behavior – Macroeconomics Point of View

A consumer is every economic individual on the demand side. A consumer enters the product
and service market in order to satisfy individual needs. (Krugman & Wells, 2009; Rubinfeld
& Pindyck, 2013) Regarding a consumer, there are many factors influencing the consumer´s
attitude and his/her preferences thank to which consumer´s decision about buying is made. (Be-
sanko et al, 2015; Clemons, 2008)
All the individuals entering the market with the aim to satisfy their needs through buying prod-
ucts or services are becoming consumers at the same time. The financial income enables such
buying and consumption itself. From the national economy perspective, financial incomes as
well as consumption expenditures of households are monitored. Such methodology connected
with the finding above mentioned is called – Statistics on Income and Living Conditions (EU-
SILC). The range of SILC results usage is rather wide. It is a base for state social politics, for
internal statistics of Czech Statistical Office (CSO), e.g. forming a consumer basket to check
a consumer prices index CPI, which is a supporting source to form national accounts within
household sector as a part of the economy product, and for comparison on international level as
well. (CSO, 2015d)
The particular financial amount spent on getting a product is called consumption expenditure.
Czech Statistical Office (CSO) in accordance with EU directives divides individual consump-
tion expenditures into 12 basic categories (see Tab. 1). These categories also include products
and services of common daily consumption. This division collects information regarding con-
sumption expenditure according to the Classification of Individual Consumption by Purpose
(COICOP). Such streamlined list is called a consumer basket. To each principal category, more
precisely to all products and services included, there is information added regarding their level
of consumption value, in total weight of 1,000 %.
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 Tab. 1 - Structure of Consumer Basket by COICOP (Source: CSO, 2015d)

COICOP (CP01-12) 2012*

CP01 Food and non-alcoholic beverages 170,332703

CP02 Alcoholic beverages, tobacco and narcotics 85,987255
CP03 Clothing and footwear 47,207768
CP04 Housing, water, electricity, gas and other fuels 253,400912
Furnishings, household equipment and routine
CP05 55,190047
household maintenance
CP06 Health 24,998575
CP07 Transport 114,887081
CP08 Communications 39,882587
CP09 Recreation and culture 93,682015
CP10 Education 7,768676
CP11 Restaurants and hotels 44,258026
CP12 Miscellaneous goods and services 62,404355
*Source: The average weights of 2015 have been on the same level since 2012.
Monitoring the aggregated consumption expenditures is part of a GDP calculation done by an
expenditure approach. (Mankiw, 2014)
In this article, we will also be interested in understanding consumer basket structure from con-
sumption expenditures perspective with regard to particular principal categories. In the national
context, these final expenditures form part of family accounts statistics.

1.2 Consumer Behavior – Microeconomics Point of View

On the contrary, it is not possible to state that all the consumers on the market behave in the
same way as each individual is specific. To reveal consumer behavior in the period of modern
technologies, e.g. internet, means a special task for every company in business. It is to find the
way to Pandora´s box. (Gurney, Chambers, Grant, Shah and Sullivan, 2004)
The consumer decision-making itself regarding buying a product is influenced by many external
factors, such as economic conditions, social level, legislation, as well as by internal factors, e.g.
psychological factors, opinions, attitudes.
From the market offer perspective, it is essential for the companies to include all the aspects
within marketing selling strategies in order to motivate a customer to buy the product.
An economically simplified marketing model of consumer behavior is visible in Figure 1 (Schif-
mann & Kanuk, 2007; retaken by Stávková & Stejskal, 2011)

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 CONSUMER BEHAVIOR
SOCIAL-ECONOMIC - Needs identification MARKETING
INFLUENCES - Search for offers INFLUCENCES
- Micro level - Offer evaluation - 4P goods
- Utility level - Rational evaluation - 7P services
- Macro level - Emotional evaluation

Fig. 1 - Model of consumer behavior and decision making (own processing; Source: Schifmann & Kanuk, 2007;
retaken by Stávková & Stejskal, 2011)

The principal aspect for retailers to understand a consumer trend is understanding of their final
segment. Each consumer is characterized by his or her shopping behavior that undoubtedly
affects the educational qualification and disposable income. Understanding of such trends and
suitable application in marketing selling strategy enable companies to have higher sales and thus
contribute to having a higher profit.

2. THEORETICAL BACKGROUND
2.1 Students and Tertiary Education in the Czech Republic
The aggregated point of view regarding university studies official statistics enables to see the
development tendency within Czech university environment.
From the following absolute frequencies in Tab. 2 regarding number of students in tertiary
education, it is possible to see a growing trend in the interest of Czech population in university
education for the academic year 2011/2012. The following two years were typical for a slight
decline. Still, the numbers are over 370 thousand students in the CR.
There are two basic forms of study in the Czech Republic – full time study and part time study.
The second one is in majority preferred by people already working.
Tab. 2 - Number of College Students in the Czech Republic 2005 – 2013 (Source: CSO, 2014a)
Number of full time Number of part-time
Academic year TOTAL
students students
2005/06 223 154 68 689 291 843
2006/07 238 172 80 778 318 950
2007/08 251 903 95 347 347 250
2008/09 263 897 107 987 371 884
2009/10 277 051 116 293 393 344
2010/11 283 528 116 736 400 264
2011/12 284 256 111 956 396 212
2012/13 281 897 102 726 384 623
2013/14 277 621 94 014 371 635

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 Tertiary education in the Czech Republic is regulated by the Higher Education Act No. 111/1998
Coll. (©MŠMT, 2013-2015) At present, all public universities (26 in total), state universities (2 in
total) and private universities (43 in total) must follow these regulations.
The truth is that young people often use university as a tool to postpone their working duties on
the labor market. According to CSO´s research, Czech students definitely enter the labor market
much later than other students do in other countries of Europe. “The Czech Republic is typical
for its long tertiary education period.” The roots of such trend can be recognized in the first
classes of primary school when many children start their compulsory education later at the age
of 7 or 8. (CSO, 2012b)
At foreign universities, it is common to enter the labor market after reaching bachelor degree
whereas in the CR, 60% of students continue in their studies on master level. Government repre-
sentatives should strive to change this trend through the system of specialization and diversifica-
tion of universities according to quality indicators. (Fiala, 2012)
External economic circumstances (unemployment, economic growth, development of a national
debt) also have a strong influence on tertiary education market. There will be a lower number
of buyers (students) in the following years (less children born) and this will be reflected in the
offer (universities). A lower number of students at some universities will cause a higher degree
of competitiveness among these (as well as faculties themselves). They will strive to influence
the university applicants. Also, their aim will be to keep the students at particular university.
The most important aspect regarding decision-making is the choice of a study program and its
characteristics (pedagogical staff, financial demands of studies, educational and accommodation
facilities). (Enache, 2011)
In the Tab. 3 below, the structure of financial household expenditures is recorded in accord-
ance with COICOP and households of various level of qualification. In the first column, a total
household average within economy is stated. In the following two columns, consumer expendi-
tures of lower and higher education are compared. The level of education is stated in accordance
with CSO in the following way:
 Lower education = persons with primary education, qualified or completed secondary edu-
cation without taking A-levels.
 Higher education = persons with completed secondary education with passing A-levels,
with higher degree of education or university degree.

Tab. 3 - Average consumer expenditures by purpose (COICOP) per capita 2014 according to
the education level (own processing; Source: CSO, 2015d)
Employee Employee
CONSUMER EXPENDITURES, Household
with lower with higher
(CZ-COICOP) total*
education* education *
01 Food and non-alcoholic beverages 20,3 21,1 17,6
Alcoholic beverages, tobacco and
02 2,9 3,4 2,3
narcotics

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 03 Clothing and footwear 4,9 4,9 5,7
Housing, water, electricity, gas and
04 21,5 20,6 18,6
other fuels
Furnishings, household equipment
05 5,7 5,7 6,0
and routine household maintenance
06 Health 2,6 2,1 2,3
07 Transport 10,5 11,4 12,2
08 Communications 4,2 4,5 4,1
09 Recreation and culture 9,5 8,3 10,7
10 Education 0,6 0,6 0,8
11 Restaurants and hotels 5,3 5,1 6,8
12 Miscellaneous goods and services 12,0 12,4 13,0

It is possible to state the following facts when comparing consumer expenditures of people with
lower vs. higher education:
 People with higher education spend less on items from category 1 = Food and non-alcoholic
beverages, category 2 = Alcoholic beverages and tobacco, category 4 = Housing, water,
electricity, gas and other fuels.
 People with higher education spend more on items from category 3 = Clothing and footwear,
7 = Transport, 9 = Recreation and culture, 10 = Education, 11 = Restaurants and hotels, and
12 = Miscellaneous goods and services.
 People with higher education exceed people with lower education in a total average across the
republic in the items from categories 3, 5, 7, 9, 10, 11 and 12.
From the aggregated data, it is possible to distinguish what products and services the people
with higher qualification seek. Following this fact, companies of various specializations can
concentrate on particular types of consumers according to their needs. Therefore, they can use
their marketing strategies and contribute to higher sales and profit.
Another indisputable source of information, which stresses the importance of a market segment
formed by university students, is provided by a strategy of European Union called Europe 2020.
This strategy was set for all EU members with the aim to support the economic growth and
employment. The strategy sets 5 key areas measured by 9 indicators. Every country strives to get
close to these target values, and has set national goals with regard to its economic, political and
social situation. (Eurostat, 2015b)
The Czech Republic accepted this strategy on 17 July 2010. Two work-connected key areas and
three measured indicators are mentioned here. The government of the Czech Republic must
strive to fulfil these before the year 2020. In the Tab. 4, there is a present development of indica-
tors from the year 2010 to the year 2014. These areas are linked to consumer behavior of Czech
students when the importance is stressed on the area of education and employment.

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 Tab. 4 - Strategy Europe 2020 and main targets, development of indicators for the Czech Re-
public (own processing, Source: Eurostat, 2015b)
target target
Key area Indicator 2010 2011 2012 2013 2014
EU CZ
Employ- Unemployment rate
75,0 75,0 70,4 70,9 71,5 72,5 73,5
ment 20 - 64 years (%)
Early leavers from
<10 5,5 4,9 4,9 5,5 5,4 5,5
education system (%)
Education Tertiary education
people age 30 – 34 ≥40 32,0 20,4 23,7 25,6 26,7 28,2
(%)

The key target within education in the CR is to reach 32 % of people with a university degree.
According to present development trend, it is expected to meet this target before the year 2020.
The question is how the Higher Education Amendment Act from 1 September 2015 will influ-
ence this indicator. The aim of the amendment is a stabilization process of tertiary education
through a new method of quality evaluation of universities (introduction of new rules within
study programs accreditation, independent professional decision-making regarding accredita-
tions, establishment of Accreditation Office and making new rules for foreign universities in the
CR). (©MŠMT, 2013-2015)

2.2 College Student and Consumer Behavior

There is a vivid discussion among some authors regarding their view on a student as the subject
of consumer behavior. The question is whether it is a relevant individual who can predict a con-
sumer behavior development or vice versa, which means to deny many findings of marketing
studies. It is definitely a specific market segment that is typical for its buying habits. These can
be reflected in the upcoming years when not having the role of a student any more. According
to Enis et al. (1972), every research within the segment of students should ask the question if the
data obtained would be credible enough for the purpose of research and development.
There is a wide range of foreign studies dealing with university students´ behavior in connection
with product and services consumption opening many debates within society about its mainly
negative impact on human being. Such products are cigarettes and tobacco products, alcohol
consumption, or narcotics. (O´Connor & Lundstrom, 2011; Zilberman & Poole, 2009)
According to Zilberman and Poole (2009), there is higher alcohol consumption during univer-
sity studies, mainly when having parties. This consumption is then analyzed from the finances
perspective. Two thirds of US students consider the alcohol consumption as reasonable, when
costs of this consumption category form ¼ of their total expenditures. Only 1/3 of students con-
sider their own expenditures on alcohol as excessive, even though almost 75 % of them declare
that their colleagues spend more money on alcohol than they should. Family background and
parents´ education are most discussed areas from psychosocial aspects influencing the studies.
Then, it is sexual adaptation, multicultural adaptability, religion or suicidal tendencies. (Luquis
et al., 2012)

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 When buying, the university students are also influenced by marketing tools. These are sales,
buy one get one free or loyalty bonuses which are most efficient selling techniques. (Osman &
Fah, 2011) Not only companies but also students themselves are aware of advanced technological
progress. Plenty of students cannot imagine living without modern “gadgets” such as smart-
phone, iPad, laptop, MP3/MP4 player, printing machine or game console. (La Roche, Flanigan
& Copeland, 2010)
The marketing research aimed at consumer behavior of US university students describes the
structure of their consumer expenditures. In the year 2012, there was a consumer demand of stu-
dents 40% higher thanks to higher intentional expenditures (expenditures above the compulsory
expenditures needed supporting consumerism). On the contrary, not intentional expenditures
(tuition fees, accommodation, study materials) experienced a slight decline in total expenditures.
Across the consumer basket, US university students spent twice more on particular items within
expenditures in the academic year 2012/2013:
 clothing (126% higher),
 technology (227% higher),
 personal care products (105% higher),
 cosmetics (280% higher).
Another area of research was focusing on students´ particular way of dieting. The highest
amount of money the students spend in retail stores (supermarkets and hypermarkets) – about 47
%. Then, it is in restaurants and student refectories (31 %) and in small shops, e.g. convenience
stores (22 %). (Miller and Washington, 2013)
Tuition fees also form an important part of students´ expenditures in western countries. The CR
has not introduced tuition fees at tertiary education (except the fees in a private education sector),
which is the consequence of lower regular common expenditures than in the countries where
tuition fees are typical. This was a topic widely discussed at the end of the year 2012. At that
time, speculations regarding the introduction of tuition fees occurred across the political spec-
trum. (Fiala, 2012) At present, in 2015, the politicians dedicate their time to questions regarding
tertiary education quality and its improvement mainly. Another important topic of these days is
employment of graduates on the labor market.
As mentioned at the beginning, a student as a consumer has various possibilities of financing
his/her consumption. Student loans from governments through banks to cover tuition fees are
typical for western countries. As shown in US study focused on student loans, students do not
use the loans just to pay tuition fees but also to cover their regular consumer expenditures in the
last five years, e.g. accommodation, transport or health care. (Ebersole, 2012)
In the environment of Czech banking companies, there is a high degree of competitiveness with
the aim to have customers within the group of university students. It is expected that these cus-
tomers will stay the customers of the banking company even after finishing their studies, which
means higher incomes for the banks. Fees for administration of bank accounts and services
mainly influence Czech students. (Kuběnka & Ptáčková, 2011)

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 As Baňařová states (2014), students consider large banks with a rich history as the most popu-
lar ones, e.g. Česká spořitelna, Komerční banka or Československá obchodní banka. All these
banks offer student packages and people recognize them as stable ones. Another reason for
choosing services of these banks can be low fees of student accounts they offer as well as service
satisfaction, namely internet banking and having a chance of using debit cards.
According to Xiao et al. (2011), the main source of financing consumption in the last few years
has been usage of credit cards and accessible overdraft accounts to cover expenditures. Having
not only one credit card makes students owing. Not all the students are aware of risks connected
with using the credit. Students believe that they know than what they are aware of, and such at-
titude influence their behavior in a significant way.
The most significant items of a consumer basket belong to category 4 Housing, water, electricity,
gas and other fuels. As seen from the research focused on US university students, more than half
of the students (about 53 %) live with their parents, 25 % renting a place, 18 % using university
halls of residence, and 4 % living in the groups of sisterhood or brotherhood. (Miller & Wash-
ington, 2013) Following this fact, more than half of the students live in a so-called impute rent.
According to Wanninyake (2014), a consumer behavior research among Czech university stu-
dents proved the existence of link regarding home product brands and services. The respondents
of this study were characterized as impulsive in the area of fashion and recreation. However,
the price was an important factor for them. A Czech customer with a lower income (a student)
behaves as spontaneously when buying as people with a higher income do. Therefore, this is the
market potential for companies offering Czech products and brands, e.g. farm shops.
Although students throughout their study process are not aware of it, there is a positive external-
ity influencing them and helping them to get rid of stress that was caused when doing other ac-
tivities. Among these pleasant activities, which can every university itself offer through its study
programs, for example sports are. (Wan-Chi et al., 2012) It is very important to consider strong
elements to accept a student at university and to motivate a student in order to finish the stud-
ies successfully. These are the teachers themselves (having a positive and open approach, hav-
ing feedback from students, knowledge), teaching methods (preference of stimulating methods,
brainstorming, role-plays, team projects) and the atmosphere within a group (pleasant atmos-
phere, cooperation). (Halawah, 2011) In case the problems occur in some of the areas evaluated,
there is a consulting authority to reveal them. Such authority is a common standard in western
countries. (Wells & Lynch, 2012)

3. METHODOLOGY
The composition of the selection of respondents for the survey included full-time students and
part-time students of the master’s degree program. The students were fundamentally sorted
according to the level of disposable income. All respondents were addressing students of the
Faculty of Management and Economics of Tomas Bata University in Zlin (FaME TBU). This
primary research was conducted in 2014. The sample of students participating in the survey was
in total of 436. The questionnaires were filled out electronically via the web store Google Disk.

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 Information obtained from the questionnaires were analyzed by using MS Excel 2013. Then,
these data were drawn up into contingency table (Table 5) for the independence testing. This
independence has been calculated by using statistical methods of Pearson’s Chi-square test of
independence (χ2).
The first goal was to show a dependence (independence) time devoted to paid work according
to the level of disposable income. Funds raised from the paid work determine the factor of time
spent on paid work per day.
Nevertheless, the data from consumer basket were evaluated and the highest values were aver-
aged. The answers reflected the current situation of the college students segment. Subsequently,
the structure of students’ consumer basket for the year 2014 was illustrated in the Table 6. Fi-
nally, changes occurred in the consumer basket which were caused by increasing or decreasing
disposable income, and determined by individual needs of students.

3.1 Hypothesis Testing

The purpose of the questionnaire is to verify whether the amount of hours of paid work depends
on the category of the level of disposable income. All students were segmented into five groups
according to the amount of disposable income to four income intervals:
 up to 5,000 CZK (no. 105; 24%);
 5,001 – 11,000 CZK (no. 149; 34%);
 11,001 – 17,000 CZK (no. 89; 21%);
 above 17,000 CZK (no. 93; 22%).
As Cooper and Schindler (2008) describe the process of hypothesis testing, there has been one
hypothesis stated which are based on theoretical background regarding the level of disposable
income of college students and number of hours devoted for paid work. For statistical verifica-
tion of the amount of hours devoted to paid work, which allows consumption was determined
null hypothesis (H0) and alternative hypothesis (H A).
H0: The number of hours devoted to paid work does not depend on disposable income.
H A: The number of hours devoted to paid work does depend on disposable income.
Subsequently, the data were tested by Pearson´s Chi-square independence test (χ2) done in MS
Excel 2013 for Windows. This program enables to calculate p-value on the stated importance
level for accepting or rejecting null hypothesis. In this study, the result of p-value was compared
with significance level α = 5%. If the result is lower than significance level the null hypothesis is
rejected and alternative hypothesis is accepted.

4. RESULTS
4.1 Hypothesis Testing
For testing the hypothesis of independence through Pearson’s square test was compiled follow-
ing contingency Table 5.

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 Tab. 5 - Contingency table of time allocation to paid work according to level of disposable
income (own processing)

Disposable income Time to paid work (in hours)

Number
interval 0h 1-2h 3-4h 5 h above Total
absolute 59 29 10 7 105
up to 5,000 CZK
relative % 56% 28% 10% 7% 24%
absolute 22 37 35 55 149
5,001 – 11,000 CZK
relative % 15% 25% 23% 37% 34%
absolute 5 5 8 71 89
11,001 – 17,000 CZK
relative % 6% 6% 9% 80% 20%
absolute 5 7 6 75 93
above 17,001 CZK
relative % 5% 8% 6% 81% 21%
absolute 91 78 59 208 436
Total
relative % 21% 18% 14% 48% 100%

More than a third of the students (37%), from the largest category of disposable income 5,001
- 11,000 CZK, work more than 5 hours per day. Another quarter, 25%, working 1-2 hours per
day. Only 15% of students in this category of income does not work at all. There is an obvious
increase in any time distribution for paid work, where 85% of all students in this category work
an hour as minimum. The second largest income group (up to 5,000 CZK) more than half of
them do not work at all. Income groups 11,001 - 17,000 CZK and above 17,001 CZK, indicate
that more than 80% of students spend more than 5 hours of paid work.
 Testing criterion χ2 = 193,9344
 Number of degree of freedom = (4-1) * (4-1) = 9
 Value of significance 5%, α = 0,05
 Critical value for 9 degree of freedom = 16, 919
 p-value = 2,484E-41
 result: p-value < 0,05 H0 is rejected
Null hypothesis was rejected. Alternative hypothesis was accept the number of hours of paid
work depends on the amount of disposable income. This finding is obvious from the contin-
gency table (Tab. 5). Minimum 80% of students with disposable income 11,001 CZK or more are
engaged in paid work 5 hours and more.

4.2 Consumer Basket by COICOP

Comparing the structure of the consumer basket, students were again monitored according to
the individual characteristics of groups of disposable income. Students fully decomposed their
disposable income (=100%) into 12 classes according to the national consumer basket by pur-
pose COICOP. They did not take into account any level of savings. The average results for each
category are shown in Tab. 6.

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 The segmentation of disposable income was for the structure of the consumer basket left in 5
categories (up to 5,000 CZK; 5,001 – 11,000 CZK; 11,001 – 17,000 CZK; 17,001 – 23,000 CZK
and 23,001 CZK above).

Tab. 6 - Consumer basket of College Students by Purpose COICOP (own processing)

Disposable income

Classes of Consumer Basket by COICOP

Number
interval

C1 C2 C3 C4 C5 C6 C7 C8 C9 C10 C11 C12

absolute

2456 601 1353 531 210 574 1402 425 896 242 1100 711
up to 5000 CZK

average

23% 6% 13% 5% 2% 5% 13% 4% 9% 2% 10% 7%

absolute
5001 – 11000 CZK

3534 941 1379 2203 365 592 1569 613 892 396 1596 812
average

24% 6% 9% 15% 2% 4% 11% 4% 6% 3% 11% 5%

11001 - 17000 CZK

absolute

2050 337 782 1722 329 348 911 345 469 413 622 572
average

23% 4% 9% 19% 4% 4% 10% 4% 5% 5% 7% 6%

absolute
17001 - 23000 CZK

1284 216 420 1344 270 213 506 170 321 269 304 384
average

23% 4% 7% 24% 5% 4% 9% 3% 6% 5% 5% 7%
absolute
23001 CZK above

694 117 305 916 234 157 314 124 198 161 167 214
average

19% 3% 8% 25% 6% 4% 9% 3% 6% 4% 5% 6%

In 2014, the structure does not change dramatically. It was confirmed that in lower income
groups, the highest expenditure items include products belonging to class 1 (Food and non-

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 alcoholic beverages), followed by class 7 (Transport) and 3 (Clothing and footwear). The low-
est numbers are reflected in class 5 (Furnishings, household equipment and routine household
maintenance) and again on Education (10).
From these calculated values a claim goes up, with the higher disposable income students has,
the items from category 4 are moving up the rankings ahead to the first place. Spillover expendi-
tures from the most representative class 1 to class 4 takes place in the income group level 11,001
to 17,000 CZK. This disposable income has 20% of the students. For higher income groups,
above 17,000 CZK, a percentage of category 4 make up 24 - 25% of the final consumption ex-
penditure. These are followed by class 1 with 19 - 23% and class 7 with 9%. At least consumer
expenditures come from class 2 (Alcoholic beverages and tobacco) and newly from class 8 (Com-
munications).
A comprehensive summary of the consumer basket for college student:
 Students with lower disposable incomes spend the most money per items in classes 1
(Food and non-alcoholic beverages), 7 (Transport) a 3 (Clothing and footwear).
 Students with higher disposable incomes spend most money in categories 4 (Housing,
water, electricity, gas and other fuels), 1 (Food and non-alcoholic beverages) and 7 (Trans-
port).
 Students with lower disposable income have the lowest consumer expenses in classes 10
(Education) and 5 (Furnishings, household equipment and routine household mainte-
nance).
 Students with higher disposable incomes have the lowest financial expenses in the classes
2 (Alcoholic beverages and tobacco) and 8 (Communication).
 Spillover of consumer expenditures from class 1 to class 4 happens in the income level
11,001 - 17,000 CZK.
 Class 7 (Transport) has a permanent and substantial position in all income groups.
 Lower income groups have significantly higher consumer expenses than higher income
groups in the class 2 (Alcoholic beverages and tobacco), 3 (Clothing and footwear), 9 (Rec-
reation and culture) and 11 (Restaurants and hotels).

4.3 Changes in Consumer Basket

The connection with the changes in the level of students’ disposable income were a part of the
survey questions related to the increase or decrease theirs disposable income. These changes
have been occurred in the structure of the consumer basket.
There is a higher wage expectation after university graduate. Students will enter into employment
relationship (they will receive regular income) eventually it means for someone an increase in
their current income. Contrary, the current disposable income could be reduced because of the
loss of financial support from relatives/government, job loss, maternity/parental leave, retire-
ment benefits. Tab. 7 below shows three categories of consumer basket which students ranked
in each income level.

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 Tab. 7 - Changes in Consumer Basket (structure by COICOP), (own processing)

Changes in Consumer Basket (Classes by Purpose COICOP)

Increase of DI Decrease of DI
Disposable income No.
(DI) interval Students
1. 2. 3. 1. 2. 3.

up to 5000 CZK 9 3 5 3 2 9 105

5001 - 11000 CZK 9 3 5 3 2 9 149
11001 - 17000 CZK 9 3 5 3 2 9 89
17001 - 23000 CZK 9 3 5 9 2 3 57
23001 CZK above 9 5 6 9 3 5 36

In 2014 the students highlighted items from classes 9 (Recreation and culture), 3 (Clothing and
footwear), 5 (Furnishings, household equipment and routine household maintenance) and rarely
class 6 (Health) caused by an increase in disposable income. The students with higher income
will raise consumer demand including products of recreation and cultural services.
In reverse, a decrease of disposable income were reflected in these classes: 3 (Clothing and foot-
wear), 2 (Alcoholic beverages and tobacco) a 9 (Recreation and culture).

5. DISCUSSION
The consumer basket of students with a higher disposable income corresponds with the con-
sumer basket as a national scale according to the CSO (2015). The controversy regarding the
structure of the consumer basket is the group of students with lower incomes up to 11,000 CZK.
These are full-time students without a full-time job and their consumer expenditures are differ-
ent from part-time students.
Although these are the students with lower disposable incomes, they are also highly influenced
by marketing tools such as price and various forms of discounts. (Osman and Fah, 2011) It
should be stated that Czech students with low incomes are impulsive consumers who also seek
for products of good quality. (Wanninyake, 2014) Still, their consumer basket has not shown
high expenditures in category 10 (Education). The question is how their consumer basket will be
influenced by the introduction of tuition fees for tertiary education by government. (Ebersole,
2012)
Organizations which offer a product portfolio in the field of recreation and culture can gener-
ate higher profits from these market segment students (in the case of employment and regular
income). However, they can be at risk in case of another economic crisis, consumer pessimism,
or the introduction of tuition fees, and therefore increase expenditures connected with educa-
tion. We cannot forget the important role of companies that offer goods such as clothing and
accessories. In this category, students have a huge potential across all segmentation criteria. On
the contrary, these can be a threat of sales decline for other student expenses.

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 Companies that should not worry about their income from sales due to decline in revenues or
unexpected circumstances affecting consumer demand are those that offer food and soft drinks,
leasing companies and financial institutions providing housing, gas station or transport opera-
tors and the companies from a pharmaceutical industry, etc.

6. CONCLUSION
A group of college students represents an increasingly larger segment in the market of goods and
services. This situation emphasizes the national statistics and the objectives of EU strategy the
Europe 2020. The number of college students in tertiary education in the Czech Republic has
escalated from 291,000 to the current number of 371,000 students in the last 10 years.
The main aim was to show the structure of the consumer basket of college students in terms of
the Czech Republic. Further on, the correlation between the number of hours devoted to paid
work and the amount of disposable income has been revealed.
Students’ consumer basket has revealed a difference in the structure of students with lower vs.
higher disposable incomes. Students with lower incomes have higher consumer expenditure,
primarily in the categories 1 (Food and non-alcoholic beverages), 4 (Housing, water, electricity,
gas and other fuels), 7 (Transport) and 3 (Clothing and footwear). There is a presumption that
students with lower incomes are full-time students and do not have a regular income from a full
time job. Students with higher incomes, presumably part-time students, are working people who
spend their disposable incomes mainly in classes 4 (Housing, water, electricity, gas and other
fuel), 1 (Food and non-alcoholic beverages) and 7 (Transport). The items of categories 1, 4 and 7
have an essential role in the consumer basket for any type of a student.
A change in the structure of the consumer basket caused by increasing disposable incomes (e.g.
entering the job market after university graduation or having a higher wage assessment is mainly
reflected in the following consumer basket items: 9 (Recreation and Culture), 3 (Clothing and
footwear) and 5 (Furnishings, household equipment and routine household maintenance). On
the contrary, a decrease in disposable income will mostly reduce expenses regarding the follow-
ing items in the categories 3 (Clothing and footwear), 2 (Alcoholic beverages and tobacco) and 9
(Recreation and Culture). The most essential items subjectively perceived by consumers are from
the following classes 1 (Food and non-alcoholic beverages), 4 (Housing, water, electricity, gas
and other fuels) and 7 (Transport).

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Contact information
Ing. Monika Horáková. Ph.D.
Tomas Bata University in Zlín, Faculty of Management and Economics
Mostní 5139, 76001 Zlín, Czech Republic
E-mail: [email protected]

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