Market Segmentation for Online Courses in the College of Business

Article excerpt

ABSTRACT

The purpose of this article is to analyze the market segments of students enrolled in undergraduate online business courses at a regional state university. By understanding the defining characteristics of these students, universities may be able to more effectively recruit and retain students in these market segments. A survey of undergraduate online students was conducted and analyzed to determine the various market segments being served, and a predictive model was prepared that incorporates key independent student variables that can forecast student demand for courses and degree programs online.

INTRODUCTION

With the concept of distance education, a paradigm shift has occurred with the university now traveling to the student instead of the student traveling to the campus. This paradigm, however, requires more flexibility and decentralization (Sherry, 1996). The concept of strategy development for the university and the individual colleges is to provide educational services for their students. Some authors believe that a first mover advantage in online course development will provide them with new or expanded markets in the product life cycle curve (see for example Burnside, 2001; Clayton, 2000; Schofield, 1999; and Willis, 2000), while others view it as a necessity in order to maintain market share (Willis, 2000). The current state of affairs in online education can be summarized as follows: "if you do not develop online courses, then someone else will". Therefore, many universities believe they are being swept along with this tide of events (Clayton, 2001; Kidwell, Mattie & Sousa, 2000 and Oblinger, 2000)

One universal question is to determine if strategy follows product development, or if product development follows strategy (Farrington & Bornak, 2001 and Hezel & Dominguez, 1999). The rationale for this question is at the heart of online course development. If one selects to construct the strategy first, then determining the target market segmentation is critical as well as the demographics and characteristics of the market segment. The reverse would be to construct the online courses over a period of time and then ascertain the market(s) that is/are purchasing the online courses, and evolve a strategy.

Market segment identification is critical for the college in crafting a strategy and to design a business model that allows for successful implementation and execution of the strategy (Kidwell, Mattie & Sousa, 2000; Morrison & Rossman, 2003; and Oblinger, 2000). The business model presents information to the administrators on the economic viability of their strategy. Therefore, it is imperative to select the type of segment that the college plans to service. Alternate educational strategies will vary based on the segment identified by the college that it wishes to serve, and the demographics as well as the behavioral characteristics will vary according to the market segment strata selected (Oblinger, 2000).

The demographic profiles of online students and traditional students have begun to be reported in literature in determining market segments for strategy formulation. Demographics allow investigators to compare and contrast traditional classroom student data to distance education student data. Although the results of such descriptions vary, the stereotype of an older part-time student has gained widespread acceptance, and persists for consumers of distance education (Clayton, 2001). Preston and Booth (2002) and Szulc (1999) claim that distance education demographics have become clearer and a detailed portrait is emerging. Moreover, some would argue that the distance education market is becoming homogeneous, while others would counter that it is very heterogeneous (Morrison & Rossman, 2003 and Oblinger, 2000). Does a "typical learner" exist in the traditional and online consumer market? At best, the data collected on demographics and behavioral characteristics is ambiguous (Peters, 2001). …