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How providers can raise prices

This may seem a strange topic when FE is advertising HE courses below the price of similar university delivered degrees.  FE has decided that differentiating on price will help it grow its market share.

In many ways this is not a bad strategy provided FE doesn’t then create a market in low price degrees.  When price is the only differentiating factor prices spiral down; quality suffers and so does student experience.  Clearly we need to ensure we focus on differentiating on other factors.  Smaller classes, more contact hours, and a host of other factors are worth considering.

The other casualty of dropping HE prices is that this becomes a mindset and we start to compete on price when selling all our courses.  Our employers soon sense the “blood in the water” and the sharks circle.  Soon we have the best-recruited lost-making courses in the region.  Disaster.

Of course we are going through a recession and people will not pay high prices.

Wrong.

Look around you and this is obviously a fallacy.

Walk down Oxford Street and you’ll see plenty of people spending huge sums of money for things they want but don’t need.  OK, so maybe you don’t think this is a great example as clearly these people are a minority and aren’t representative of the type of people FE deals with every day.

But look further.  Look at the sort of people we deal with in colleges and let’s see how they also buy things they don’t need.  I’m old enough to remember when bottled water went on sale in the UK.  The press had a field day, as clearly no one would buy water in a bottle when we could get free from our taps.

But of course those sneaky marketing and sales people played their ace card.  They told us that this was a lifestyle product and that only successful people would drink it.  Well we all want to be successful and before long the majority of people started drinking bottled water.   And when the success story started to wane those sneaky people then played the health card.  Bottled water was better for our health.  Then they decided that not all water was the same and Perrier, San Pellegrino and Volvic were brands with which the consumer wanted to be associated.   It became about lifestyles.

And don’t think those that didn’t buy water were immune to this form of marketing.  Many of them went on to drink colas and argued whether Pepsi or Coke was king.

So what does this mean in FE?

Simple.  The same marketing principles apply.

I love cooking and pay quite a lot of money for high quality cookery courses.  The reality is that I can learn a huge amount from TV and video courses.  Nevertheless, I pay good money for courses where the chef has a Michelin star background and the course is hands-on.

So a few years ago I decided to apply this principle to one of the courses from our basic workbased offer.  I decided to charge a lot more for a simple food hygiene course.  I was told no one would pay more than the basic price, which, in reality, was set by competitive pressures.

The differentiator was a (minor) celebrity chef teaching the course.  The qualification was the same but attendees could now claim a celebrity chef had trained them.  It had a certain cache and was worth money to them when properly marketed.

Then we went further.  We discovered that First Aid courses were ripe for a price increase.  Old Fred had taught our courses for years and no one ever complained about his courses.  But Fred has practised outside a classrooom.  Therefore, when Fred retired we employed a number of paramedics who supplemented their NHS salary with a day’s First Aid teaching.  You know the sort of people I mean.  They apply their skills in life and death situations every day.  People were prepared to pay a premium for people that could demonstrate day to day practical experience.  It didn’t stop there.  People with practical experience of marketing, IT, plumbing, design and a host of other subjects attracted employers willing to pay premium prices.

The main reason that this doesn’t work in many colleges is one of mindset.  Staff don’t think people will pay more than a basic price.  Tell that to the producers of bottled water and listen to their laughter.

Stefan Drew is a marketing consultant, and was previously director of marketing at two FHE colleges. He now works with providers throughout Europe and the US. Visit: www.EmployerEngagementStrategies.co.uk

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