Dwindling Enrollment Hurting Parent of University of Phoenix

Discussion in 'General Distance Learning Discussions' started by sulla, Mar 22, 2006.

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  1. chydenius

    chydenius New Member

    Economics 101

    In a competitive market, price tends toward marginal cost (the cost of producing one more unit of output). In a monopoly market, a supplier can charge prices well above the cost of production, because it is the only supplier.

    Monopoly comes in many forms and degrees. It can be established by government, as is the case with copyright, patent, and franchise (e.g., local electricity companies). It can be what we call a natural monopoly, as is the case with reputation, skills, and specialized knowledge.

    Product diffentiation is a kind of monopoly. "The others are just toothpaste. Ours is a lifestyle." (not an actual quote)

    Ivy League schools have reputations that enable them to restrict their output (i.e., graduates) in order to keep their prices high. If Harvard had open enrollment, it would dilute its brand. Also, the number of Ivy League schools is fixed; it isn't as if you could start a school, earn your chops, and then be accepted into the club.

    Accreditation is a kind of monopoly. Although it is 'voluntary', if a school wants access to the federal financial aid trough, it must be accredited by an agency recognized by CHEA. Since accreditation is difficult and expensive, the number of accredited schools is limited, which enables them to charge tuitions that are significantly higher than the marginal cost of production (i.e., the difference between what it costs to have 20 students in a classroom and what it costs to have 21 students in a classroom).

    UoP enjoyed a strong monopoly position, when it was the only accredited proprietary school that beckoned from seemingly every website. In time, though, the profit margins inspired competitors to enter the market. At the same time, demand increased with public acceptance of online and proprietary education. On a supply and demand graph, both curves shifted outward.

    Now, the market is much more competitive that it was before, which is placing downward pressure on prices.

    UoP has two options: lower its tuition or differentiate itself from its competitors.

    The problem with differentiation is that one focuses on niche markets, which is anathema to many. It will be interesting to see who is able to make the transition.

    The upside is that inexpensive things, like student services, should improve. Given a choice between two schools that are indistinguishable from each other, except that one has helpful student services couselors and the other has rude or non-existent student services drones, prospective students will tend to opt for the former and current students of the latter will tend to transfer to the former.

    I prefer not to go into detail in this forum, but my employer benefits from this process. ;)
     
  2. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Re: Economics 101

    If Harvard had open enrollment, it would dilute its brand.

    Harvard does have surprisingly open enrollment:

    http://www.extension.harvard.edu/

    The upside is that inexpensive things, like student services, should improve. Given a choice between two schools that are indistinguishable from each other, except that one has helpful student services couselors and the other has rude or non-existent student services drones, prospective students will tend to opt for the former and current students of the latter will tend to transfer to the former.[/QUOTE]

    I think that we have neither a competitive market nor a monopoly market. The distorting effect of Title IV funding acts as a sort of price floor from which few major players deviate. So far they haven't seemed to feel too much pressure to improve service either -- it's easy to find disgruntled students from almost any of the proprietarie institutions.

    Is yours an analysis of the future, then, now that the market is seemingly getting saturated?

    -=Steve=-
     
  3. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member

    Well, first, the reason I used the wine example is because the classic example used in economics to explain inel;astic demand (price goes up, demand goes up) is prestige wines. I never intended to accuse the University of Phoenix of being cheap wine for the masses. So far as changing one's image, it is possible to do, but it is more difficult than just a new ad campaign. The university's image is going to depend a lot upon its positioning in the customer's mind. This is why I raised the issue of whether customer perceptions of UOP as "expensive" are accurate. As a baseline, the least expensive DL MBA, until recently, was Ashworth College ($4,889) and the most expensive DL MBA is from Duke University ($115,700). The universities that seem to come in for the most flack around here for being "expensive" are Touro University ($13,200-$15,600), Walden University ($15,800-$26,860), Northcentral University ($17,100), Nova Southeastern University ($23,005-$31,030), University of Phoenix ($25,650), and Capella University ($26,000). The other thing is going to be figuring out how tightly-held customer perceptions are and how to change them. It'll probably take more than a single ad campaign. One of the problems that most proprietary schools are going to have is the perception by the traditional academic community that words like "marketing" and "profit" are dirty words.
     
  4. chydenius

    chydenius New Member

    Re: Re: Economics 101

    You are correct. You will find pure monopoly and pure competition only in Economics textbooks. The real world is not digital. Our economic lives are spent somewhere between these two extremes, in a state of imperfect or monopolistic competition.

    Monopoly and competition are endpoints of a continuous spectrum. Also, you have to take account of the context, in which you are identifying how monopolistic or competitive a market is.

    Microsoft has a monopoly on the production of Windows, but it has competitors in the production of computer operating systems. Is Microsoft a monopolist? Yes and no, depending on the context.

    It is both a price floor and a price ceiling.

    Title IV will fund up to a certain level. This makes it a price ceiling, insofar as schools can charge up to this amount without requiring the student to pay any difference out-of-pocket. If Title IV will cover up to $500 per credit hour and tuition is $500 per credit hour, then students can cover the total amount with financial aid (it is a little more complex in the real world, of course). If tuition were $750 per credit hour, students would opt for schools that charge $500, in order to avoid paying the difference in real time. If tuition were $250 per credit hour, schools would miss out on all that 'free' money.

    That some schools' tuition varies significantly from the Title IV limits is a function of many factors that go beyond this simple example. I am speaking here about that sector that includes UoP, Kaplan, DeVry, AIU, etc.

    The near future.

    UoP and its ilk are at a crossroads. The model on which they were built will not work indefinitely. When UoP went onto the web, they were the only game in town (natural monopoly). Now, however, many state universities offer programs that are similar to those offered at UoP at subsidized tuition rates (competition).

    UoP can either improve its customer service or continue to watch its enrollments dwindle. Outstanding customer service is necessary, but not sufficient. They will need that special something that makes them different.

    Being on the web set them apart in the beginning. Being on the web no longer sets them apart.

    You are absolutely correct. It will take much more than an ad campaign. It will take a change in culture. You can put lipstick on a cow, but that doesn't make her a prom queen.

    In Florida, we have a cornucopia of distance education options at our state universities, including Executive Doctor of Pharmacy (FAMU), Master of Fine Arts in Computer Arts (FAU), Master of Science in Instructional Systems - Open & Distance Learning (FSU), Master of Science in Forensic Science (UCF), Master of Science in Electrical Engineering (USF), in addition to all of the usual suspects (MBA, Criminology, Nursing, Education, etc.).

    University of Florida has Masters programs in International Construction Management, Veterinary Medical Sciences emphasis in Forensic Toxicology, Water Resources Planning and Management, and my personal favorite Pest Management.

    Peter Drucker never mentioned giant flying cockroaches in any of his books. ;)

    Big State U. has cottoned on to distance education, and UoP has some deeply entrenched competition.
     
  5. recruiting

    recruiting Member

    My wife tried UoP a year ago and hated it. The whole group thing was not great for her.

    She along with maybe one other student in the group usually carried the weaker ones. That is a poor method of teaching IMO.

    They (UoP) were preditors before she signed up and then the CS totally sucked. Upon inquiring about the school they called and called and called and sent email after email!!
    Another thing was UoP kept double billing for classes the Army already paid for.. Getting that cleared up was almost impossible as the admission/student counselors kept quitting. A new week a new face.

    It was an all around bad experience FOR EVERYONE in the house.

    IMHO <--- I don't believe the UoP name is as well respected as it could be but thank god it is RA!

    They have turned that school into a cash generator and don't give a damn about their students. It truly shows.:(
     
  6. jimnagrom

    jimnagrom New Member

    I tend to agree - UoP is a for-profit company - and you forget that at your peril. The entire adjunct instructor focus is centered on extra income by working professionals with minimal interest/experience in actually teaching students.

    If you notice, about the only person who braggs about teaching for UoP is a person with an "odd" track record (and no longer posts on this site).

    UoP is a classic example of the "poor pay more".

    http://www.exodusnews.com/editorials/editorial-065.htm
     
  7. aic712

    aic712 Member

    I wouldn't go that far, but I would say the instruction you receive is completely dependant on which campus you attend. There are some good teachers and some bad teachers just like any school, and most of the teachers tend to do it because they want to, or to network.
     
  8. jimnagrom

    jimnagrom New Member

    I do not know one teacher who does not do it for the money ;)
     
  9. recruiting

    recruiting Member

    The Poor Pay More

    OMG jimnagrom, that is depressing... THANK GOD I NEVER NEEDED A PLACE LIKE THAT..

    LEGAL LOAN SHARK PLAIN AND SIMPLE..
     
  10. aic712

    aic712 Member

    I have to say that my UOP degree has served me well, actually better than the traditional degree I earned from a state university (yes I have 2 Bachelor's degrees). They do have quite a few problems, and most of it stems from the insanely agressive sales tactics.

    Before I left, I worked as a BDS (business development specialist) and my job was to generate leads. The leads were supposed to be quality (converting to apps, then enrollments) and in large amounts. If you didn't make your lead goal, you were fired or demoted on the pay scale. There was a lot of potential in the job, but it was very demanding and my boss was an absolute jackass who would literally trip people to get them to fill out an information card. I got sick of that fast...

    Either way, the academic part was good for me, I had a good group, my writing improved quite a bit, and I was able to get into George Washington U with my degree (who I have recently transferred out of due to the insane cost of tuition).

    The point is UOP has good and bad things about it but they provide a valuable service to alot of people. Apollo group has managed to stay cleaner than some of the other for-profit parents, and UOP has held it's accreditation with what used to be constant 3-5 year visits from NCA for the past 27 years.
     

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