Published on 2015/03/18

Four Factors Competing with Price as a Differentiator for Online Students

The EvoLLLution | Four Factors Competing with Price as a Differentiator for Online Students
Price is a key definer of choice for online students, but service, convenience, instructional quality and seamlessness of experience all play a role in institutional differentiation in the online marketplace.

As online education grows in popularity and breadth at institutions nationwide, leaders are grappling with a few central issues. First, defining how return on investment (ROI) for online students differs from that of on-campus students and, second, finding ways to ensure online students are getting what they expect from their educational experience. These are the central issues I will be taking on in this article.

So, what factors—benefits and costs—do students consider in selecting an online program? Two large surveys, one by Noel-Levitz and one by Aslanian and Clinefelter, asked students about that choice. Aslanian and Clinefelter found that institutional reputation and price were the main drivers for choosing an online program, while Noel-Levitz found access and convenience to be more important. [1, 2]

The perceived costs for online students center primarily around perceptions. The most common fears are:

  • Possible stigma associated with an online program (that employers, for example, will not value their degree);
  • Perceived lack of structure or community;
  • Fear of access to fewer services;
  • Lack of instructional options,
  • Less faculty interaction;
  • Fewer choices in degree programs.

Marketing and branding arms are often called upon by institutions to inform students and help them overcome negative perceptions of online education. Most institutions, however, can bet on their brand counteracting costs such as price only regionally, as few institutions have the luxury of national brand recognition strong enough to overcome a less expensive local competitor.

Because price and convenience, versus program quality, seem to be valued more consistently by online students, online programs may be in danger of becoming “commoditized” à la Pine and Gilmore. A service or product becomes commoditized when consumers do not distinguish between options except on the basis of price.

This phenomenon of commoditization creates a challenge for institutions: Can institutions overcome the allure of a low-cost competitor? Must they compete on price?  Not necessarily.  Students also value reputation, which is another way of describing what Pine and Gilmore call experience. In some cases, the experience of attending the institution is one people are willing to pay more for. There are many evidence-based ways an institution can create value—an experience—for online students that persuades them to choose that option:

1. Student-Centered Service:

The attitude and skill set of the institution’s first point of contact with online students, whether by phone or online, is crucial. Having staff who are knowledgeable, accessible and responsive should be a priority.  Additionally, personalizing service, with staff who are assigned to a student throughout their academic career, who know the student by name and know the campus resources that could assist the student is a plus.  Focus on creating accessible, responsive and personalized people, resources and systems (including websites). The on-campus version of this strategy is the one-stop shop, in which resources and knowledgeable staff are co-located so that students do not have to run around the campus to get something done. What might that look like for the student accessing the campus virtually? Saving students time and demonstrating that they matter, as discussed in an earlier article create value.

2. Access to the Co-Curriculum:

In an earlier article, I noted that a significant difference between most online programs and their on-campus counterparts is the co-curriculum (or lack thereof). Colleges can create additional value for their online students by providing access to those experiences that happen outside the classroom. For example, campus events can be reconfigured to be broadcast and involve interaction with distance-based students. Career counseling and networking opportunities can be conducted online. With the technology available today, I can think of very few out-of-class opportunities that cannot be done online. The trick is to focus on the goal of the activity and redesign it for the online experience.

3. Diversity of Classmates:

The primary advantage of the online environment over the F2F class is the ability to bring students from all over the world into the same classroom, while they remain all over the world. Where else but in an online class can you see what a school site in Moscow looks like, while talking with the student teacher located in Moscow, and compare it to the experience of the student teacher in the UAE, Los Angeles or Chicago? Encourage programs with a broad reach to make good use of that diversity.

4. Enhanced Classroom-Based Learning Experience:

Some of those strategies appeared in an earlier article. Other ideas involve creating curricular options that allow online students to personalize their learning. These options include being able to design or customize a major, engage in research with a faculty member, or use one’s work place (with permission) as a study topic. And simply being known for providing concrete, timely, task-oriented feedback on student work can increase value.

Conclusion

While price functions as a key definer of choice among online students, excellent service and convenience, combined with a seamless online experience and dynamic, effective instruction can create an educational experience that resonates with students and competes with price. Put another way, institutions failing to develop dynamic educational experiences will turn online education into a commodity.

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References

[1]  Noel-Levitz (2012). The factors influencing college choice among nontraditional students. Coralville, Iowa: Author. Retrieved from www.noellevitz.com/Factors2012.

[2] Aslanian, C. B., & Clinefelter, D. L. (2013) Online college students 2013: Comprehensive data on demands and preferences. Louisville, KY: The Learning House, Inc.

[3] Pine, B. and Gilmore, J. (2011). The Experience Economy, Updated edition. Cambridge, MA: Harvard Business School Publishing.

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