The volatility in the global demand for UK university education has actually been exceptional in recent years. This has been a major element driving financial pressures in universities throughout all 4 UK nations.
Some analysts have actually characterised this as a structural need shift far from the ‘big four’ (anglophone) trainee locations– the United States, the UK, Canada and Australia– to a more diverse group of location countries. There have definitely been non-market elements at play here, including issues in relation to the visa program in the ‘big four’. The current UK education strategy also de-emphasises growing international student numbers studying in the UK.
However in part one of the issues facing UK universities (and organizations in the other original ‘huge four’) is that market conditions in sender nations are altering rapidly. In two essential recent contributions, Vincenzo Raimo and Patric Kirchner argue convincingly that a few of the problems effecting on university sustainability are because of an absence of method in pricing.
They highlight a lack of understanding by universities of how costs should respond over the admissions cycle and a granular understanding of rate elasticity and margin. They show how moving beyond making use of minimal price points/bands and a complete understanding of the ‘costs of acquisition’ is necessary to optimising costs and prevent pricing danger.
We argue that this must go further, and it depends most importantly on having the right data on both financial variables and on the views of prospective students– which can all alter quickly over time, producing rapid swings in trainee need.
In the late 1960s, the economist Kevin Lancaster developed a design of customer need, which offers essential insights on how one need to think about the nature of complex products or services such as college. In a nutshell, Lancaster suggested that the energy that customers stem from particular items and services does not depend straight on the great, as argued in standard demand theory in economics. Rather, one must see a good or service as a bundle of underlying characteristics or characteristics.
This technique to comprehending customer demand is more apt when one is handling sophisticated and multi-dimensional/ complicated services such as college. If I am a trainee picking between, state, a Masters in Management in University X in country Y and, state, a Masters in Service Data Analytics in University A in nation B, I am not merely comparing the 2 courses when making my choice.
I will be looking at the underlying characteristics, and this will drive my choice. These qualities have various dimensions, a few of which are under the control of the university provider and others that are determined by the larger environment: visa expenses, health care expenses, trainee security in each country; employability, the abilities acquired on the course, trainee life; and many other attributes.
The ‘price elasticity of demand’, which is so essential in driving strategic rates techniques, then becomes more complex to identify, because it needs the university to know much more about how each prospective student worths each of these characteristics, how they weigh them, and how each of these intrinsic features are tensioned against rate.
A corollary of this is that if UK universities want to enhance their global recruitment strategies, consisting of prices, then they require better data. Economic conditions in sender nations can alter quickly, and this can effect on the price each trainee in key sender market will pay. Smarter prices strategies as Raimo and Kirchner propose are essential, however they need a much better understanding of the interactions of economic, social, political and cultural variables in crucial markets.
To support HE providers, Public First is looking at ways in which we can comprehend the volatility and the complex interplay of these key variables, alongside prospective trainee opinion.
There are also important intermediate signs of student behaviour such as trainee withdrawal rates throughout visa application processes, and immigration policy indications such as visa rejection rates
In the financial sphere we have seen currency crises in sender countries such as Nigeria, Ghana, Pakistan and Egypt– in addition to more managed depreciations against the US Dollar and the UK Pound by nations like India. Indicators of wealth and graduate employability also matter.
Enhancements in the track record and domestic HE capability in sender nations also influence student need. In addition, there are key social and cultural indicators on the propensity to study abroad. There are likewise important intermediate indications of trainee behaviour such as trainee withdrawal rates during visa application processes, and immigration policy indicators such as visa refusal rates.
To conduct appropriate tactical pricing one needs to comprehend the relationship between these various signs. We are establishing models that will help universities make better, and timely, decisions. The post-2020 volatility in the global demand for UK higher education ought to not be surprising.
In a more turbulent world, abrupt swings in crucial economic, social and policy variables in sender and receiving markets will impact in a large method on the demand for an intricate investment such as university education. But universities can improve at this with timely data and smarter analytical modelling