How Non-Profits Compete With For-Profits in the Marketing of Online Programs

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For-profit education institutions are lauded in the business community for the profitability of their new models of efficiencies and their marketing prowess. Unlike their non-profit counterparts, who typically spend in the 0-8% range on marketing and advertising, for-profits are spending in the 20-30% range, more akin to typical commercial entities. And the percentages are of a much larger revenue stream, resulting in a budget that can be magnitudes of scale larger than the typical non-profit institution budget. The Apollo Group spent over $240 million on advertising related expenses in 2006. This is a quote directly from the SEC filings of the Apollo Group concerning their University of Phoenix division:

“The higher education market is highly fragmented and competitive with no private or public institution enjoying significant market share. We expect that competitive colleges and universities will continue to modify their existing programs to serve working students more effectively.”

This is how they see you. How do you see yourselves? The challenge of competing against a $240 million budget with your "somewhere south of a half a million dollar" budget can seem daunting. But if you are a non-profit education institution, there are some things that you can learn from the business community as well. This is not the only field that involves small organizations with small budgets competing with a handful of large organizations with well-funded marketing efforts. How does the local hardware store compete against the Home Depot and Lowe's of the world? How does the local coffee shop compete against the Starbuck's down the street? It comes back to one of the most basic marketing principles, differentiation. In general, a marketing professor may suggest that you consider the 4 P's when trying to differentiate, price, package, promotion, and product. The following suggestions are related to the 4 P's, but provide more specific, practical techniques to consider when you are differentiating your programs: brand, local markets, and carving a niche.

Brand - Your institution has been developing a brand since even before it opened the doors to the first students. This brand is hard to put a price tag on, but it is by far the most valuable resource you have in attracting new students to your programs. While many institutions are aware that they have a brand, many do not know what it actually is, how to manage it, or how to use it. According to wikipedia, a brand is:

"...a symbolic embodiment of all the information connected to a company, product or service. A brand serves to create associations and expectations among products made by a producer."

What is your institution known for? Excellence in a specific field? Serving more students than any other institution in your local area? Quality education at an affordable rate? What are the expectations of the students when they attend your institution? Find out what your brand is and support your brand in everything you do as an institution.

Local markets - It may seem counter-intuitive to think that you would aim an online program to local markets. It may also be a political issue at your institution because it seems threatening to existing face-to-face programs. But when you examine online programs across the country, there is a clear relationship between proximity to the physical campus and the number of students that attend the programs. You could conclude that this is because those institutions are marketing closer to home, rather than that they have an inherent advantage in their local markets. But it is clear that aiming at the local markets can be a successful strategy and there are several things that can be done to focus this activity. You may be able to develop and promote characteristics of your institution indicating that there is a physical presence nearby representing the education they are seeking. And ff course, if they are nearby, holding a select number of face-to-face events, even if just to give the students a chance to network, are a good way to exploit this local advantage you have. Depending on your program, you may find local events that are well-attended by your potential market and can be relatively cost-effective to market at compared to a national-level campaign. Local magazines, local sporting and community events, and professional society events can all be cost-effective areas to put your marketing dollars into a message promoting your localized advantages.

Carve a niche - This is a well documented strategy across most fields that smaller organizations can use to successfully compete against larger organizations. If I start a small computer services company and have to compete with Dell Computers, I am more likely to be successful finding a niche that I can be successful in, such as installing specialized systems for restaurants. Even though Dell's smallest division still dwarfs my company in size and resources, I can still successfully compete if I offer a well developed expertise in my specific area. Large companies look for large markets that can satisfy their growth goals. Therefore, the small niche I am trying to carve out falls under their radar, yet I could double or triple the size of my firm for years to come. Higher Education has been applying these concepts for years in the offering of specializations, but when it comes to today's competitive environment, this should always be a consideration for any program.

The Internet can pose opportunities as well as threats for your institution. Whether you are ready or not, the Internet has suddenly thrust your programs into a global economy of fierce competition and little appreciation for the history and social importance of your institution. But you have all of the tools that will help your institution survive and even prosper in this new age, it is just a matter of putting them to use.