Niche Marketing Makes Its Mark

To differentiate themselves from an ever-growing crowd of competitors, business schools need more than great academics —they need an edge. Many schools are exploring niche programs that may give them special claims to fame, and often, an advantage in the marketplace.
Niche Marketing Makes Its Mark

Ask former dean and finance professor Andrew Policano what keeps University of Wisconsin– Madison School of Business thriving, and he has a ready answer: It finds the right niche and fills it. For the last 30 years, UW–Madison has made creating educational specialties a specialty in itself, offering a variety of niche programs, called “centers,” which range from arts administration to supply chain management. “Brand-name MBA programs are dominating the business school industry right now,” says Policano. “In this environment, if you don’t have a specialized strategy, you don’t have much at all.”

Marketing appeals based on educational cornerstones such as stellar academics and state-of-the-art facilities simply don’t pack the promotional punch they once did, now that a chorus of business schools is making the same claims to fame. Faced with a barrage of choices, many students are asking, “That’s great, but what else have you got?”

Rick Hesel, a higher education marketing consultant with Arts and Sciences Group in Baltimore, Maryland, agrees. “The management education field has witnessed a proliferation of institutions offering business degrees, from the local adult education provider to the Harvards of the world,” he says. “The competition is keener and the need for differentiation all the more significant.”

Occupying a niche may, in fact, prove to be almost as powerful a lure as a brand-name reputation. Business schools are quickly learning that if they can’t beat the competition at its own game, they still can prosper simply by finding a different game to play.

Global Warming

The increasing globalization of education has been a primary force driving business schools into niche specialties. Before 1990, MBA programs in the United States and Europe reigned, as the Western-style MBA attracted students whose countries had few, if any, choices in business education. Although competition among business schools in the United States was fierce as the number of enrollments swelled, markets in Western Europe, Asia, Australia, and Africa were quiet by comparison.

After 1990, however, management education institutions experienced a worldwide population boom. Communism fell in Eastern Europe, sparking an explosion in Western-style business practices. China entered the global economy with gusto, freeing its markets to world trade. And the European Union formed, creating a homogeneous market for management education in that region. By 1997, more than 1,000 new programs had opened in Eastern Europe, according to the Chronicle of Higher Education. Likewise, China went from having no MBA programs in 1990, to having 26 business schools in operation by 1997, and 26 more in the planning stages.

Add to the mix the technology boom of the ’90s, which has made it possible for business schools to interact with students thousands of miles away, and, in effect, you have a market for education without boundaries. “These institutions find themselves in a highly competitive sphere,” says marketing consultant David Strauss, also with Arts and Sciences Group. “As competition continues to intensify, traditional promotional techniques have become somewhat secondary. Now, marketing based on how a school differs from its competitors is what makes the primary difference.”

Recent moves by some business schools may make niche development even more imperative. For example, in the last two years, some of the best-known business schools have set up shop in foreign countries: INSEAD of Fontainebleau, France, and the University of Chicago of Chicago, Illinois, both opened business school facilities in Singapore last year, extending their reach into the Asian market. Likewise, The Wharton School of the University of Pennsylvania in Philadelphia joined forces with INSEAD earlier this year, giving each school a foothold in Europe, Asia, and the United States. As a result, many regionally prominent schools must revise their marketing strategies now that their once-distant competitors are becoming their new next-door neighbors.

Singapore has always been important for the Australian Graduate School of Management, located in Sydney, says its dean, Michael Vitale. However, Vitale realizes that INSEAD and the University of Chicago have raised the stakes considerably, and he believes AGSM now must promote itself more aggressively to retain its market position in the Pacific Rim countries.

“We have not seen much overseas competition until now. But it’s starting, and there’s no question that it will continue to increase,” he says. To maintain AGSM’s status in the Australian and Asian markets, the school is concentrating heavily on points that it believes will set it well apart from its competition.

“We have just rewritten our MBA program for 2002, and we are promoting that very heavily as a program that is essential for the business practices of the new millennium,” states Vitale. “Furthermore, we now see ourselves filling a niche that offers small class sizes and face-to-face education.”

AGSM also plans to forge into new markets where other schools have yet to explore. For the first time, the school will focus its marketing efforts in Indonesia. As the fourth-largest country in the world, Indonesia promises to be a substantial market for management education, in spite of its current political unrest, Vitale comments. “We will be getting into these markets, promoting our diversity, quality, and brand harder than ever.”

Great Expectations

Some business schools aren’t simply adding a niche program— they’re becoming one. The City University of Hong Kong, for instance, is revamping its entire focus, transforming its programs into an e-business curriculum. Risky? Yes, especially when the Internet bonanza seems to be at least temporarily subdued. However, Richard Ho, dean of City University’s business school, sees the shift to online commerce as almost inevitable. He wants his school to be among the first to offer businesses a supply of graduates savvy in all things “e.”

Publications such as The Wall Street Journal and BusinessWeek have diversified their ranking systems. They now produce separate rankings devoted to NICHE PROGRAMS such as entrepreneurship, technology, and, most recently, executive education.

“To prepare Hong Kong for China’s accession to the World Trade Organization, Hong Kong must overhaul its education system to provide more manpower to the Chinese mainland,” says Ho. “Intensified competition, brought about by globalization and accelerated through electronic commerce, demands that our education system become more responsive to the New Economy.”

City University started on the path toward becoming an ebusiness school with its iMBA program, an online education program launched in 1999. That program already has gained the school international recognition and a No. 1 ranking as the top distance-MBA program in Asia Week’s May 2000 issue. Now, the school is completing the transformation, teaching all of its courses with the “e” in mind. E-accounting, e-economics, e-logistics, e-human resources management, and e-marketing are now offered, as well as courses in information technology and data mining. Students will earn BBA, MBA, and Ph.D. degrees in ecommerce and information systems.

“Hong Kong is moving toward a knowledge-based economy, in which new business activities are becoming increasingly e-driven,” says Ho. “This move is seen as an opportunity to leapfrog the performance of other local and regional institutions.”

City University’s radical approach to specialization may not be right for all programs, but such niche development may define the next wave of competitive activity between business schools. Although the management education field has not yet entered an age in which business schools are completely unrestrained by regional boundaries, such a market may soon be coming. Schools adopting a “do-it-first” strategy are betting that their efforts will keep them competitive, now and in the future.

Rank and Reputation

Schools once were wary of specializing, especially since it did little to move them up in the ever-present rankings. However, with each passing year, many institutions are finding it more and more difficult to win the rankings race. Suddenly, exploring a niche or innovative approach to education is capturing students’ attention, rankings or not.

“In a sense, rankings have discouraged innovation, because there was very little reward to institutions at the top for doing something outside the realm of rankable characteristics,” says Hesel of Arts and Sciences Group. “However, rankings are encouraging innovation for other institutions. Schools that are lower in the pecking order are not going to be able improve their positions by merely boosting promotion, unless they were doing no promotion at all before. Most likely, they will do so through differentiating themselves from the schools at the top.”

Specialization, in fact, is not only a way for a school to change its magic number in the rankings but may also help the school to sidestep them altogether. “You can develop a real foothold with these types of niche programs,” says Policano of UW–Madison. “This is a strategy that more and more business schools will follow.”

As business schools continue to explore specialties to make their own, the field already is witnessing a change in the way rankings operate. For example, publications such as The Wall Street Journal and BusinessWeek have diversified their ranking systems. They now produce separate rankings devoted to niche programs such as entrepreneurship, technology, and, most recently, executive education. This trend can only benefit the schools subject to these annual evaluations. After all, the more such diversification takes hold, the more top spots will be available, and the more chances there will be for a school to earn a top ranking in the niche of its choice.

Corporate Collaboration

Schools need only look as far as the business community they serve to anticipate a need before others have the chance to address it. Says Policano, “We always ask ourselves, ‘What does the business community need? Do we have some competitive advantage in filling that need? Do we have the faculty resources to make it successful?’”

To this end, he meets with corporate heads on a regular basis to learn whether or not they are having a difficult time finding graduates with a specific skill set, or if they are branching out into new areas that may require attention from business schools. Companies often come to the school with ideas for specializations. If they are deemed promising, the next step usually is to ask the company to help get the program off the ground.

“Once we discover an idea, we enlist the company’s help,” says Policano. “For example, right now we’re looking at brand management and product innovation, and we’ll be talking to companies such as Kimberly Clark and Proctor & Gamble.” With the help of the companies that will most benefit from certain niche programs, Policano believes business schools will be capable of producing extremely valuable graduates, custom-made for the next wave of business practices.

To a large extent, corporations are looking to business schools like UW–Madison, City University, and AGSM to be incubators, not only of the workers they need now, but of the workers they’ll need four, five, and even ten years from now. Schools that make niche development a priority today may well ensure themselves a more prominent place on the educational map and could be the first destination for tomorrow’s corporate recruiters.