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U of P a brilliantly executed market opportunity scan-pt2

sample market analysis

by Kenneth Rudich

In Part 1, we established the background circumstances that were in effect when Dr. John Sperling undertook a market opportunity scan (MOS) in the 1970’s to determine if a better product could be fashioned for serving the needs and motives of the adult learner than was being provided by traditional universities at the time.

The results of the MOS led Dr. Sperling to found the University of Phoenix in 1976.

In Part 2, we’ll look at the market characteristics analysis of Sperling’s MOS to demonstrate the purpose it served, and to illustrate how and why you might perform one for your own business.  Prior to reading this part, however, you may first want to review Part 1, and also possibly skim an earlier blog post that describes what a market opportunity scan is.  In addition, you may wish to view the video “A Big Picture Perspective for Marketing Excellence” as well. 

the market characteristics analysis

The potential for U of P rested with the premise that a better higher education product could be offered to working adults than was currently available, and that there was a sufficient market to make it a sustainable for-profit business.

The market characteristics analysis set out to investigate the second part of this premise in particular.  It sought to identify a potential target market that was either underserved or un-served; or otherwise seemingly ready to entertain a new and different value proposition.

It also wanted to put a face on the potential size of the market by creating quantified estimates for it.  This task brought into play “the rule of materiality” for determining what data to collect, how to collect it, how much of it to collect, and at what level of detail.  This was a critical consideration.  The primary objective was to avoid any omission of data that could unearth valuable information.  Such an omission would be akin to a detective overlooking one or more key clues in a crime investigation.

In an article titled “Time for Nationally Authorized Universities,” authors Robert Tucker and John Sperling discussed the need for them to navigate the rule of materiality.  With no immediately available data beyond what was typically kept for the 18-24 year old age group, they knew they had to expand their assessment if they were going to adequately explore the true potential market for contemporary higher education. 

They wrote: “While we know that many consumers of higher education are working adults, there are no national data on students’ current position in their career path or on their near and long-term career goals.  Having this kind of information makes little sense if one assumes that students are 18- to 24-years old, nonworking youth.  We have asked these fundamental questions about student demographics and, in doing so, have found six distinct groups that make up most college and university populations.”

Here’s what they reported based on their findings:

  • Group 1: 3.9 million traditional undergraduate students — ages 17 to 24, seeking a bachelor’s degree and enrolled full-time at a campus.
  • Group 2: 650,000 traditional graduate students — ages 22 to 34, seeking either an academic or professional master’s or doctoral degree and enrolled full-time at a campus.
  • Group 3: 2.9 million semi-traditional undergraduate students — ages 17 to 24, seeking a bachelor’s degree and enrolled part-time at a campus, usually working part-time in a non-career, entry-level job.
  • Group 4: 487,000 semi-traditional graduate students — ages 22 to 34, seeking an academic master’s or doctoral degree and enrolled part-time at a campus. (Employment varies among this population.  Some have part-time work in a variety of campus and off-campus non-career jobs. Others work in full-time careers, e.g., school teachers, principals and superintendents or college teachers completing their doctoral degree.)
  • Group 5: 5.3 million non-traditional undergraduate students — ages 25 and up, they are career-oriented members of the labor force, usually seeking a first degree in an on-campus or off-campus program, enrolled full- or part-time.
  • Group 6: 880,000 non-traditional graduate students — ages 25 and up, working full-time in a chosen career, enrolled full- or part-time, seeking a professional master’s or doctoral degree in an on-campus or off-campus program.

They explained that Groups 1 through 4 tended to be regarded as the typical consumers of higher education, but that they comprised only 56 percent of the total market potential.  Groups 5 and 6, meanwhile, represented 44 percent.  More importantly, traditional universities had a longstanding tendency to under serve these last two groups. 

Tucker and Sperling wrote: “They do not provide the educational systems and services needed and wanted by working adult students, nor do they have the capacity to satisfy this growing segment of the student population. The mismatch between the needs of working adult students and youth-centered institutions extends beyond missing components; many of the same facilities put in place to serve youth — e.g., dormitories, gyms, and extensive commons –impede the efficient access of working adult students.”

And with that summation of the market characteristics, Tucker and Sperling not only put a face on the strategic segments within the higher education market, but they isolated a sizable niche of underserved working adults that the University Of Phoenix could pursue. 

Still, there were some lingering questions about the U of P’s economic viability, and the answers to those questions would lay nestled within the external forces analysis.

the rest of the market opportunity scan

In part 3, we’ll explore the external forces analysis of the market opportunity scan for the University of Phoenix.  As you’ll discover when reading it, it also had a major role in making this opportunity look inviting.  See you then.  

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