This essay is the second part of a series devoted to the marketing and branding of US colleges and universities. The first installment can be found here. There may or may not be a third part forthcoming.
I’d like to begin this second installment of college branding by using a case study of sorts to illustrate a far-reaching dilemma experienced not just by college administrators, but also by folks in diverse industries. I desire to keep the identity of the college below anonymous; therefore, I will refer to it as ‘City College.’
Case Study
City College was founded over 200 years ago to provide higher education to the wealthy residents of a small, but influential, town. Since its founding, the college was variously funded, first by the city itself, then a cadre of wealthy benefactors, then the city once again, until finally, it passed into the hands of the state in the late 1960s, after which its undergraduate population grew exponentially in size over the next 30 years, from about 200 to around 10,000.
After primary funding for City College passed on to the state, its mission changed a little; rather than focus on just the privileged few of the city, it saw itself as a regional college, providing education to that geographic area of the state in which it was located. Being rather new to the state university system, as well as being relatively small, City College received but a fraction of the funds allocated to the two other major universities in the state, leading one dismayed college president to opine, “The large universities send their lobbyists to the Capitol to stay in large, fancy hotel suites; we send ours with a roll of quarters.”
Because of the paucity of state funds—as well as a very limited alumni network (remember, as late as 1970, City College only produced around 50 graduates a year)—the school had developed a very specialized sense of its place in the world of US higher education. It chose to be a teaching-intensive institution, over and against research; it chose to focus on low-cost areas of education, such as the humanities, rather than the natural sciences, where it maintained a capable, but small, faculty with very limited resources. Because of its success in holding down costs, it also saw itself as a low-cost provider of education, serving mainly the small region in which it was located. The quality of education was far from Ivy-League caliber, but neither was it sub-standard. It was merely serviceable, a low-cost, medium-quality alternative that worked quite well in its region, for the region itself lagged behind the national average in terms of per-capita income.
This all changed a few years ago when a new president arrived and sought to put into place a different business model. Not content with being merely serviceable, the new president wanted City College to become more competitive, and in anticipation of this shift, decided to raise tuition accordingly. With the new funds, the president sought to upgrade existing facilities, enlarge the academic offerings, attract more highly-regarded faculty, and invest in more cost-intensive areas of study in order to attract brighter students and faculty.
As one might imagine, this shift led to some grousing among the old guard who were quite comfortable with the status quo, and as typical in the world of college presidents, the new president left the school long before many of his initiatives were brought to fruition. The result: the school has made some gains in the area of competitiveness, moving up the rankings on various fronts, but not nearly the progress anticipated or desired. The school’s tuition has shot upwards and now rivals the other public colleges in the state. Further, because of ongoing projects, the school is now committed long-term to pursuing this course.
Concurrent with the shift in business model, there was a huge marketing push heralding the school’s new commitment to academic excellence and its aspiration to be mentioned in the same sentence with more elite institutions.
Commentary
The situation above is one not uncommon to several schools and businesses around the country. At root, the basic dilemma addressed by the shift in business model is one of market polarization, which is the phenomenon that occurs when the deliverers of extreme high quality and extreme low cost squeeze the middle of the business spectrum, or those businesses that deliver medium-quality, medium-cost products and services. The existence of such a phenomenon is taken as an article of faith by executives across many industry sectors.
To observe how this phenomenon works in a general setting, witness the fate of businesses like Eddie Bauer or Pier One Imports. Both specialty retailers offer consumers middle-of-the-road products and prices. While being far from Louis Vuitton, Armani, or even Pottery Barn, by the same token, they not do pander flea-market goods either. The challenge to these businesses brought about by market polarization is that consumers increasingly demand absolutes: either the absolute cheapest, or the absolute best. In this way, middle-of-the-road businesses end up getting clobbered by those competitors who offer higher quality or lower prices. The customer who furnishes his home by attending Sotheby’s auctions or by trundling down to Pottery Barn to pay $1,000 for a bedside table is never going to chose Pier One for similar purchases; likewise, the customer who doesn’t really have an appreciation for quality—or who is super-conscious of price—will almost always chose Walmart’s or Target’s array of cheap Chinese imports to the marginally better goods found elsewhere. This, in theory, is how market polarization squeezes the middle market.
Ultimately, the question is, “Does this model of market behavior translate to higher education?” I would argue that the answer is far more nuanced in education than in, say, retailing, but more and more, the trend in hiring college presidents tends to favor recruiting folks from the business world, rather than academia, and as the number of businesspeople running colleges increase, so, too, have those ideas that first gained an audience in business, such as market polarization. Indeed, the new president who introduced change in our case study above cut his teeth in the world of investment banking and holds an M.B.A. The press release that announced his departure to head up another college described his tenure at City College as follows:
[He] oversaw the institution’s growth from a regional university to a nationally-known liberal arts and sciences institution with a steadily improving student profile. He increased the number of full-time faculty, set record giving levels, and boosted the number and diversity of academic and co-curricular programs.
From one perspective, upon the arrival of the new president in our case study, City College was battling against market polarization. While incredibly cheap when compared even to public schools within the same state, City College was still more expensive than, say, a vocational school or a community college. Likewise, its academic offering was immensely better than a community college, but no contest when compared to elite schools. It would not be a huge guess to assert that the new president was guided in his strategic decisions by his application of market polarization to higher education.
By attempting to move City College up market, the new president was guided more by long-term strategic forecasting than the here and now. For if market polarization is present or applicable in the market for higher education, the niche occupied by City College would be a steadily contracting one. At least, one presumes, so goes the thinking.
But strip away the slick marketing language—such as the kind employed in the press release excerpted above—and one discovers that the gains made by City College during this time have been fairly modest in the big scheme of things. Further, the new president had the huge benefit of starting his program from a still position; that is, any progress looks infinitely better when measured against a baseline of zero, but as the College has discovered, sustained movement up-market requires sustained—and increased—funding, and this funding has been in short supply. Once the funds run out, so, too, does the progress, and perhaps this is why the new president bid adieu to City College, so that, in effect, he wouldn’t have to manage the stagnation—or worse, decline—that would inevitably follow the school’s inability to fund the president’s vision.
If you believe—as I do—that four-year colleges really don’t compete with community colleges, except maybe in very marginal cases, then you could argue that what the new president actually tried to do was reposition a provider a low cost as one of high quality, which would be akin to Walmart repositioning itself as an upscale retailer. In fact, Walmart itself made moves in this direction recently, but ultimately suspended the effort when it discovered it had alienated its core segment of customers. The result was a housecleaning within its ranks, particularly the marketing department, which has seen a great deal of turnover within the last year.
Similarly, City College has alienated its core constituents, who now must fork out substantially more money for a product that has only marginally improved in quality. It has, in effect, forfeited its position as the preferred provider of low cost in a half-baked effort at moving toward the other end of the spectrum.
But over and against the business case against the new president’s strategy, there is another element at play when considering public universities, and that is the duties and responsibilities these institutions have toward the publics that fund them, and in this regard, the analogy between public universities and for-profit corporations begins to fall apart. The ultimate return for a shareholder is profit; that is the point of owning shares. But the publics who in effect ‘own’ universities have a different set of expectations. The region served by City College scores below the national average both in terms of wealth and education; I can’t imagine how attempting to create an up-market university better serves these people, especially when it was entirely foreseeable that the state would run out of money long before such a transformation could ever properly be completed.
This example should serve as a caveat to those trustees who are now considering turning over their schools to an ex-businessman with delusions of grandeur, because once you start down that path, it’s next to impossible to reverse course.
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