Consumer behavior is changing, in part because consumer options are increasing rapidly. Simple case in point, how many channels did you have to choose from when you watched TV as a child?
When the rate of change for consumer behavior and the increased number of consumer options change abruptly, we can easily note the transformation. Crises allow for radical transformations. But if change is slower, we don't perceive the change as easily, and individuals as well as organizations are slow to adapt.
So why that apparently far-fetched comparison between graduate schools and greeting cards? The greeting card aisle in your local Target and WalMart is still a fixture even though consumers have plenty of other options when choosing to send birthday or holiday greetings. The substitutes range from a phone call, online e-cards, Facebook or Twitter posts, and text messaging. Social expectation to send a card is decreasing. Yet the printed greeting card seems to survive.
But the underlying reality is that we are seeing a shift in consumer behavior. Printed greeting card purchases are declining steadily and the average age of the purchaser is increasing. I will spare you a deeper analysis of the greeting card industry, but compare it to the much faster decline in the music industry (when did you buy your last CD?) or the print newspaper business. These businesses are recording dramatic declines in revenue in short periods or time. Digital options are changing consumer purchasing decisions.
Now think of the traditional campus-based graduate school. Students are still signing up in increasing numbers. With this Intead Insight we want to consider with you the overall graduate school enrollment and next week we will analyze MBA programs specifically. Stay with us for a moment and think through the changes in consumer behavior and the choices. Current high school students and even undergraduate college students are getting very comfortable accessing and learning all types of content from digital platforms. Wiki's are commonplace, math and language drills and tutorials are consumed online. Khan Academy, Lynda.com and even YouTube are offering on-demand learning environments for today's student generation. And this stuff is starting earlier and earlier in the elementary grades. Children around the world who want to learn something know to look to the nearest electronic device to figure it out.
With this review, we are looking for the canary in the coal mine. Our hypothesis is that substitutes and alternative learning channels will have a real impact on the enrollment figures of graduate schools in the future. The deans of law schools already know what it feels like to see dramatic enrollment changes. The decline of LSAT takers is continuing and law schools have been forced to adjust due to an oversupply of law graduates and declining job prospects for lawyers.
Last week our Intead Insight reviewed GMAT takers worldwide. We saw a strong trend with more international test takers as well as a higher percentage of female candidates. With this trend in mind, we analyzed the report by the Council of Graduate Schools and ETS on Graduate Enrollment and Degrees 2002 to 2012. This report covers all types of graduate programs and shows longer term trends. Not surprisingly, some of the trends we noted about GMAT takers last week are visible in this enrollment report as well.
As strategic advisors and planners, we are trying to discern the trends and what they mean for enrollment and university operations:
Fact 1: For many academic subjects, such as engineering and science, international students are a critical component for the sustainability of programs.
Figure 2.17 below from the report shows you the breakdown by citizenship. All types of sciences and engineering are composed of international students at rates of 30 to almost 50%. Most other programs are composed of 15 to 20% international students, an important cohort to maintain viability of these programs. What we hope for is more substantial visa reform in the U.S. to retain the talent, strengthen our economy and allow students to earn a return on their education investment.
Fact 2: Women have become a much bigger share of the student population.
Let's consider the implications.
From facts, we are moving to more speculative future trends:
Trend spotting:
- Will graduate students shift to certificate level courses as opposed to master degrees? Figure 2.23 (below) from the report already shows a substantial share of certificates in the fields of Education and Business.
- Will graduate level students increasingly rely on digital platforms and blended courses? Will professionals shift to blended or online education? We contrast this with undergraduate education, where non-content related elements such as maturing and developing social skills are a critical component. In graduate education, time and location flexibility are critical and the content is the center of the activity. As a result, we foresee a much greater impact from alternative learning platforms in particular in non-science graduate education areas. As a result, we believe the geographic radius for recruiting may increase and hence bigger university brands and more specialized schools will compete with regional offers.
- Who are the new competitors for traditional public and non-profit graduate schools. The report seems to have a limited representation of for-profit schools. So it is not clear whether for-profits are not a player or there is a blind spot in the analysis. Even more challenging are the non-traditional substitutes such as the CFA for graduate finance education (see blog) or CPIM designation in supply chain management. These substitutes are the most difficult competitors to spot since they are not yet considered your competitors but rest assured they will take market share from your education offerings. In the past, professional designations were complements to your education, today new digitally-based programs will teach the content, and the professional designation will provide the credential. There is a reason that Kaplan purchased a CFA online content provider.
We know that all these trends will have operational implications for your teaching, technology requirements and marketing. Building new capabilities requires long term investments. We know that this is true for teaching capabilities but we also know that it takes years to build a new marketing infrastructure and culture that embraces digital marketing across larger geographic territories, differing tuition fees than credit hours and many different marketing channels.
Fast forward 10 to 15 years and envision how you will reach graduate students and how you will serve them. What will be your tuition revenue split between local residential students, blended teaching and pure online teaching. How many full-graduate degrees will you award vs technical certificates?
We all have many questions. And Intead would love to be your partner as you plan the marketing strategy that will differentiate your institution from the growing competition. If you are not planning ahead, both in terms of the changes to your academic offerings and how you will communicate those offerings to your prospective students, your institution may go with way of the music CD, or worse, the vinyl LP record. If you are asking, "What is a vinyl LP record?" you just might have a shot at surviving the transformation.
