University Business - May 2008 - (Page 31) MONEY M AT T E R S Willingness to Pay Making the best case for institutional value and return on investment By Kathy Kurz, Jim Scannell, and Samantha Veeder OR MANY FAMILIES GOING through the college search and selection process, there may be a big difference between the ability to pay college expenses versus the willingness to pay. Ability to pay—the expected family contribution (EFC)—is based on income, assets, family size, number in college, and other key information from the Free Application for Federal Student Aid (FAFSA). Willingness to pay is a function of the institution’s value proposition—the intersection of the perceived benefits of the educational experience provided and the net cost to the family (i.e., the amount paid through savings, work-study, and loans). When the perceived benefits are high, the family is much more willing to pay, sometimes beyond what the FAFSA indicates as the EFC. But when the educational experience and benefits are viewed more as a commodity, willingness to pay is lower. In an environment of increased competition, a strong brand is critical to building and sustaining the value proposition. Marketing expert Bob Sevier, a regular contributor to University Business, sees brand as a promise that matters and must be communicated clearly as well as authentically. When there is no time, space, or opportunity to communicate, a strong brand tells the world who you are and what you stand for. This provides a clear message and identity to customers that instills confidence and saves time in decision making. For example, the marketplace views MIT’s brand as a premier technological university and Yeshiva University (N.Y.) as a comprehensive Jewish institution. Students looking for these characteristics in a college easily identify these institutions. F The University of Rochester has co-branded scholarship opportunities with national companies with local roots. There are two primary options for strengthening the value proposition: differentiate your brand and demonstrate the return on investment (ROI). DIFFERENTIATION APPROACHES In the crowded education marketplace, differentiation is critical. Common approaches to differentiation used by higher education institutions include: 1. Academic quality. Families are willing to pay for an Ivy League education because the perceived value and benefits are high. Demand for these institutions is high, and so is selectivity, which enhances the perception of quality. But for most IHEs, limited resources make aspiration to Ivy League costs unrealistic. Those with smaller endowments choosing to brand based on quality typically focus on building their reputation for specific programs. 2. Big-time athletics. Successful athletic programs generate visibility. Think about the colleges and universities that sell the most branded apparel. All of them are either football or basketball powerhouses. 3. Convenience. IHEs providing flexible modes of delivery, multiple locations, and convenient class times will attract “busy” people who want to further their education but struggle to find the time. 4. Co-branding. Marrying your brand with another perhaps more prestigious or well-known brand, or one of particular interest to a target audience, is often used to jump-start a branding campaign. In order to gain more national recognition among high ability, college-bound students, officials at the University of Rochester (N.Y.) co-branded a number of scholarship opportunities with Bausch & Lomb, Xerox, and Kodak, all nationally recognized companies with local roots. This strategy allowed the university to gain visibility and penetrate markets that otherwise would have been unavailable or inaccessible. 5. Unique program or major. Students consistently and repeatedly say their main reason for choosing a college is that the major or program of their choice is offered. If the program is unique, is in high demand, or has a distinctive way in which it is taught, demand usually follows. Over the last few years, physical therapy and forensic science are two such academic programs. When brand messages are weak, admissions recruiters and financial aid Kathy Kurz and Jim Scannell are partners in the enrollment management consulting firm Scannell & Kurz. Samantha Veeder, formerly the director of Financial Aid at Hobart and William Smith Colleges (N.Y.), is the firm’s senior consultant. They can be reached via their website, www.scannellkurz.com. universitybusiness.com May 2008 | 31 http://www.scannellkurz.com http://universitybusiness.com Table of Contents for the Digital Edition of University Business - May 2008 University Business - May 2008 Contents College Index Company Index Advisory Board Editor's Note Stats Watch People Watch Sense of Place Viewpoint Money Matters Financial Aid Human Resources Community Colleges Art Appreciation HR Directors Speak Out Marketing: The Big Questions Answered Top 5 Reasons You Should Attend EduComm 2008 What's New Calendar of Events End Note University Business - May 2008 http://www.nxtbookMEDIA.com
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