Published on 2020/01/16

Has Higher Education Become Commoditized?

The EvoLLLution | Has Higher Education Become Commoditized?
As higher education commoditizes, institutions will have to evolve to keep pace while ensuring they continue to serve their key demographics.

Commoditization is a process whereby difference is eroded and competition becomes solely price based. Commoditization occurs when diversity decreases between competing products or services. It happens with food, furniture and motor cars. When different shops are selling different vegetables to each other, price doesn’t matter so much, because people will choose to buy from the shop that is the only supplier of the vegetable they want. This is a basic marketing concept.

Commoditization is now affecting education. Organizations offer generic products, competing on price rather than good quality education and services.

Education was once less regulated. There were lots of different universities and colleges offering lots of different courses, taught in different ways. Some may have been more theoretical, some practical, following various psychological theories of learning. Students chose the course that best suited them and what they were looking for.

Then some bright spark thought it would be nice to have a “national curriculum.”  This has happened in lots of different countries, such as Australia and the U.K.  The same courses, certificates and diplomas are offered across the whole country.  A particular concept of learning—the competency-based model, for example—is adopted and teachers are restricted to teaching within the confines of that concept. Teachers are told what and how to teach. If they do not conform to these rules, then their teaching is criticized and they may even lose their job. Auditing becomes increasingly controlling. Teachers are less empowered to vary how and what they teach, and to modify their approach to individual students. As a result, the diversity of what can be offered by education institutions becomes increasingly confined, and the points of difference between institutions decrease.

Reduced diversity in education has resulted in a trend toward commoditization, which can leave institutions increasingly focused of price as a point of difference when trying to recruit students.

The way to avoid commoditization is to find and develop points of difference outside of price. Examples of how to do this may involve focusing on.

1. Unique or Rare Services 

The National Curriculum or other nationwide training requirements can reduce the ability of education providers to offer unique or rare services. Not everyone wants to study the same things. Our world has become specialized. At one time, a person would go into a cobbler’s shop and the cobbler would talk to the customer, measure their feet, make their shoes and sell them. Today, shoes are often made in factories, where a person may only create one part of the shoe, perhaps the heel. This has meant that people require specialist knowledge and training. But our education services have become generic, offering the same courses to everyone throughout the country.

Why?

Education providers will often receive funding from the government or other official bodies. That funding often relates to specific courses detailed in the national curriculum. So, education providers will often, of course, focus on the courses that will get them money from the government. As a result, more unique or rare courses will not be offered. A college may have the opportunity of 100 new students on the same course, compared to 10 on a specialist course. They will either not offer the specialist course at all, or price it at an expensive rate to make it worth their while—likely making it inaccessible to many students.

Unfortunately, this means that specialist knowledge and training can be hard for students to obtain. A sad example is botany. Since 1988, the number of universities in America offer botany course has reduced by half. Students are increasingly encouraged to study more technologically modern courses. However, the journal Nature said “U.S. universities find that demand for botanists exceeds supply.” There is no logic. More botanists are required to meet demand, but less universities are offering the course and less students are therefore studying it!

To avoid commoditization, education providers must continue to offer specialist, rare and required courses to ensure that our learners are being educated in a wide range of subjects. We should also remember that as a race, humans need to maintain essential knowledge, such as botany, to continue to grow and develop and survive.

2. Market Segmentation 

Market segmentation is the activity of dividing a market into subgroups depending on shared characteristics. In education, this could be different groups of consumers, such as parents and pupils. Today, the market for education is far more complex. We have child learners, teenage learners, adult learners, parents, online learners, face-to-face learners, blended learners, students looking for short micro-courses, those looking for longer qualifications, those who want free courses, those who are willing to spend. Market segmentation means marketing to specific groups, but with education, it is not a case of one size fits all. When providing educational services and courses, we need to focus on particular market segments, not as a way to get the price right, but as a way to make sure that we are offering them the services and courses they need to get the best education. What suits a teenager will not necessarily suit an adult learner with a young family and limited time to study. When looking at the market, education providers should not be focusing on where they can sell their courses and for how much, but on targeting specific groups to ensure they receive the education they require.

3. Differentiation 

Another way to avoid commoditization is through differentiation of learning and education. Differentiated learning means that the processing, content, sense of ideas, teaching materials and so on enable all students to learn effectively, no matter their ability. Students vary according to motivation, interests, language, gender, socioeconomic status and culture. Considering the needs of individuals in the classroom or in their learning means that students learn more effectively and respond more positively to the educational experience. The one size fits all philosophy that tends to exist in the commoditized educational market of today does not fit all or even anyone.

4. Bundling 

Finally, how educational materials are bundled is also influenced by the commoditization of the educational industry. Before we look further into this, what do we actually mean by a bundle? A bundle can mean a bunch or parcel or packet. So when we look at education in this way, it can be the packet or parcel of learning provided to a student. However, to bundle can also mean to push something hastily or forcibly, which is where we seem to be with the education industry today, pushing bundles of courses onto students who may not want them, and without proper care and attention by education providers. Good educators will provide a packet of learning that meets the student’s needs, not the needs of the education provider.

The Ship May Have Already Left Harbor

Many mainstream education providers may have become commoditized without even realizing it. They are struggling to survive. New players in the industry are taking advantage of this landscape. If a large business, with excessive cash liquidity, has a desire to capture market share in a commoditized market; they can do that relatively easily by being willing to take a financial loss for a while. Once they have eliminated competition, and gained market share, they can then raise prices and begin making profit. Some would argue this is already happening in education.

The long-term implications of a commoditized education market can be a real problem though. Diversity of educational opportunity can decrease, and that can lead to a decreasing capacity in the graduate population to be innovative. The scope of the skill set among the population may be diminished, and the number of people who can approach problems in different ways can be reduced.

Eventually, needs are likely to cause a move back to a more diversified education system, but in the meantime, the disruption caused may be unnecessarily problematic.

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