Strategies for market positioning in the competitive higher education market
Farshid Shams F.Shams@bath.ac.uk
One of the most significant implications of economic globalisation was deregulation of markets and emergence of free market economies. The higher education sector has not been immune from that fundamental change. HEIs are traditionally known as non-profit entities, which are responsible for adding educational value to the society. The controversial point is that these non-profit organisations need to survive (financially), especially when operating in a liberal market economy. For instance, in a recent Observatory report, financial problems and the low number of enrolled students were mentioned as the main reasons for George Mason University to withdraw from the UAE market(OBHE, May 2009). This represents the importance of market strategies to achieve, at least, a minimum financial viability for a HEI.
The notion of a free market economy prescribes deregulation and privatisation that results in less governmental control and interference, rooted in a belief that the invisible hand of market would automatically assure the efficiency of outputs especially in the favour of customers (Smith, 1997). This theory argues that less regulatory pressure on businesses from the government side would bring liberty to the market thus a greater competition among individuals. To win the competition, players need to hear the consumer’s voice hence undertake cost and quality oriented policies. Gibbs (2002) pays attention to the humanistic market approach to education instead of economic market philosophy. He argues that although financial viability is necessary for an HEI to create competitive advantage, but the notion of market in higher education must also address socio-ethical issues such as trust building; hence, an invisible handshake is suggested instead of invisible hand of the market(Gibbs, 2002: p 333).
At the institutional level, HEIs adopt different strategies to position themselves in the market and move towards creating a competitive advantage. Mazzarol and Soutar (2008) studied the strategic positioning behaviour of Australian educational institutions. Drawing on the Porter’s generic model (Porter, 1990: p 39),they realised that some educational institutions undertake a cost leadership strategy and some others prefer to reach a competitive edge through differentiation strategies. They also identified a percentage of these institutions that follow cost-focused and differentiation-focused strategies by targeting niche markets and surprisingly, some of them that have no strategy at all (Mazzarol and Soutar, 2008: p 147).
Some scholars believe no matter what strategy has been underpinned, the main pattern of competition in the HE market revolves around operating a “ positional good”(Marginson, 2006: p 3). The positional good, to some extent, guarantees the student’s better social lifestyle in the future. The positional aspect is associated with the concept of prestige for an institution.
This research aims at identifying the patterns of competition in the higher education sector and studies the strategies undertaken by HEIs to create a sustainable competitive advantage in that market.