Managing the Gears of Higher Ed Growth

It’s been approximately four years since Grawe’s bombshell “Demographics and the Demand for Higher Education.” And, just as many of us were coming to terms with the future Grawe portrayed, COVID-19 and a sharp drop in consumer confidence have wrought even more challenges. 

Fall 2022 numbers showed some growth in specific areas, yet undergraduate enrollment—the bellwether of indicators—fell for the fifth semester in a row. All this while a large percentage of the population remains critical and, even less trusting, of higher education. By all accounts, our market is losing not just relevance but also size.

To survive, a common approach for market leaders—or any brand with a similar growth mindset—is to focus on market share ahead of market health, but this approach may only benefit categories in which there are only one or two dominant players. In a different frame and as Guy Murphy wrote, “Everyone worries about having more pie than anyone else, and no one is worrying about how much pie there is in the first place.”

In categories with a larger portfolio of players and where the spread of market share is more dynamic, market health plays a stronger role in growth. Knowing the number of institutions and that most students don’t shop via a predetermined set (small liberal arts vs. R1 public), we see that higher education follows a much similar pattern to the latter scenario. 

For higher education leaders and marketers, this begs the following questions. What is marketing’s role in all of this? How should marketing navigate the dynamics of our current market? More specifically—and the crux of this article—is it possible for marketing and advertising to help grow the market? If so, how?

What follows is an attempt to shine some light on what advertising can collectively accomplish in a volatile industry.

Markets as Brands

Academics and practitioners have plenty of evidence to suggest advertising can be a driver of market share. What’s not so clear is whether or not it is a stretch to imbue advertising with enough market power to say it can grow a market. 

If we are to assume that there is the potential for advertising to grow a market, then it’s not far off to think that markets act as brands. This is a fair assumption considering markets, like brands, have both emotional and rational characteristics and perceptions. Consider the research mentioned above: There is a strong response to the role higher education plays in culture and the economy, as well as perceptions of its value. The same can be said for cars, phones and even social media in terms of market consideration.

If we treat markets as brands, then two implications arise. 

• Advertising must influence a shift in consumer priorities, especially if another market brand may offer a competing need.
• Secondly, advertising must increase the importance of the market in our lives, meaning it must occupy a bigger part of our lives.

These are pretty large implications and tall tasks, but there are lessons to explore in the annals of marketing’s not-too-distant past.

Capture Culture

Market brands must be built through a much larger variety of sources than consumer brands are. Instead of starting with the typical question: What communication channels are most frequently used by my audience? Start with the following questions: What communications/communicators have had the biggest influence on this market in culture? Where do consumers learn about this market? For example, olive oil grew in market size as brands capitalized on the sudden popularity of the Mediterranean Diet. 

Understanding that a market brand may be shaped by culture means that advertising must influence collective understanding on a much larger scale than just name buys and tightly targeting messaging. 

Facing government regulations that diminished the amount BT could charge phone users per call, the brand’s only path to increase revenue became to grow the market. In a sense, creating a need for people to make more phone calls (call volume) and encouraging product adoption would encourage an increase in calls.

BT found that the phone habits of men and women were distinctly different among most demos. “It’s Good to Talk” aim was to soften men’s view of phone calls being a “means to an end,” as well as their view on their partners’ desires to have more frequent phone communication. Using broad, segment-sweeping media placements, BT’s campaign increased not only call volume in the United Kingdom but also the call times of both men and women.

Raise the Tide

The combined power of advertisers or an advertising body has shown the power of influencing the market size. This strategy is driven by the need to influence mass consumers for the benefit of all category players (i.e., a rising tide lifts all ships.), often through the use of broad-reaching advertising. There is evidence to suggest that this is an effective way to grow the market size, but often only does so in the short term.

Aside from raising a few eyebrows during this year’s Super Bowl, The California Avocado Commission has once again extended its campaign to support California-grown avocados and the brands that sell them. With support from growers, the goal of the campaign was to increase not only market size but also distribution through the United States, as well as consumers’ willingness to pay a price premium. By their own publicly available dashboard, the campaign is showing the power of using a combined effort—in this case, from a trade association—to increase the occasions and the amount consumers are willing to buy. 

Perhaps the most well-known effort was the milk industry’s attempt to influence a nearly 20% decline in consumption during the early 1990s. Organizations such as the California Milk Processor Board and MilkPEP joined forces to hire a legendary agency that would make milk mustaches iconic and a nation suffer alongside an Alexander Hamilton history buff. With the increase in ad spend throughout the mid-90s came an increase of approximately 6%.

Steal from the Sector

The first two paths show that there are slight indications that market size can be influenced by advertising. What these also assume is that consumer decisions fall in line with how we categorize our industry, which is, at the end of the day, an artificial construct. Ultimately, this sets up marketers to define a market by its products, not its buyers. Buyers come to a market to satisfy a need. We often forget that different products may meet a specific need. 

It also shows us that market growth doesn’t always come with creating new desires. Growth will most likely occur at the sub-sector level, meaning within current desires. To quote Tim Broadbent, “The opportunity for our product is not limited to the set of similar products but extends to a wider set of different products that meet the same want. If we monitor only our product sector share, we might lose sight of the consumer.” 

It’s there, found in Broadbent’s insight, where we find a third path. In many cases our consumer has reshaped the problem or, better yet, has more solutions at their fingertips. Whether it’s upskilling, credentialing or receiving a degree over multiple modalities, like the car example above (Figure 1), the share of growth within a category is also seen in sectors. From a market perspective, this is often driven by consumer substitutions (e.g., Udemy vs. an online degree) or innovation at the product level (e.g., modality and/or access initiatives). 

Advertising has been shown to rearrange share at the sub-sector. For marketers, this means that advertising must not only consider what the market is made up of but also measure our efforts against what our audiences interpret as solutions to their problems. In this context, advertising can be used effectively to influence the segment where the most growth opportunity exists, leveraging the ability to grow share. 

Perhaps it’s no surprise that, when major online institutions not only outspent most of the category but also selected broad-reaching media, sector growth occurred across a very specific modality. What isn’t clear is whether or not this produced new growth—even more difficult to track when advertising spend is at one of its lowest points since 2013. So, as many institutes look for ways to leverage advertising, these three paths provide guideposts for potential growth.