Tech reliance is at an all-time high on campus. Educational changes, like more online lectures, behavioural changes, like more streaming and gaming, and market changes, like more virtual experiences – have all played their part.
And, most of the time, this would be great news. Digitisation can democratise access, reduce costs, increase mobility, and enhance social lives. For the most part, it still is great news. But in a cost-of-living crisis, a growing reliance on products and services which are experiencing rapid price increases, needs to be more carefully considered.
Let’s take a look at the numbers
When it comes to services, over the past 18 months, both Spotify and Netflix have raised the price of all plans by £1 each, and Apple’s iCloud membership is now 25% more expensive. Sky subscriptions are up too, with prices for broadband and TV customers more than 8% higher than last year, whilst some of its competitors reached +14%.
When it comes to products, it feels even sharper. Apple’s iPhone 14 Pro launched at £150 more than the previous model and its new MacBook Pro is £250 more. Apple has always been a good barometer for tech products because, for most of its history, its prices have been closely linked to inflation and therefore never felt too drastic a leap. Apple also consistently comes out as one of the favourite student brands in UCAS surveys, so it’s an important tracker for HE.
But it’s not that the tech giant has decided to go off-piste with its pricing after all this time, it’s simply that inflation hasn’t been this high since 1990. And with neither wages or student loans keeping pace today, therein lies the problem for young people.
Students are now paying more for technology than they ever have done – at a time when technology has become an essential component of the student experience.
So, what are students doing about it – and how will this affect brands?
The nature of technology in the university experience is now thoroughly non-negotiable, which means that instead of seeing wholesale changes in the way tech is bought or used, the knock-on effects are being felt elsewhere.
Smartphone contracts are up in the air. Piggyback networks, like Giffgaff and VOXI, can hoover up new customers right about now – because they offer cheaper monthly prices as a result of not needing to recoup any infrastructure investment. They use the existing setups of networks like EE, Vodafone, and O2. And in 2023’s UCAS Lifestyle Survey, we noticed most piggybacks pick up more customers for this reason, whilst most of the big networks lost student market share.
(The swing probably isn’t yet dramatic enough to worry the market leaders, but it is indicative of a principle of pricing – one that could stick around for a while, and penetrate many more sectors.)
Despite price being an important consideration when buying a smartphone handset, the infamously expensive iPhone is still by far the preferred smartphone. It’s true that more students opted for second-hand or refurbished smartphones than last year, but only slightly more. Apple occupies a special place in the heart of students – it seems to be almost completely insulated from sacrifice. Great news for Apple, but an almost socially enforced requisite purchase of that expense leaves little flexibility in student budgets for other brands to compete for.
Students won’t give up a requisite purchase like an iPhone, but they’re telling us that they will make sacrifices on:
- eating out
- buying clothes
- ordering takeaways
- spending less on groceries
- consuming less alcohol
Simply put– they would rather forfeit life’s luxuries (not to mention some of its essentials) than forego their tech.
They’ll also wait. Two months after last year’s freshers arrived on campus, 71% still had their eye on products that they were yet to buy – laptops and tablets were two of the top three. More tech, like phones, games consoles, and headphones, were also in the top 10.
Avoiding buying the tech they need, or at least delaying the purchase until the price is right or the money is saved, will mean educational and lifestyle setbacks. It’ll put them on the back foot. Obviously this isn’t an ideal solution.
And neither is expecting parents or guardians to foot the bill – as they face the cost-of-living crisis themselves. Compared to previous years, fewer parents and guardians paid for student laptops, tablets, or entertainment services this time around. For the most part, students now need to find the money themselves.
So, what else could they do – and how could this affect brands?
Ofcom reports that buying communications bundles is cheaper than buying standalone services, like packages which combine broadband, landline, and TV. But with streaming and smartphones so popular among students, how many of them are searching for cable TV and house phone deals? Could brands do more to highlight the products and services with low awareness in younger profiles?
Altnet providers (ISPs which build their own infrastructure and don’t need to pay rent to Openreach or Virgin Media) are also cheaper broadband options. These smaller providers can be up to half the price of the main providers – but again, how many students are aware of City Fibre or Gigaclear? Could these brands benefit from university partnerships, or by working with accommodation providers?
And pre-paid mobile phone services, where minutes and data are sold in monthly packs which expire, are usually cheaper than pay-monthly contracts. But when many students start their smartphone lives on parent-funded monthly contracts, it’s likely that they simply stick to what they know. This seems to be the case according to the latest UCAS data, because almost 60% of this year’s freshers are still on contracts. Could networks be doing more to educate young people on the savings available in their other, less-used services?
Products seem to be a tougher obstacle than services, with few ways to dodge the rising RRPs – besides waiting for sales or searching for discounts. Apple, in particular, is notoriously steadfast with its pricing and rarely runs sales. Samsung phones are cheaper from the outset, offer a much wider selection, and are the second most popular smartphone brand for students – but somehow their student market share is still less than a third of Apple’s.
What can brands and the community around students do?
Universities are doing plenty to support their students, but there are only so many payment plans and bursaries they can realistically afford to offer. We need to think more creatively and collaboratively to find solutions that work for students, and it’s brands that are likely to make the biggest impact:
- Social solutions – can we enable more networking between students moving into halls together, to find group cost savings? Do two neighbours both need the same games console, for example, or can Currys offer ways to split the cost of sharing an expensive item? Can Spotify offer something like its Family subscription but for friends too? Do we need a new Blockbuster type brand, but for tech which is less frequently used – like home printers, tablets, or wearables?
- Financial solutions – is there a way to simplify the discounts landscape, for the benefit of both students and brands? Almost all (89%) students now use a discount platform, but with more and more of them being set up, it’s taking longer to hunt down the bargains – which kind of defeats the object.
- Behavioural solutions – TikTok and Reddit are where advice is the most innovative and realistic, and particularly popular with young audiences, so can brands be more present on these platforms – to put themselves at the heart of the most useful and outcome-oriented content online?
- Technological solutions – And finally, technology itself may be the best solution to expensive tech. Look at food tech, where Good To Go saves meals from going to waste by offering them in cheap surprise bags at the end of the night. What other ways can brands find to use tech to offset the cost-of-living crisis for students?
Next steps for brands
For brands looking to successfully navigate the cost-of-living tech squeeze on students and Gen Z, UCAS is a partner that understands this audience like no one else.
Find out more about how UCAS works with brands or start a conversion by getting in touch with the team: commercialservices@ucas.ac.uk