The Market Oriented University

The Market Oriented University

Transforming Higher Education

John A. Davis and Mark A. Farrell

The next decade will be transformative for the higher education sector. Government funding is decreasing. Through their marketing activities universities have created the ‘student consumer.’ The student consumer is prepared to shop around, compare prices and value, and once purchased expects a return on their investment. Disruptive innovations are challenging traditional forms of learning and in many cases are viewed as better alternatives to traditional learning in the classroom. Competition from private educational providers is increasing. Their cost base is lower, and their customer focus is superior. In short, universities around the world are facing a perfect storm. While experts don’t expect the higher education sector to collapse under these challenges, they do believe that for some institutions the future looks bleak. If universities are to avoid closures or mergers, they will need to adopt a market-oriented approach.

Chapter 2: Competition and rankings

John A. Davis and Mark A. Farrell

Subjects: business and management, management education, management and universities, marketing, education, management and universities, management education

Abstract

With a reduction in government funding universities, and with over 17,000 universities for students to choose from, the competition in higher education has never been fiercer. In this chapter we examine the nature of competition in higher education, with particular reference to status competition and positional goods. Prestigious universities enjoy a similar status to luxury brands, with constant demand from a hungry market keen to share the brand association. Conversely, lesser know institutions do not enjoy the same cachet. We also examine how university rankings shape reputation and how reputation shapes rankings, often leading to perverse incentives.

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