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John A. Davis and Mark A. Farrell

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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John A. Davis and Mark A. Farrell

With a competitive higher education sector, and students forced to pay more for their education, it is inevitable that students, their parents and other stakeholders will begin to view universities as providers and students as consumers. In this chapter we examine the metaphor of student as consumer and how this affects the staff/student relationship. We also discuss the importance of customer satisfaction as a metric for assisting universities to become more competitive, and how increasing customer/student satisfaction can lead to significant benefits for universities.
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John A. Davis and Mark A. Farrell

Given the faster pace of change in the higher education sector, we focus on relevant organizational change frameworks and methods university leaders can use in their efforts to become market-oriented. A key challenge most organisations confront, and is certainly one that is particularly pronounced in higher education institutions, is resistance to change. We offer recommendations for how university planners can both plan and begin to execute a shift toward becoming market oriented. Overcoming organizational and leadership biases, plus less-productive routines, can accelerate the market-oriented transformation, and developing a customer-oriented mindset among the university’s many employees is an essential part of any change initiative.
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John A. Davis and Mark A. Farrell

In this chapter we examine strategy planning processes and their application in a university context, in which multiple stakeholders play vital contributing roles in shaping the institution’s direction. Clearly defining the university’s vision, mission and values are essential and it is surprising how often disconnects occur between the stated ambition versus the implementation. In effect, the challenge lies in two key areas: first, aligning the vision, mission and values; second, walking the talk (i.e. living the institution’s values and purpose). For a market-orientation to take hold, a university’s strategy plan must be bold enough to encourage a rigorous and penetrating review of the institution’s curricula, research orientation, and teaching support, aligned with performance-based outcomes and the market-oriented research findings.
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John A. Davis and Mark A. Farrell

Three distinct market forces, student diversity, cost pressure, and technological change are converging, compelling many universities to not just closely re-examine their role in society, but to animate how they make strategic investment decisions in support of the institution’s efforts to develop a distinctive position in the global higher education market place. Achieving a distinctive position can help the institution develop a recognized, truly valuable brand value proposition that defines the university’s role and contribution to society and the stakeholders it serves. We examine the role of differentiation for universities through the lens of a brand strategy framework comprised of four dimensions: Destiny, Distinction, Culture, Experiences. We also discuss the benefits to developing a university ‘brand touchpoints’ map and a customer journey map, with the student as customer as the focal point, but an obvious application to other stakeholders is apparent as well, providing a highly useful set of tools planners can use to fine tune their respective institution’s strategic plans and positions over time.
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John A. Davis and Mark A. Farrell

In this chapter we answer two deceptively simple questions: What is a market-oriented organization and what are the benefits of being market oriented? To address these questions we review the marketing literature and provide an overview of the marketing concept and the evolution towards a market orientation. We compare and contrast the culture versus behaviour view of market orientation before providing the reader with an understanding of how to measure a market orientation, by illustrating the key market orientation measures. We then demonstrate the benefits of being market oriented and conclude by examining some of the marketing activities undertaken in some universities.
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John A. Davis and Mark A. Farrell

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John A. Davis and Mark A. Farrell

In this chapter we examine theories of disruptive innovation and take the reader through the development of Clayton Christensen’s theory of disruptive innovation. One of the paradoxes of disruptive innovation is why incumbent firms fail to respond to the competition. To answer this we review the literature and provide several arguments that suggest the higher education sector is vulnerable to a disruptive innovation and/or business model. We provide several examples of business model innovations, from Uber to Ryan Air. Finally, we turn our attention to disruption in education and provide a compelling argument that universities are facing a perfect storm of reduced government funding, demanding students, increasing competition from within the sector, and competition from new providers who are innovative, flexible and market oriented.
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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.
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John A. Davis and Mark A. Farrell

In this chapter we argue that the higher education sector and the leaders of universities are remarkably resistant to change, and that the main impetus for innovation in higher education is the government. In an increasingly competitive and globalized world, governments look to higher education as a means to earn export dollars, make a contribution to society’s problems, and provide an educated work force for the economy. In this chapter we demonstrate that the view of higher education as a public good has been replaced with a government philosophy and policy direction that the main beneficiary of higher education is the private individual. In short, the individual receives a private benefit and as such is a consumer of higher education. Concomitantly, government is looking to the individual to shoulder an increasing financial burden as shrinking government budgets are stretched to meet the demands of other areas of the economy. The result is reduced government funding, increasing competition from traditional and non-traditional providers, and an increasingly demanding and sophisticated student/consumer.