Targeting, segmenting and positioning the market for college students to increase customer satisfaction and overall performance

College Student Journal, Sept, 2008 by Robert E. Wright

Numerous studies have explored the relationship between marketing efforts and firm financial performance. Studies have looked at potential lifetime value of customers, to demonstrate the value of keeping customers. Various other studies have looked at the relationship between customer satisfaction and firm performance. However, few studies have looked specifically at how targeting customers for colleges and universities may increase the overall success of the college or university, as well as increasing student satisfaction. This paper develops a methodology for college and universities to maximize their return on marketing efforts by evaluating how and which customers are targeted, and satisfied.

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Customers are the key to a successful business. Most business ventures are long term in nature, making it necessary for the business to either retain customers, or constantly acquire new customers to maintain profitability.

A fundamental goal of a business is, then to acquire and retain customers. This is especially true for colleges and universities. These entities spend a tremendous amount of time and money in recruitment efforts for new students. Therefore, it is imperative that institutions of higher learning maximize the return from their promotional dollars.

Literature Review

Many higher educational institutions seek to maximize yield for a given expenditure. However, as Cao and Grucda (2005) note, not all customers are desirable customers. Cao and Grucda note the need to target the most potentially profitable customers. These customers are typically those that will be most likely to purchase your product. Thus, it is imperative to target students who are most likely to attend your institution. The other important area of a successful business is in customer retention. This is frequently tied to the notion of customer satisfaction. Boulding, Staelin, Ehret, & Johnston, (2005) note the importance of good customer relationships, and the potential effects on the bottom line. Similarly, Gustafsson, Johnson, & Roos, (2005) note the importance of good relationships with customers on customer retention. Mithas, Krishnan, & Fornell, (2005) discuss how and why customer relationship management applications might affect customer satisfaction. Lewis (2005) relates the importance of incorporating consumer behavior toward a firm into the determination of customer value.

Both Ryals (2005) and Srinivasan. & Moorman, (2005) discuss the importance of good customer relationship management in terms of increasing firm profitable. They also note the importance of good measures of customer satisfaction in making customer relationship management work.

It is clear that customer management is an important topic in marketing (Payne, & Frow, (2005) and widely used as a part of a firms overall marketing strategy (Rogers, 2005).

However, efficient and effective customer relationship management requires both a solid customer acquisition and retention strategy, and good information technology systems to monitor customers (Jayachandran, Sharma, Kaufman, & Raman, 20005).

Purpose

This paper describes a methodology for targeting customers who are most likely to maximize the revenue of a college or university, as well as maximizing student satisfaction. Such a methodology requires gaining information on potential students, and then monitoring their satisfaction levels throughout their college experience. Use of this information will allow colleges and universities to properly target the appropriate segment.

Potential students have a large range of motivation and ability levels. The 2005 National Survey of Student Engagement (as reported in USA Today, October 9, 2006, p. 1a) noted that 43% of college students under the age of 30 disagreed with the statement that "I do just enough to get by," while 77% of the students over 30 disagreed with the statement.

Clearly, this demonstrates that the relative level of motivation of students can vary tremendously. While the majority of students under age 30 are apparently doing "just enough to get by," the vast majority of those students over 30 are apparently doing more than that.

Mixing students who just want to get by with highly motivated students would clearly be a recipe for disaster for not only the instructor attempting to teach such a mixture, but also the students themselves, and the college or university.

The first necessity for an institution of higher education is to determine how it plans to position itself in the marketplace, given its strengths and weakness. Then, it must determine the appropriate market segment to target with its marketing mix.

Types of Market Segments

Potential students may be segmented into groups based on motivation and ability. With three levels of ability, and three levels of motivation, there will be nine different student segments. The first three of these will be high motivation, high ability, high motivation, medium ability, and high motivation, low ability. The next three segments will be medium motivation, high ability, medium motivation, medium ability, and medium motivation, low ability. The final three segments will be low motivation, high ability, low motivation, medium ability, and low motivation and low ability.