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”.