MARKETING HIGHER EDUCATION A periodic electronic Newsletter to help you market your school, community college, college, or university. Vol. XII, no. 9, September, 1998 -------------------------------------------------- TABLE OF CONTENTS Are You Marketing Focused? Profiling a Marketing-Focused Institution by Craig Shoemaker, Ph.D. & Ray Muston, Ed.D. Audience Segmentation in Higher Education Marketing by Robert (Bob) S. Topor -------------------------------------------------- Are You Marketing Focused? Profiling a Marketing-Focused Institution by Craig Shoemaker, Ph.D. & Ray Muston, Ed.D. NOTE: For Dr. Shoemaker's vita and photo, click here Introduction Colleges and universities face an uncertain future and many may be in danger of major restructuring if not extinction. The competitive intensity for students and financial resources will challenge the ability of many small colleges and universities to survive into the twenty-first century. No longer will institutions of higher education rely on quantitative measures such as enrollment and development growth as indicators of institutional quality. "Growth" will increasingly reflect qualitative dimensions related to the ability of institutions to adapt to changing economic, social, and customer needs and expectations. "Growth" will also reflect a creative mix of technology, ease of access, and new learning paradigms to satisfy needs of new clientele. Those institutions that succeed into the twenty-first century will do so for a number of reasons, but one factor may be their ability to plan and successfully execute marketing strategies and make realistic adjustments in plans and programs consistent with the institution's purpose and mission. The traditional population of higher education students is changing. Many institutions have, out of necessity, broken their historic paradigm of focusing only on traditional-aged, on-campus students by using alternative delivery methods and technology to make education accessible to nontraditional market segments. The contemporary consumer mix more often includes first time students, continuing adult students, and adults with shorter-term goals to re-tool or reposition skills to maintain their position in the workplace. Student interest in available post secondary options is also changing among institutional sectors, fields of study, and careers. One thing certain for independent higher education institutions is that change itself will play an important role in institutional development and survival. Administrators and faculty of independent colleges and universities can influence the adaptation of their institutions to the changing environment. While many of these institutions will extend traditional approaches and policies, others will seek means to enhance the adaptation of their institutions in a new direction. The role of institutional leadership is central to the shift to a vision which encompasses coordinated systems which are customer centered (Kotler, 1995). The more effective presidents will likely be those who proceed with the difficult task of transforming the culture of the institution to be sensitive and responsive to the changing needs of its internal and external stake holders. Some presidents will employ marketing strategies and programs to meet articulated institutional goals such as growing enrollments and endowments, attracting higher quality students, and improving retention rates. Others simply want to maintain their existing size but focus on improving the quality of education. All will necessarily confront the need to share leadership and responsibility for change with those closest to the customers, faculty, staff and current students. The realities are all will be different as a consequence of change in the environment and the educational marketplace. Purpose of Marketing The purpose of marketing strategies in higher education is to assure a rational and deliberate methodology to recognize, anticipate, and react to market changes. Marketing is the proactive management of the relationship between the institution and its various markets using the tools of marketing - product, place, price, and promotion. Marketing is not a panacea to be considered when enrollments or endowments are in steady decline and the continued viability of the institution is in question. The fundamental questions for every stake holder involved in institutional planning is: "To what extent do we want to intervene and influence the destiny of our institution rather than be reactive to the environment?" and "What marketing practices and programs are most effective?" Our research shows that the concept of marketing in colleges and universities remains an unfocused product of a naive perspective of the real meaning of marketing. In fact, results indicate that after a full decade of discussion about the merits of strategic planning and marketing in higher education actual behaviors still reflect a bias toward promotion and sales activity at the expense of good market research and product development. (Muston 1985, Shoemaker1997). Marketing for small colleges and universities has historically been interpreted as synonymous with the admissions brochure. Management and operational techniques in such areas as budgeting, information systems, personnel, and finance have been modeled and refined from the business world, but marketing has not been readily or uniformly accepted. In the college and university environment, marketing has been viewed as selling and advertising, both of which bordered on being unethical in the academic world. Most college administrators believe industrial-type marketing cannot or should not be incorporated into educational management. They believe that colleges and universities should take a passive, not active stance toward marketing. Study Methodology The purpose of this study was to assess the relationship of the president's role in shaping and implementing strategic marketing among independent colleges of the Midwest. We wanted to see how well strategic marketing functions were incorporated in ongoing leadership of independent colleges. We also wanted to see how the role of the institution's president might be related to the presence of strategic marketing initiatives and programs. Data for the study reported here were collected from three sources: 1) standardized data sets, 2) survey of presidents of participating institutions, and 4) on-site interviews and observations at four case-study institutions. These primary and secondary sources of institutional information provided the data used to study the relationship between marketing strategies, practices, and initiatives with measures of institutional performance. The IPEDS (Integrated Postsecondary Educational Data Systems) provided data for selection of the study sample and to identify enrollment and endowment trends. The Iowa College Student Aid Commission provided an additional source of institutional performance as well as the selection criteria for the institutions used in the case study. Primary data were acquired from the presidential survey instrument. The survey instrument was constructed to elicit presidential perspectives and to define institutional performance measures. A total of 205 independent colleges and universities in ten Midwest states were selected for the study. Institutions targeted by the study represented a segment of higher education institutions-- private, independent colleges and universities. The decision to survey presidents presumed that development of a coordinated marketing strategy depends on a commitment from the central institutional administrative leadership and effective integration of academic and student service units. Presidents of ninety-eight private, independent institutions selected for study responded to the survey. Case studies provided a better understanding of institutional marketing. Four independent institutions in Iowa were selected for case study. Historical enrollment data provided by the Iowa College Student Aid Commission provided the selection criteria. Profiling a Marketing-Focused Institution Marketing holds that the key to achieving institutional goals consists of determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Our presumption was that the president, as the driving force of institutional culture and direction, is responsible for developing a marketing-oriented environment that is pervasive throughout the institution. A pervasive marketing climate also requires a major cultural shift in the breadth of participation in planning and communication than has been the case in many institutions. The following factors will provide the distinguishing profile of a market- and customer-focused institution. The president is actively involved in providing institutional marketing leadership. The president must personally exemplify strong commitment to a marketing culture. Presidents personally involve themselves in areas they consider strategically or operationally important to their institution. Presidents were asked to consider a list of nine selected marketing practices and identify those they provided personal approval. Those areas reserved for the president's final approval were considered most important. Presidents ranked personally approving Admissions and Development plans highest. These practices likely ranked higher than others because presidents viewed student tuition and endowment funds vital in providing the revenue stream necessary to support continuing operations of the institution. When presidents were personally involved in the areas of planning, strategy development, initiating marketing research studies and approving printed promotional materials there was evidence institutional performance was improved. Mean values of the performance measure of the ratio of student inquiry to student application were higher for presidents who report providing final approval of printed materials. A significant relationship was found between these two variables. Presidents who rated coordinating their institution's marketing strategy high in importance realized measurable gains in conversion rates of student inquiry to student application and consistently ranked in the top quartile. By comparison, presidents who did not rate coordinating their institutions marketing strategy high in importance ranked in the bottom quartile of this measure of institutional performance. The marketing process is integrated to reflect, recognize and involve all institutional stakeholders. For higher education institutions to embrace and receive a full measure of value from embracing a marketing orientation they must understand that marketing is a culture that must be pervasive throughout the institution. This means having a clear appreciation for what marketing comprises and what it can do for the institution. The breadth and depth of an institution-wide marketing orientation means involving individuals in developing a marketing attitude, sharing of expertise, building commitment, and good communications. All institutional stakeholders must understand and support essential enabling marketing strategies to ensure integration of operational responsibilities at every level within the institution. Distribution of the marketing plan to the various stakeholders within the institution is an effective method of communication and represents an excellent way to build commitment. Marketing plans were well distributed among top institutional officers but less often to other institutional stakeholders. Less than 30 percent of the presidents reported distribution of marketing plans to deans, department heads, faculty, staff, alumni, or student government officers. Participation in writing the institution's marketing plan brings shared expertise, commitment from participants, and assists in communicating the plan throughout the institution. It was clear from survey responses institutional planning was top down in participation. Top officers representing key administrative areas were most likely to assist in development of marketing plans. Slightly more than 50 percent of responding presidents reported involving a faculty representative and only 31 percent reported involving an academic dean in the planning process. Mean values of retention rates were both higher as well as significant when academic deans participated in writing marketing plans. Outside marketing consultants are used to build and enrich institutional marketing culture. Outside consultants can be used to analyze local problems and assist in designing and organizing marketing strategies and programs. They can provide new ideas for an institution to consider when developing marketing initiatives. They can provide legitimacy for changes an institution wishes to make. And they can often help an institution that is stuck get unstuck. Over two-thirds of the responding presidents reported using an outside consultant. Generally, presidents who reported using an outside consultant were more likely to employ marketing strategies, programs and initiatives. An outside marketing consultant's impact on institutional planning was most evident in the areas of institutional planning. Presidents who reported using an outside consultant were more likely to have a marketing committee and a marketing plan to provide marketing direction than those who reported not using outside consultants. Regular and structured marketing research studies of all important stakeholder areas are conducted. Institutions must obtain information on stakeholder needs and gather marketing intelligence to help satisfy these needs efficiently. Every marketing decision poses unique needs for information, and relevant marketing initiatives can be developed based on the information gathered through marketing research. The presence of marketing research studies or programs to monitor change in the external environment is primary in the development of marketing strategies and programs. Marketing research was not well developed in independent colleges and universities studied. Presidents reported they were most likely to focus marketing research studies on current and prospective students and least likely to research their own faculty and staff. Independent institutions are dependent upon alumni and donors for endowment and operating funds. The percentage of presidents reporting researching these two stakeholder areas was below 60 percent. The percentage of presidents reporting conducting marketing research studies on parents (38 percent) and high school counselors/principals (28 percent) was also lower than one might expect. Clearly the bias was on prospective students. Although mean institutional retention rates for presidents who reported conducting marketing research studies on current students were higher than those reporting not conducting marketing research studies on current students, no significance was found. While over 82 percent of responding presidents reported conducting marketing research studies on prospective students, mean values of the ratio of students admitted to students enrolled were not significantly related. Although the mean value of the ratio of students admitted to students enrolled appeared higher for those presidents who reported conducting marketing research studies on high school counselors, no significance was found. Most presidents reported marketing research studies on new students was important, but presidents who forecasted an enrollment increase above 15% by year 2000 were more likely to conduct research on this important market segment. A marketing-oriented planning culture exists that includes participation from all stakeholder areas. Scanning an institution's various environments for trends is at the heart of planning. Making important decisions would be easier if presidents could correctly anticipate the environment and its impact on student enrollment. Higher education presidents often make two types of mistakes. First, many presidents wait for events or trends to fully emerge before incorporating them in their planning. Second, many presidents wrongly assume that the past correctly forecasts the future. Marketing planning is a natural outgrowth of higher education's concern for the allocation of limited human and financial resources in cash-constrained environments. Opportunities differ in an institution's different markets. A central concept of marketing planning is that institutions be strategically defined to take maximum advantage of such opportunities and that missions must be assigned consistent with the differences among them. Marketing planning describes the process of planning that (a) is built on sound assessments of market opportunity and institutional capability and (b) involves the development of the institution's total strategic approach to its various markets. Previous research found that less than 50 percent of higher education institutions had written marketing plans to provide overall marketing direction to the institution (Muston 1985). Less than half of the presidents in this study also reported no marketing plan. This study found the presence of a written marketing plan was associated with an overall higher level of institutional marketing. Presidents who reported the presence of a marketing plan were also likely to have retention, recruitment, home visit, and campus visitation plans then were those presidents who reported not having a marketing plan. Presidents who reported the presence of a marketing plan were also more likely to conduct marketing research studies (These relationships were significantly related). This suggests that institutions are using the results of marketing research studies to assist in the planning effort. Higher levels of retention are evidenced when institutions have a marketing committee. Mean values of retention rates were both higher as well as significant for presidents reporting the presence of a marketing committee. Marketing evaluation systems are in place to assure continuous monitoring and improvement of marketing programs and strategies. Marketing research studies and marketing plans focus on assessing institutional strengths and weaknesses against the backdrop of evolving opportunities, and results in a determination of the institution's ability to fill these opportunities, their relative attractiveness, and ways and means of taking advantage of them. Institutions typically implement more than one marketing strategy. Different strategies target different markets. These strategies embody ways in which institutions take advantage of market opportunities, and are employed to meet institutional objectives. Improving student retention and recruiting new students are clearly top goals of every institutional president. Marketing strategies and programs focus on the attainment of institutional objectives and periodic assessment provides validation of the success or failure of marketing strategies. Over 81 percent of responding presidents reported the presence of a written recruitment plan to attract potential students, but less than 60 percent of presidents reported the presence of a written retention plan as a strategy to improve student retention and graduation rates. Two-thirds of responding presidents reported conducting marketing research studies on their current students. Because matriculated students renew their enrollment decision every term and the costs of attrition are substantial, presidents considered retaining students nearly as important as attracting new students. Nearly 64 percent of presidents who reported the presence of a marketing plan indicated they also had a retention plan. The mean retention rate reported by presidents in this study was 59.33 percent with a standard deviation of 15.46 and a range of 85. This wide variance suggests either presidents did not know their retention rate or some institutions are actually only retaining 15 percent of their students while others are retaining 100 percent. Presidents who reported retention rates in the top quartile were more likely to employ important marketing practices. They were more likely to focus on planning and to conduct marketing research studies on various institutional stakeholders. Once a student is admitted, the institution makes an effort to persuade the student to enroll. Therefore, the goal is to convert admitted students to enrolled students. The mean admission to enrollment rate for institutions in this study was 50.78 percent with a standard deviation of 18.57. Once again this wide variance suggests either presidents did not know their admission to enrollment conversion rate or some institutions are actually only converting only 26 percent of their students while others are converting 95 percent. A relationship between the conversion rate of students admitted to students enrolled and various marketing initiatives was expected. Twenty-two marketing practices, strategies and programs from the survey were examined for significance. Only one was found - Admissions personnel who are marketing trained. Choice is at the heart of marketing, and institutions must understand the process consumers use to decide what and when to buy their education. Before students submit an application to an institution they must have some level of awareness of the institution. The goal of admissions is to convert these initial inquiries into completed applications. The literature notes a 10 percent conversion rate is average. The mean inquiry to application conversion rate in this study was 26.6 percent, with a standard deviation of 21.7. . Once again this wide variance suggests either presidents did not know their inquiry to application conversion rate or some institutions are actually converting only 4 percent of their students while others are converting 84 percent. Less than 15 percent of responding presidents reported conversion rates above 50 percent. A significant relationship between the conversion rate of student inquiry to student application and various marketing initiatives was expected. Four were found significant from twenty-one marketing practices, strategies and programs examined: 1) presence of a written marketing plan, 2) presence of a marketing committee, 3) use of an outside marketing consultant, and 4) Board of Trustees/Directors have oversight of institutional marketing direction. Presidents who reported conversion rates below 15 percent were more likely to focus on various planning strategies to aid in improving this important measure of institutional performance. Individuals in key institutional areas are formally marketing trained. Individuals academically or experientially trained in marketing are more likely to understand and successfully implement marketing strategies. Forty-eight percent of the responding presidents reported their admissions personnel were marketing trained and thirty-four percent reported their development personnel were marketing trained. Marketing training of the admissions staff makes a difference in recruiting prospective students. Mean values for the ratio of students admitted to students enrolled, and the ratio of student inquiry and student application were both higher and statistically significant when admissions personal were marketing trained. Recommendations Broad stakeholder participation in planning brings shared expertise, commitment from participants and assists in communicating the plan throughout the institution. Results from our presidential survey and the case studies indicated that institutional planning was top down in participation and results were poorly communicated to stakeholders. Presidents should consider broadening the involvement of stakeholders in institutional planning. Marketing decision-making at independent colleges and universities should be information driven. Results from our survey and the case studies indicated marketing research was not well developed. Marketing research should become a structured and routine activity at independent institutions. This study examined marketing strategies and initiatives at independent institutions in the Midwest. Results of the research indicated a significant relationship between measures of institutional performance and admissions personnel who were marketing trained. Considering this finding an institution's key decision makers (administration, faculty and staff) should be marketing trained. The large number of people who must interact makes good communication and dialogue necessary for successful planning difficult. They have widely varying backgrounds and are often physically and organizationally remote from one another. The distribution of the institution's planning efforts needs to be expanded. As it implements its strategy, institutions need to track the results and monitor new developments in the internal and external environments. Higher education institutions can count on one thing-- their environments will eventually change. And when they do, institutions will need to review and revise their implementation, programs, strategies, or even objectives. Institutions develop a system to evaluate and provide feedback of the effectiveness of the institution's planning system. Our research found that strategic planning and marketing among and within independent colleges was no more disciplined nor sophisticated than that found among state universities in the 1970's. 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"Organizing for marketing." Marketing Higher Education, VII(7), 1-8. Wallingford, H. P., & Karen Berger. (1993). "Marketing strategies for a low endowment private university in the 1990's." Journal of marketing for Higher Education, 4(1/2), 325-338. Werth, B. (1994). "Why is college so expensive?" Community College Journal, 13-34. Willmer, W. (1993). "Blue print for a small college." Currents, 19(9), 36-40. Wills, G. (1982). "Marketing a business school to industry." Industrial marketing management, 11, 303-310. ********** Craig Shoemaker, Ph.D. St. Ambrose University & Ray Muston, Ed.D. E-mail: cshoemkr@saunix.sau.edu ********* NOTICE: This guest article was written by Craig Shoemaker, Ph.D. and Ray Muston, Ed.D. For reproduction rights, please get permission from cshoemkr@saunix.sau.edu. Your credit should include "Marketing Higher Education newsletter," September 1998. Thank you. ********** -------------------------------------------------- Audience Segmentation in Higher Education Marketing by Robert (Bob) S. Topor One of the major problems I find as I am out consulting at colleges and universities in higher education in this country and others is the idea of audiences. Too many schools are trying to be everything to everybody! They think of their audiences as homogenous wholes, rather then accepting the idea that audiences comprise many, many sub-sections and that each sub-section can be targeted (i.e., communicated to) differently to get best results. Therefore, for example, alumni are not alumni (the homogenous whole) but are sets of classes that experienced quite different things while at your school and remember it quite differently. Using marketing research you can find out what those perceptions are and, applying that information, you can get better responses for admissions, fund raising, alumni participation, and other activities. Besides segmenting current audiences, both internal and external, you can use this idea to develop new audiences. For example, the Latina market, comprising many sub-sets itself, can provide many new opportunities. More and more commercial firms are moving to appeal to this relatively newly discovered market. However, communicating to this market requires appropriate language and cultural approaches. Otherwise you will turn off, rather than appeal to these audiences. My colleague, Dr. Engelberg and I have conducted a major marketing research (image) project for an educational system in Mexico. We have discovered and have researched many ideas about how to work in this environment. Many of our personal myths about this culture and country have been "busted" as we worked with people such as Dr. Fernando Leon Garcia (Ph.D., Stanford) of Centro de Ensenanza Technica y Superior (CETYS)! This project and our experience has been covered in a book I authored called "Image Analysis: How to Use Research Gathered Information to Achieve Higher Education Advancement Results" (available for order in hard copy [$40.95] through my web site. Segmenting audiences by age is also a good way to improve results. I am thinking of the so-called "Generation X," and those who follow, "the aging Baby Boomers." Watch carefully as commercial companies strive to re-position their products to appeal to this new market segment. I see growing numbers of colleges and universities recognizing this audience in distance education, for example. They are finding good marketing opportunities. Many schools miss this market because most administrators and communicators are much older and do not naturally associate with this segment of the market (culture, music, values, interests, etc.). This is a typical higher education problem... as I have covered in my book, No More Navel Gazing! The suggestion is quite simple: Do not think of your audiences in traditional higher educational terms (alumni, prospective students, alumni annual givers) and as large, abstract conglomerates, but find ways to segment your audiences through lists and by factors that will help to target that audience's subsets. You will be amazed at the improved marketing results. Questions? Call Bob Topor, author of this article at (415) 962- 1105 or write him at 280 Easy Street Suite 114, Mountain View, CA 94043-3736 or e-mail at topor@marketinged.com Happy segmenting! ********** Bob Topor * Topor Consulting Group International Higher Education Marketing Evangelist Web site: http://www.marketinged.com E-mail: topor@marketinged.com ********* NOTICE: As a subscriber to this electronic newsletter, you have permission to reproduce and use this article on your campus. All others please note ©1998, Topor Consulting Group International. Comments about, or requests to reprint should be directed to Bob Topor at topor@marketinged.com. ********** SPECIAL OFFER For Marketing Higher Education newsletter subscribers ONLY. Download the updated second edition of Bob's "classic" book, Marketing Higher Education - A Practical Guide, directly from his Web site at http://www.marketinged.com Special Deal: As a subscriber to this newsletter you have permission to make copies and distribute on your campus... a great aid for marketing committees! Make as many copies as you like (limited to your campus). You can get this book from the Home page on Bob's web site. It costs $40 (U.S.) It is easy to download to your computer, then you can reproduce it in your print shop or make photocopies. The first edition of this book has been one of CASE's best selling publications and has been used around the world. If you have questions call Bob at (650) 962-1105. NEW! 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You can use these ideas both in your business ventures as well as your personal life and success activities. Bon Appetit! This book is easy to download from Bob's website: http://www.marketinged.com -------------------------------------------------- Original posting: 9/29/98 Marketing Higher Education Newsletter is published by Topor Consulting Group International (http://www.marketinged.com). Newsletter posted by WEBB Internet Marketing & Consulting (http://www.firstchapter.com). copyright 1998 Topor Consulting Group International