The Silver Bullet Syndrome
by George C. Dehne
Optimism is a proud American trait. Although higher education has its share of skeptics, it still based on the optimistic premise that hard work and achievement are rewarded. Yet some higher education leaders are pinning their hopes for improvement on a single panacea, whatever it might be. I call this the Silver Bullet Syndrome, a reference to the Lone Ranger's one-shot problem solving.
The Silver-Bullet Syndrome is at work at numerous institutions. Recently, a college officer listened to an extensive presentation about his market, including data indicating that few high-income students were in his pool, high-ability students were choosing other options, and a diverse student body was unlikely because the institution was located in a rural community. After a three-hour presentation, he asked, "Well, what is the one thing we can do to attract more high-income, high-ability students and greater diversity without changing our institution?" This is a classic example of someone searching for a silver bullet.
As Benjamin Franklin wrote in Poor Richard's Almanac, "He who lives upon hope will die fasting." That sums up the danger of relying on a silver bullet. There are no shortcuts. The only lasting success comes from having programs, opportunities, and a "product" students value -- and identifying those students early in their college selection process.
Higher Education is accustomed to thinking of value in terms of low cost or exclusivity -- definitions that may be antiquated. Consider a 1993 study by the marketing-research firm Yankelovich Partners. The study revealed that the definition of value shifts according to varying shopping situations or goals. Upscale department store purchases of gifts are considered a situational value. Shopping stress is eliminated through the availability of selection, service, and status. Therefore the customer is willing to pay more for the gift even if the same item can be found in a discount store. A discount store -- offering value for the money, service, and cleanliness -- is sufficient if the purchase is for oneself. The Yankelovich study also found people shopped electronic stores regardless of higher price because of the perceptions of knowledgeable sales staffs and range of options. This, too, is situational value.
Can private colleges become more aware of their situational value? The answer lies in better understanding the ways students select the institutions they ultimately attend. There are many examples of how situational value applies to higher education.
The increase in popularity of low-priced, small colleges in the Southeast is attributable to size and price. Students do not expect prestige, elitism, or many amenities. Rather, they want small classes, personal attention from faculty, and modest prices. And they realize few state-supported options can offer this type of situation. Another example: In a small Pennsylvania college, about 60 percent of freshmen will study natural sciences. According to a study of the students' selection process, the students also considered private research universities or public flagship research universities. Their decision to attend the small Pennsylvania college was based on its program and facilities, not its smaller size and higher cost. The college created a situational value.
Similarly, a New York college recognized that residential life and extracurricular experiences can be as exciting and important as the academic program. Officials spent a great deal of time and energy to find out what students wanted and how the faculty were willing to interact with students outside the classroom. By becoming the prototypical residential college, this institution took advantage of its situational value to some students.
One institution can create several situational values. A small college with an academic program usually found only at large institutions -- like the one in Pennsylvania -- can create a situational value. If the college offers a special experience -- required overseas study, a guaranteed internship, and so forth -- it can create another situational value. If the same institution offers a unique recreational extracurricular program -- sailing, riding, cycling, and so forth -- it can create a third.
The basic concept of creating situational value is well known throughout higher education, albeit under various terms. Institutions committed to enhancing their situational value must thoroughly understand why and how students choose to attend a specific college. Additionally, they must identify sufficient numbers of students who value its existing "situation," or modify its situation to become more appealing to a larger number of students.
Unable or unwilling to undertake this admittedly difficult process, many institutions seek the simpler solution -- the silver bullet. Is you institution among them? Before you answer No, consider several popular silver bullets, and keep in mind how attractive the solutions seem at first glance.
Improve Your Ranking in the Guides to Colleges.
The view at many colleges is that the U.S. News & World Report ranking holds the key to their institution's future. Rankings have become an obsession with many college presidents, faculty, and trustees. In a recent expose, the Wall Street Journal reported that some college officials were so eager to improve their positions they misrepresented "vital statistics" to the guides. Some blamed the guides. But the guide publishers simply are reporting the facts as they receive them. After all, it is higher education that long ago decided to evaluate itself by inputs rather than outcomes. It was not U.S. News & World Report that determined higher education should put a value on endowments, or the number of faculty with doctorates, or applicant-to-acceptance ratios. In reality, the ways higher education and the guides judge quality make little or no difference in determining the success of an undergraduate student. These measures are inputs, not outcomes.
But just assume that improving one's ranking in the guides is the silver bullet that means success. Many schools have investigated improving their profiles by raising endowment-per-student ratios, increasing the number of Ph.D.'s, or raising faculty salaries. But the irony is that quality does not necessarily drive the guides -- popularity does. If an institution becomes popular, applications will increase, which results in more rejects, which equals greater selectivity. Further, if an institution's popularity increases, presidents, deans, and admissions officers who "vote" on these things will notice. In other words, an institution becomes known as a "hot college." Unfortunately, "hot" has little to do with academic quality as we know and love it.
Indeed, popularity might be external to quality. Consider two public universities in a Southeastern state. They took radically different routes to become "popular" (more selective) institutions. One hired Nobel Laureates and known scholars and put them in the classroom with undergraduate students. The other became the Disneyland of higher education. It provided great recreational facilities and enhanced outdoor recreational opportunities. As the second institution became more popular, it began cutting out the less qualified. Interestingly, the second institution -- not the one with the known scholars -- has become as selective as the state's flagship institution. It should not be lost on any of us that many of the nation's highest rated and most selective colleges are in attractive recreational regions or popular cities. It is more than academic quality that determines their popularity.
Fix the Admissions Office.
There is a prevalent suspicion among administrators, trustees and faculty that all would be right if the admissions office simply would get more students. Faculty, administrators, and trustees often claim, "We are a good college. If the admissions office would just tell students how good we are, we would have all the students we want and need."
"Fixing" the admissions office usually means one of three things:
1. Fire the admissions director and find a new one who will say nice things about the college. Depending on the weaknesses of the current office, this can work for the short term.
2. Contract with an admissions company to run the admissions and financial-aid office. Most of these firms use merit scholarships as the lure to students and often more questionable promises to prospective students. This approach also might work in the short run, but over time the cost of recruiting rises dramatically, and the merit-scholarship lure results in less revenue, rather than more.
3. Improve the admissions operation by employing "innovative" student-recruitment techniques. Unfortunately, these tactics are easy to copy, and so competing institutions quickly catch up.
Geodemographics uses some demographic information about current students -- primarily census data and zip codes -- to identify other parts of the country in which similar kinds of potential students reside. Geodemographics does not account for the distance from home a student is willing to travel, the academic ability of the student, or a family's willingness to pay. Think about your own neighborhood: Do all the students in your neighborhood got o the same college? Of course not. As a result, geodemographics is not a reliable way to predict who is going to attend a specific institution. It is a tool one might use to develop solutions, not the solution itself.
Follow the Corporate Model -- Advertise.
A marketing concept currently in vogue at many institutions is to create a "brand name" through institutional advertising based on a corporate advertising model. According to a review of Advertising Age, a magazine that reports on the advertising industry, an annual regional advertising campaign can cost $6 million to $8 million.
Obviously, national campaigns are more costly. It would be difficult to explain such an expenditure to a college's various constituencies. Advertising in local markets to attract nontraditional students can be of great value, but high-impact institutional advertising campaigns are just not financially feasible for colleges.
One method of creative pricing is peer pricing, in which an institution sets a price similar to an institution with which it wishes to be associated or with which it competes. The theory is that if you quack like a duck, maybe students and parents will think you're a duck. Studies show, however, that most students believe a college that costs $15,000 can be of the same quality as one costing $25,000. As a result, peer pricing certainly does not resonate well with prospective students. Rather, many think a college can be high quality for much less money than it charges.
Since peer pricing has not worked, some institutions have kept price increases down. Some college officials say they will not increase tuition and fees for a year; others pledge to increase it only at the level of inflation. But since 1989, the cost of tuition room and board, and other fees at a private college has increased 23 percent, according to the Digest of Education Statistics, while the median income of families has dropped 7 percent in the same time. For the first time, 45 percent of parents and 36 percent of students now believe a college education costs more than it is worth, according to a 1993 Northwestern Mutual Life Insurance Company study on college funding issues. And this disgruntled group includes families with children attending or considering lower cost public institutions as well as private colleges. In other words, keeping prices low will not necessarily offset declining incomes and what the market is willing to pay.
Leveraging Financial Aid.
Financial aid and merit scholarships often reward high-ability students and high-income students. This leveraging yields short-term gains. If your college does not have excess capacity, leveraging will have little impact. Additionally, college officers must take into account income levels of average households. According to projections of 1990 U.S. Census figures by CACI Marketing Systems, in 1994 the median household income was $33,900. Half the population's income is less. In 1999, the median household income is estimated to be $34,564 -- a four-tenths of one percent increase, or $664. This figure represents the "true" middle-income family. The "middle income" families private colleges claim to be losing are in the $60,000 to $80,000 range. Of the families likely to have college-age children -- parents between the ages of 35 and 54 -- only 20 percent have incomes exceeding $75,000. In 1994, the median income of families in which parents were ages 35-44 was only $42,381 and for ages 45-54, $47,471. But most frightening, by 1999 this income is predicted to decrease for these age groups to $42,289 and $47,175 respectively. The leveraging issue quickly becomes moot. How can you leverage money in the long run when students and their families just don't have enough?
Educate the Consumer.
This is a silver bullet whose popularity has ebbed and flowed over the years. The argument goes something like this: "the more the public knows about private colleges, the more likely it will appreciate them. All we have to do is tell the public the value of private colleges and remind them of the importance of saving for college." In some ways, this strategy has been successful. A 1991 study showed that 50 percent of the public had high levels of confidence in private higher education. (But a nearly equal number, however, had high levels of confidence in public higher education as well.)
The 1993 Northwestern Mutual Life Insurance Company study also reported that 83 percent of families were worried about how to pay for college. Yet on average, families expected to spend only $49,300 for four years of college. They expected to save about $6,000. Three-fourths said that borrowing was an acceptable way to pay for college, but were willing to borrow only about $14,000 over four years. The average total cost of a private college for four years is about $70,0000. So the message about the importance of saving and the value of private colleges may be getting through, but the public is either unwilling or unable to respond. Clearly, educating the consumer about the value of a private education has not proved to be an all-encompassing solution.
Look to Federal or State Governments.
There still are some in higher education who expect or hope that the federal or state governments will bail out private higher education -- or at least their institution. Obviously, given the current political, social, and economic climate, private higher education cannot expect that any government will come to the rescue. Private colleges and universities essentially are irrelevant (or nearly so) to governments because they have no effect on large numbers of people. Only 17 percent of college-bound students actually enroll in private colleges or universities. Of these, 40 percent are adult students who have few options. This means that only about 9 percent of traditional students who attend college are enrolled in private colleges or universities. This small number is not likely to mobilize politicians.
In contrast, pursuing a strategy focused on creating situational value is not a silver bullet. Rather, it is an effective way for an institution to assure its future in uncertain times. Just as the Lone Ranger was a fictitious character, the idea that there is a magic wand, a fairy godmother, or a silver bullet waiting to be discovered is fantasy. The adage still holds: If something looks too good to be true, it probably is.
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