Diversifying HEI Income Generation – How Can Marketing Support?
Most universities derive income from a broad range of diversified sources, such as knowledge transfer, commercial operations, public-private partnerships, and philanthropic giving. The latest HESA Finance data (2008/09) shows that ‘other income’ comprised close to 20%, or nearly £5 billion, of total UK Higher Education Institutions’ income.
There seems little doubt that financial pressures in future will increase, as funding body grants reduce, tuition fee income becomes less stable, and the demands to pay for new and better facilities continue to grow. And then there’s the pension fund liabilities!
A well-structured and resourced strategic marketing team should be a major benefit to any HEI when considering where best to develop new businesses and income streams. In many organisations, marketing either encompasses or sits alongside business development and its processes and disciplines give such development a rational and structured approach.
In an academic environment, many of the ideas for new businesses and incomes will emerge from academic staff engaged in research. Where marketing can add value is to help these ideas move from concepts on paper, or in the lab, to fully fledged business propositions, well positioned to take advantage of the market opportunities available, and to become sustainable income streams.
Support for business development
An experienced marketing team, with a strategic as well as marketing communications capability, can add value to business development in a number of ways:
1. A well-structured market assessment process to help identify
- Who are the potential customers?
- Who are the competition and what are they offering?
- How does our proposition stack up against others?
- What is the scale of the market?
- What market trends are apparent?
2. A methodology for proposition development, taking into account market demand, feasibility, and sustainable competitive advantage (as illustrated in this diagram)
3. A ‘go-to-market’ planning capability, marketing and communications support to enable the launch of a new product or service
A marketing team should also be able to advise on the on-going level of resource needed to manage engagement with the market once the business is up and running.
Is this happening already?
Yes and no is probably the answer; yes, in that many of these activities are being conducted although on a piecemeal, not planned and structured, basis; no, in that, a market and customer oriented perspective is not typically the start point. A more normal approach is that organisations try to ‘sell’ their existing capabilities (‘inside-out’), rather than understanding market needs and tailoring their product or service accordingly (‘outside-in’). Also, the marketing and communications team is not generally included in HEI business development despite the fact that they should be able to provide the necessary insights.
What are the benefits of this approach?
Firstly, diversifying income streams beyond the well understood core university activities of teaching students and winning research grants is still relatively new territory for many institutions; and it’s clearly important to gain a good understanding of potential customers. After all, they are going to pay for your product and service in future.
Second, it’s valuable to evaluate who else is already targeting the market, particularly if you’re planning to launch something new. What services already exist, what are customers paying for and where are the gaps?
Finally, it helps to have a longer-term perspective and consider how sustainable income can be built beyond the initial product or service. How might services need to adapt and grow in the future; how can a portfolio be built?
All of this can be achieved without marketing expertise and resource but shouldn’t it be an integral part of their role? It’s certainly part of the rationale for having a strategic marketing as well as communications capability.