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A STRATEGIC MARKETING PLANNING FRAMEWORK FOR A PRIVATE EDUCATIONAL INSTITUTION by Margarietha, J. Scheepers, B.Com. Honns. Thesis submitted in partial fulfilment of the requirements for the Degree: Magister Commercii in Business Management in the Economic and Management Sciences Faculty of the Potchefstroom University for Christian Higher Education. Study leader: Prof. L.R.J. van Rensburg Potchefstroom 2000 ACKNOWLEGEMENT To the Creator, and Lord all the praise, and honour. Because of His power and grace this study could be completed. A special word of acknowledgement to the following people and institutions, without whom this study would not have been possible. • My husband for his love, understanding and sacrifices made during this study. • My parents for their love, understanding, help and support throughout my life, but in particular during my studies. • Prof. L.R.J. van Rensburg for his leadership, concern and help, I am deeply grateful for his contribution and motivation to my scholastic growth. • Mrs. Lig for the proofing of the documents. • Mrs. S. Fawcett for her support and help with the editing of the document. • A word of thanks to the National Research Foundation (NRF) for the financial support for this study. Opinions expressed in this study are those of the writer and not of the NRF. • A special word of thanks to Damelin Rustenburg for their willingness to participate in the study. • George and Hanti Mathews for their support, motivation and belief placed in the author. M.J. Scheepers POTCHEFSTROOM UITTREKSEL Hoer opvoeding in Suid-Afrika staar 'n diverse, komplekse en vinnig veranderende omgewing in die gesig. Hierdie omgewing bied verskeie uitdagings en bedreigings vir tersiere opvoedkundige instellings, as gevolg van veranderende omgewingsfaktore. Bemarking bied 'n opiossing vir die probleme van hulpbronverminderings en toenemende kompetisie, wat opvoedkundige instellings ervaar. Die strategiese bemarkingsbestuursproses kan opvoedkundige instellings help om 'n gei'ntegreerde bemarkingsplan te ontwikkel, en sodoende verbruikersbehoeftes beter te bevredig. Die hoofdoel van die studie was om die bemarkingseffektiwiteit van 'n private opvoedkundige instelling te evalueer. 'n Poging was aangewend om 'n private opvoedkundige instelling te evalueer in terme van hoe effektief en kompeterend die instelling sy kliente en publieke se behoeftes te bevredig. Inligting is versamel deur middel van 'n literatuurstudie en later onderhoude met sleutelpersoneel van die instelling. Die literatuurstudie het hoofsaaklik op drie aspekte gefokus: die tersiere opvoedkundige bedryf in Suid-Afrika, die wetlike agtergrond en hoe bemarking op die opvoedkundige instelling van toepassing is. Onderhoude wat gevoer is met die sleutelpersoneel van die privaat opvoedkundige instelling het gefokus op die volgende punte: 'n historiese en kulturele analise van die instelling se agtergrond; 'n taak- en makro- omgewingsanalise; bemarkingsbeplanning, die bemarkingsorganisasie strukture, inligtingstelsels, koste, administratiewe en kurrikulere programme. Hierna is die data ontleed. Aanbevelings is gemaak ten opsigte van sterk punte en geleenthede wat saamval en hoe die instelling dit behoort te gebruik. Sekere tekortkominge is ook gei'dentifiseer, en aanbevelings oor hoe om dit te bowe te kom is gemaak. TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1.1 Introduction 1 1.2 Defining concepts 1 1.3 Motivation 2 1.3.1 Awareness of problem 2 1.3.2 Importance of research 3 1.3.3 Problem statement 3 1.4 Objective of study 3 1.4.1 Objective 3 1.4.2 Goals 3 1.5 Research method 4 1.5.1 Literature study 4 1.5.2 Empirical Research 5 1.5.3 Study Population 7 1.5.4 Problems experienced with study 7 1.6 Outline of study 8 CHAPTER 2: THE SOUTH AFRICAN TERTIARY EDUCATION SYSTEM 2.1 Introduction 9 2.2 Global trends in the education industry 9 2.2.1 Knowledge-based economy 10 2.2.2 Capital-for-labour substitution 10 2.2.3 Paradigm shift towards life long learning 11 2.2.4 Technological advances 11 2.2.4.1 IT market segment growing 11 2.2.4.2 Technological proliferation and rapid evolution 12 2.2.5 Corporate downsizing and restructuring 12 2.2.5.1 Disgruntled corporate environment seeks alternatives 13 2.2.6 Funding constraints 13 2.2.7 Effective distance learning alternatives 13 i 2.3 The South African Education Market 14 2.3.1 Expenditure on education 14 2.3.2 The size of the education market 15 2.4 Strategic groups in the South African education industry 19 2.4.1 SA public higher education 19 2.4.1.1 Student enrollments in universities and technikons 21 2.4.1.2 Graduates 21 2.4.2 The SA private higher education providers 22 2.4.2.1 Opportunities in the market favouring private education providers.. 23 2.4.2.2 Risks and challenges facing private education providers 26 2.4.2.3 Private colleges 26 2.4.2.3.1 The College Sector Coalition (CSC) 26 2.4.2.3.2 Damelin Education Group 27 2.4.2.3.3 Midrand Campus 29 2.4.2.3.4 INTEC College 30 2.4.2.3.5 The National Colleges 30 2.4.3.3.6 Academy of Learning 31 2.4.2.3.7 Africa Growth Network (AGN) 31 2.4.2.4 Private listed companies 32 2.4.2.4.1 Education Investment Corporation (Educor) 32 2.4.2.4.2 ADvTECH Educational Holdings Ltd 36 2.4.2.3 Overseas universities operating privately in South Africa 39 2.5 Competitor ratings 40 2.5.1 Best in Higher Education Survey 40 2.5.1.1 Efficiency 40 2.5.1.1.1 Undergraduate success rate 40 2.5.1.1.2 Graduates / Diplomates 41 2.5.1.1.3 Cost per graduate 42 2.5.1.1.4 Research outputs 42 2.5.1.2 Innovation 44 2.5.2 Professional Management Review Surveys 45 2.6 Conclusion 48 ii CHAPTER 3: EDUCATION IN SOUTH AFRICA: THE REGULATORY FRAMEWORK 3.1 Introduction 50 3.2 Background 50 3.3 The Reconstruction & Development Programme 52 3.4 The National Commission on Higher Education 54 3.4.1 The need for transformation 54 3.4.2 Principles and features of the new framework 54 3.4.2.1 Principles 54 3.4.2.2 Central features of the new framework 55 3.4.2 A framework for transformation 57 3.4.2.1 Proposals for a single co-ordinated system 57 3.4.2.2 Proposals for co-operative governance 59 3.4.2.3 Proposals for goal-oriented funding of higher education 62 3.4.3 NCHE final recommendations 63 3.5 The implementation phase 63 3.5.1 Organizations involved 63 3.5.2 Quality of the education system 64 3.5.3 Registration of private educational institutions 65 3.6 Conclusion 72 CHAPTER 4: MARKETING IN EDUCATIONAL INSTITUTIONS 4.1 Introduction 74 4.2 Why are educational institutions concerned with marketing? 74 4.3 What is marketing? 75 4.4 The evolution of marketing in educational institutions 76 iii 4.5 Strategic marketing management 78 4.5.1 Strategic and marketing analysis 78 4.5.1.1 Marketing audit and SWOT analysis 80 4.5.1.1.1 Marketing audit 81 4.5.1.1.2 Resource analysis 82 4.5.1.1.3 Evaluation of current offering 84 4.5.1.1.4 Identifying opportunities 86 4.5.1.2 Environmental analysis 88 4.5.1.2.1 Importance of environmental scanning 89 4.5.1.2.2 Environmental scanning procedure 89 4.5.1.3 Industry, Competitor & Customer analysis 90 4.5.1.3.1 Industry & competitor analysis 90 4.5.1.3.2 Consumer analysis 95 4.5.2 Strategic direction & strategy formulation 97 4.5.2.1 Mission & goals 98' 4.5.2.2 Market segmentation and targeting 98 4.5.2.2.1 Defining the market 99 4.5.2.2.2 Segmentation 102 4.5.2.3 Positioning 103 4.5.2.4 Formulation of strategy 103 4.5.3 Strategic choice 104 4.5.3.1 Designing educational programmes 105 4.5.3.1.1 Service quality: higher education 106 4.5.3.1.2 The service quality concept 107 4.5.3.1.3 The importance of good service delivery 108 4.5.3.1.4 Levels of "customer service" focus 109 4.5.3.1.5 How to build a customer-orientated (responsive) institution 110 4.5.3.1.6 Service standards and the measurement 111 4.5.3.1.7 Benchmark with excellent organisations 111 4.5.3.1.8 Aim for continuous improvement 112 4.5.3.2 Pricing educational programmes 113 4.5.3.2.1 Pricing and institutional mission and goals 113 4.5.3.2.2 How customers look at price 114 4.5.3.2.3 Maximizing net tuition revenue 114 4.5.3.2.4 Determining cost-recovery prices for educational programmes 116 4.5.3.3 Delivering educational programmes and services 116 4.5.3.3.1 The meaning of location 116 4.5.3.3.2 The delivery-system objectives 117 4.5.3.3.3 Should new facilities or delivery systems be established? 117 4.5.3.3.5 Where should new facilities be located? 118 4.5.3.3.6 How can distance education and new technologies be used? 118 4.5.3.3.7 How should facilities function and "feel"? 119 4.5.3.3.8 Intermediaries 119 4.5.3.4 Communicating with markets 119 4.5.4 Strategic Evaluation: Criteria & Choice 121 4.5.5 Strategic Implementation and Control 121 4.6 Conclusion. 122 IV CHAPTER 5: THE MARKETING AUDIT: RESULTS 5.1 Introduction 124 5.2 Preliminary information 125 5.3 Historical and cultural analysis 127 5.3.1 Current information 127 5.3.2 History and background of the institution 131 5.3.3 History of programmes and services 135 5.3.4 Events leading to initiation of study 136 5.4 The marketing environment analysis 136 5.4.1 Curricular programmes and services of the institution 136 5.4.2 Publics: Groups which have a major impact on the institution 149 5.4.3 Markets: The set of all or potential students at the institution 161 5.4.4 Students: Consumers and products of the institution 5.4.5 Access: Availability of the institution's programmes and services .
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