College Marketing

College Marketing: If we offer it, they will come, won’t they?
By Paul Herbig

If you think you’ve had a rough go of it lately, talk to someone from an institute of Higher Education. Colleges have it rough these days. The falling stock market has significantly lessened their endowment resulting in fewer funds flowing their way. Whatever funds they may have in fixed income assets have seen the income stream disappear like a stream in the midst of a summer drought due to record low interest rates. Donors who gave like drunken sailors during the good times of the nineties have suffered through the same tribulations with the stock market or their businesses have taken a shellacking or their employment/professions have suffered; no matter what, donations from givers have plummeted. Foundations who provide grants and scholarships have also suffered and are often not in a giving mood. If this rendering of the supply side does not frighten college executives, the demand side situation is even worse.
Because of all the problems faced above, tuition increases often amounting to double digit (10-12% or more) have been dropped on unsuspecting students. These same students and their families have been victimized by the continuing recession and their ability to pay has therefore severely decreased. With the lessen abilities of schools to provide sufficient financial aid and the fewer amounts or quantities of scholarships available, the only alternative to finance higher college costs are to take out loans, in increasing amounts. The schools continue to increase tuition while the average student’s ability to pay has dramatically dropped over the last few years and does not appear likely to righten itself anytime soon. Since a college education and degree are rapidly becoming the keys to success and an expected commodity, the alternative of not going is quickly disappearing. Many students caught in this dilemma, though, are putting off college for a semester or year in the hopes of working and building a nest egg to afford the higher costs.
This is the situation the average college marketer finds himself in these days. Between a very hard place and an ever increasing tougher rock. How can he appropriately market the institution? Between the ever pressed kids and the cost cutting bean counters, can he find middle ground?
The first thing the marketer must do is to examine value. Value compares what the user is getting for the price paid. A customer considers a good value when the utility of what he purchases exceeds the price paid. And vice versa for bad value: the utility does not match the price asked. To increase value, both variables can be taken into account. Either the price must be lowered or the utility of the product received must be increased. If the institution already has a problem with value (for example many students indicating they are not getting their money’s worth), further increasing the price will only increase the dissatisfaction. (To the arguments we need to increase the price or our price is in line with our competitors, I can only say the user could care less about your needs, he is examining the situation from his utilitarian point of view. If he perceives the value is not present, all the arguments in the world and all the facts will be of poor persuasion. If he perceives an item, to him it is reality). If the marketer is stuck with a value problem, the only options are to increase the quality of the product offered or lower the price.
Lower the price? Wait a minute here. Some schools are actually wading into the dark hinterlands of price decreases. They are betting on increased demand to more than make up for decreased per unit revenues. They appear to be prospering. If I had previously recruited 300 students at $15,000, how many students do I need if I lower my price to $12,000? (answer: 375). (Of course, from a marketing point of view, how much money are you throwing away—that is, if 300 would have paid $15,000 anyway, you have forfeited the 900,000 dollars those students who would have come anyway in the pursuit of an additional 75 students at $12,000.) Which is why, instead of messing around with list prices, you can achieve the same effect by discounting differently (keep the $15000 for those 300 and increase discounts for those additional students according to what it takes to get their business—in this case their attendance at your institution), Nonetheless, the first and often last price seen is the list price and discounted or not, too high will tend to put off many customers who will not inquire further. Rather than act like an airline with a thousand different prices for the same trip, some schools are experimenting with a “one price fits all” (like Saturn’s no haggling the price you see is the price you get) in an attempt to be different from the thundering herd.
The other option is to increase the worth of the product to heighten the value and hopefully overcome the price increases. How can you do this? You can take the long term expensive route: Higher rankings. Renown faculty. Modern buildings. Or you can examine those smaller items that most students (customers) care about: facilities that are appropriate (warm in winter, cool in summer), computer labs that are modern and user friendly, freshly painted dorm rooms, good and varied food in the cafeteria, activities and events for the afterhours and weekends, broadband internet connections, etc. Small items but for the students critical ones. Many small items that will cost the school little if anything. But they make a difference. For many students it is not one big item but a thousand little things that create the dissatisfaction that erodes the value they see from the institution. And don’t forget service. Listen and respond to complaints and suggestions. A customer who feels he is being heard will have positive feelings about any business—a student is no different. Just knowing someone cares, actually cares about him/her and will work with the student to resolve problems or difficulties could well be the difference between staying or leaving for another institution.
My advice to marketers of all makes: Solicit their input and deliver. Many students are all too happy to provide suggestions—the first time. However, if they discover they are just being heard and ignored, don’t ask them a second time, you have lost their confidence and nothing else you will get from them. They will continue to gripe and like many customers may eventually leave and complain about you to dozens of prospective customers. It is best to solicit their complaints here and now and to resolve them here and now.
But whatever you do, don’t promise unless you intend to deliver. Don’t listen just to allow them to blow off steam. Don’t listen unless you really intend to follow-through. The young people of today are sophisticated and cynical and can read right through you if you are trying to pull a quick one on them. You have but one chance, two if they are forgiving. Three strikes and you are definitely out.
A third and definitely recommended solution is to brand the institute. The best college marketers know they must first create a brand for their institution. Consider a brand as standing for something. What does your institution do? What is it all about? Why should I come here? A brand is image and it is also how the institution is perceived by the populace (as well as by potential users—the students). If no brand exists, one need be created for the institution. The brand must be consistent, realistic, and honest. A brand is a promise: the manufacturer agrees to provide consistent quality and product features in return for the consumer to continue to use the product loyally. A brand helps differentiate the institution from all other institutions out there (as there are well over a thousand institutions of higher learning in the United States, you will need to differentiate yourself to stand out from all the others). A brand if created correctly offers a degree of pricing flexibility a commodity does not; that is, users will tend to pay more for a proved brand. Branding your institution could well take some pressure off your price increases by itself increasing the perceived value of the institution.
Today is definitely a challenge for any college marketer. But not an impossible situation. It is an opportunity to improve the perceived value of your institution by careful branding, by implementing many small measures, each of which will cost very little if anything, but the sum of all is much greater. In recessionary times, many companies cut service, R&D, marketing, and training. Those companies will not be able to handle the good times that inevitably follow. The best companies do not cut but increase spending on those factors and during the good years will put ever more distance between themselves and the spendthrifts. As with companies, so with institutions. Fo smart marketers and alert institutions, Bad times can also be an opportunity. Add to your marketing efforts. Create an unique focused brand and be consistent with it. Carpe Diem.