William Annandale February 9, 2017

Winners and Losers – Strategies in Higher Education

The last few years have seen major changes in higher education in the UK; a sector that was more used to quiet evolution previously. The changes can be traced back to the coalition government’s ‘Students at the heart of the system’ white paper in 2011, the enabling of a dramatic increase in undergraduate tuition fees for English universities, up to a maximum of £9,000, in 2012, and the removal of central control on recruitment numbers.

Since then, not the least of the shocks has been Brexit, which is predicted by many to have a major negative impact on universities’ recruitment of EU students, to add to uncertainty about international student recruitment, related to immigration policies.

The dynamics of the sector are now completely different. The outgoing chief executive of UCAS said in her ‘end of cycle’ report in December 2016 ‘When I took over at UCAS in 2010, students chased places – now the places chase them’. Marketisation is a jargon word used, often pejoratively, to describe what is happening in UK HE, and students as consumers. Whatever the terminology, there is no doubt that HE has changed forever.

There is also no doubt that financial pressure is building, on at least some universities. HEFCE’s most recent report, in November last year, on the financial health of the sector suggested ‘a widening gap between the lowest- and highest-performing institutions and increasing volatility of forecasts in the sector’, with forecast surpluses by institution ranging from ‘a deficit of 28.6 per cent to a surplus of 21.5 per cent in 2017-18’.

From a strategic and marketing perspective, what can and should universities be doing as a result of all the changes? Two broad courses of action are suggested.

1: Size and Shape

The removal of the cap on undergraduate UK and EU recruitment numbers has provided a big opportunity for universities but it will only be right for some to take advantage. Expansion clearly comes at a price, in terms of staff and facilities, and brings increased risk at a time of increased uncertainty.

If not already undertaken, universities need a major review of what they want their size and shape to be in the future. Size with regard to overall numbers but also undergraduate versus postgraduate, domestic versus international, directly delivered education versus partnerships etc. Shape includes issues such as breadth of faculties and courses offered, emphasis and investment in research versus teaching, the extent of face to face education as opposed to blended or remote learning, and facilities offered to students.

In the past, most universities have had stated intentions for growth, within the previous student recruitment limitations. Now, consolidation is absolutely a viable option and one that is likely to be more appropriate for some institutions (the UCAS ‘end of cycle’ report indicates that a number of universities are already taking that route).

A consolidation approach also needs to consider breadth. There has been a tendency for universities to try to be all things to all people; hard decisions now need to be made about less reputable faculties or departments and where the focus should be, so that the institution can concentrate on and promote a strong core. This includes a hard look at proposals for new programmes; a HEFCE report from 2012 concluded that only 10% of new undergraduate single subject programmes could be considered successful. With estimated programme development costs at £200m, this suggested that £180m of NPD costs did not achieve a return for institutions.

2: Distinctiveness

Alongside size and shape, distinctiveness is an increasingly important issue for universities to address. How can they genuinely stand out, to target audiences such research funding bodies and industry as well as prospective students, in an increasingly competitive and crowded marketplace?

The typical ‘inside > out’ approach of ‘broadcasting’ (shouting louder) what you think you’re good at will not work unless it’s based on real insights from ‘outside > in’. How is the institution really perceived by the outside world versus its peer group, who are this peer group in reality (not always those assumed), what is being said about it on social media forums for instance regarding student experience, and what is important to those having to make a choice? According to UCAS, almost two thirds of students with some A level grade profiles now get five out of five offers; that’s tough competition even after short listing, and (good) distinctiveness is imperative.

A distinctive position can and should evolve over time but it needs to be established in the first place, and established on the basis of depth of insight, and then communicated in a motivating and appealing way. Many universities are becoming increasingly innovative in their ‘campaigns’, particularly digital; not always, however, grounded in a relevant and appropriate proposition and positioning.

The HE sector has many opportunities and many challenges, and the gap between ‘winners’ and ‘losers’ will inevitably widen, even in the near future. As well as being reactive to changes, universities should be proactive to take charge of their own destinies, and make sure they have the fundamental strategies in place to ensure they end up in the winning camp.

William Annandale November 11, 2015

Teaching Excellence Framework in UK Universities

Will UK universities need a new approach to strategic planning?

It is just as well that UK universities are filled with, and run by, bright people. Just when they might have thought they had worked out how to improve their reputation – many made significant gains in the 2015 THE and QS rankings – the UK government decides to change the rules, or at least issue a Green Paper with a view to changing the rules. It is about consultation at this stage but the Green Paper does signal a fundamental change which will impact on the strategy and planning of many HEIs.

A bit of scene setting first. Many UK universities, outside of the research powerhouses like Oxbridge and Imperial, derive a majority of their income from teaching. However, their reputation – particularly international reputation, which is becoming increasingly important – is based far more on their research. For many institutions, research – and the promotion of it – has become a clear priority and, as a consequence, for many academics, building a research profile is more important for career and personal interest than teaching students – even if this is what pays the wages. As the Green Paper itself says, ‘teaching has been regarded as a poor cousin to academic research’.

Belatedly – and, in our view, positively – the proposed new Teaching Excellence Framework (TEF) is intended, amongst other things, to start redressing the balance. Over time, according to the principles behind TEF, universities will be categorised in one of several levels for ‘teaching quality’.

If a university finds itself in the bottom rung, that is likely to have a major impact. Not only will it be unable to raise tuition fees (and may have to reduce them), its teaching quality designation will deter large numbers of high-quality students from applying. The institution will run a real risk of a downward spiral, where lesser quality students, a low ranking for teaching quality, and constrained finances could create real problems. The Green Paper is quite open about this possibility – ‘Eventually, we anticipate some lower quality providers withdrawing from the sector, leaving space for new entrants, and raising quality overall’. It’s worth questioning whether students should be paying ‘extra’ for the quality of teaching that they might expect as a matter of course, but that’s a different topic and a different blog.

Consider also the situation at the other end of the spectrum. Those universities with the highest ranking could well be overwhelmed with applications. This would put a huge strain on admissions systems and staff, trying to cope with large increases in the volume of applications, and potentially risking more disputed decisions on who to offer places to.

Now the good news; there is time (some) to prepare. The government is proposing that the first version of TEF is piloted in 2016 and has a more limited scope in its first two years. Planning and Strategy teams, however, should start evaluating its potential impact now, and developing alternative scenarios for their operating models. In turn, Marketing teams can start to consider how their institutional propositions might need to be adjusted.

And a good start point; the robustness of existing data about teaching quality for each institution. The National Students Survey (NSS) records scores for ‘assessment and feedback’ and these have traditionally been the area of the student experience with the lowest satisfaction levels. Now is certainly the time to ensure that any shortcomings are identified and addressed.

Louise Curtis July 29, 2013

Mid-ranking universities will feel the squeeze

Mid-ranking universities will feel the squeeze when student numbers cap ends

Removal of the cap on tuition fees will unleash fierce competition – universities need to rethink how to market themselves to students.

The surprise decision to remove the cap on the number of undergraduate students that universities may take was one of many steps towards the marketisation of university taken by the coalition government.

Announced in the 2013 autumn statement, the policy will take effect in 2015. It was preceded by raising of tuition fees to £9,000 in 2012 and the publication of the Students at the Heart of the System white paper in 2011.

This is still some way short of what would normally be called a market because of the continued fee cap and the unintended clustering of universities at the top end of the fee scale. Only 10 out of 120 institutions will charge maximum home fees of less than £9,000 in 2014/15.

However, the removal of cap numbers, following the relaxation on the numbers of AAB/ABB students who could be accepted, will allow individual institutions the freedom to recruit – in theory anyway – as many undergraduates as they want.

Universities are spending more on marketing

What impact will this have on universities’ marketing? We are already seeing an increase in university promotions – for instance, scholarships for higher-achieving students and a rise in unconditional offers from the likes of Birmingham, Nottingham, Leicester, Queen Mary and Sussex.
There has also been a noticeable increase in marketing spend by a number of institutions.

According to the Ucas figures for 2013 full-time acceptances, there have been winners and losers as a result of the AAB/ABB relaxation.

Aston, Bristol, Exeter and UCL have expanded their undergraduate numbers by more than 35% compared with 2011. In contrast, others such as London Met, Bedfordshire, Bolton, East London and Liverpool Hope have seen their undergraduate entrants drop by more than 20%.

Moody’s Investors Service published a report in April suggesting that increased competition is “likely to lead to growing credit variation between individual institutions”.

Moody’s divides universities into three groups – global, national and regional – and provides a different assessment of risks and opportunities for each group.

Global universities, such as Cambridge and Manchester, are unlikely to see the removal of the cap as an opportunity for growth, but will want to maintain their current superior position. National universities will take the opportunity either to improve their share of domestic undergraduate market, or focus on increasing their postgraduate an international numbers. Regional universities are most likely to struggle.

Competition will lead to polarisation

This is too simplistic a view, however. Universities will respond to and be affected by competition as individual institutions, but the outcome may well be polarisation between those that are highly-ranked and others that adopt a niche position, with a squeezed group in the middle.

There are numerous examples in other sectors of the middle ground being a difficult place to operate, particularly when organisations do not have a clearly defined product to offer customers.

The uncapping of places came too late for most universities’ planning for 2014/15, so we are more likely to see the impact in 2015/16 and beyond.

From a marketing perspective, institutions would be well-advised to at least review their strategy, their communication with prospective students and their distinctiveness in the eyes of this audience. Clear communication of the benefits they can offer students is the way to counter their competitors’ initiatives.

Universities need to sharpen their proposition

Even if individual universities decide, as some will, that undergraduate expansion is not desirable or even possible, it would be dangerous to assume that current recruitment targets can still be achieved without sharpening their proposition.

If tuition fees are deregulated at any point, or the upper limit further relaxed, that will create an even more competitive environment and offer potential for institutions to highlight their unique value. London Metropolitan University already does this well by positioning itself as offering an affordable education.

For institutions that decide to take advantage of the removal of student cap numbers to recruit some of the estimated additional 60,000 students, communicating benefits for prospective students will be even more important, given that for many, higher education will not be an automatic choice.

The head of marketing at one of the former 1994 Group universities recently summarised his position during an informal chat with me: “We are definitely looking to take advantage of the opportunity for additional undergraduate recruitment, but absolutely need to plan carefully and make sure we attract the students who are going to benefit most from the experience here”.