From the October 2004 issue of Entrepreneur

Looking for your next niche market? Consider college grads. Few marketers effectively distinguish between college grads and the broader 18 to 24 demographic. But narrowing your focus to target the 2.3 million students who graduate every year could help you win part of the approximately $40 billion they spend on products and services, according to the latest "eGrad Research Study," released in March 2004 and conducted by Boston, Massachusetts-based Youth Media and Marketing Networks (Y2M).

Add to that the tremendous comparative earning potential of college graduates-the Department of Education claims a college degree is worth 75 percent more than a high school diploma, or more than $1 million over a lifetime in the work force. And it's clear why college grads are highly desirable prospects for many marketers who see the benefits of winning their business early and retaining them as long-term customers.

What They Buy

College grads make a significant number of new purchase decisions. As first-time heads of households, graduates replace many products that defined their college experiences and purchase new products, including computers, cars, clothing, mobile phones and credit cards.

In the 12 months following graduation, according to the eGrad Study, 2 out of every 5 graduates will buy a car, 2 out of 3 will reorganize their relationships with financial service providers, and half will establish new wireless phone service. This is particularly good news if you're marketing insurance, for example. "Approximately 70 percent of freshmen have their car insurance paid for by their families, but within six months of graduation, less than 10 percent are on their parents' policies," says John Fees, Y2Mco-founder.

Nearly three-quarters of all grads will make an investment in a new business wardrobe. And companies including Brooks Brothers, Men's Wearhouse and Talbots have all created programs to market business attire to young grads. Affordable furniture, particularly mattresses, is also a safe bet if you're targeting recent grads, as more than 40 percent plan on making these acquisitions to furnish their new lifestyles.

How to Reach Them

Today's college grads are the most wired group ever. According to the eGrad study, nearly 100 percent of respondents send and receive e-mails daily and expect e-mail to be a primary means of contact among their friends. But they're also marketing-savvy, so hard-sell solicitations will be less productive than more content-rich (think informative and engaging) Internet communications.

In addition to online communication, radio, highly targeted print media and direct mail are effective for reaching recent college graduates. In fact, in the four years that Y2M has conducted the study, radio has remained constant in its share of grads' time, with every other medium except for online dipping. What works best is an integrated multimedia approach connecting to grads through a combination of online and offline media, rather than focusing on one alone. And don't overlook efforts to build buzz. College graduates are terrific influencers who remain strongly connected to social networks composed of their peers.

In recent years, student debt has grown and is a major concern of college grads. Marketers targeting this niche should focus on special pricing and promotions. Or follow the example of automobile manufacturers such as Ford, Mazda and Toyota, which offer college graduate rebate programs. Promotions that include rebates allow you to capture valuable data and build your customer list in order to sell additional products and services over time.

And here's a final tip: Don't try to market to this niche during the summer following graduation, when they're likely to be taking time off to return home or travel. The best time to kick off your promotions is in September and October, when the new college graduates are moving out on their own and starting new jobs.