Higher education has faced criticism from many quarters in recent years, attacking curriculum, standards, personnel practices, costs, and a sense of unresponsiveness. If viewed from a market perspective, it might be observed that the production that higher education represents is being criticized for failing to meet the needs of the consumer, represented by society. The process by which the producer prepares an offering and interacts with the consumer is typically referred to as marketing, and is described in a body of marketing theory.

The theoretical perspectives in marketing literature provide insights that could help institutions in thinking about their market relationships and responses to current market dynamics. The intent of this paper is to position higher education and its exchanges in the spectrum of marketing theory. While all concepts and approaches discussed do not pass rigid tests for theory definition, they all represent well-known concepts and models to explain the behavior of producers and consumers in a market.

Definitions of market, marketer, and marketing have shifted over time, corresponding to shifting perspectives on the scope of marketing. For this study, broad conceptions of these terms are required, since authors whet their definitions to suit their argument. Shelby Hunt (1983) considers a broad scope for marketing theory, described by three dichotomies: micro/macro, positive/normative and profit/nonprofit, which allows investigation of exchanges that previous definitions tended to exclude. This study seeks to be as inclusive as possible, illustrating the application of marketing theory throughout the fabric of institutional interactions with the culture.

The general definitions of a market envision a coming together of buyer and seller. For this study market is the construct for the environment in which exchanges occur. Exchanges are defined broadly, distinguishing them from quid pro quo transactions. The idea of a market requires that some participating parties have options for their exchanges; hence, it is implicitly competitive. The concept of a market is not restrictive of who may participate, and exists for non-profit as well as profit-taking enterprises.

Market relationship refers to the interaction of two parties who have previous or ongoing exchanges. Marketing is purposeful interaction in the market by those who seek to attract exchanges. Marketing is seen as activity that is distinct from selling (Fennell, 1987). In terms of higher education, Philip Kotler (Kotler & Fox, 1995) offers the following:

Marketing is the analysis, planning, implementation and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets to achieve institutional objectives. Marketing involves designing the institution's offerings to meet the target markets' needs and desires, and using effective pricing, communication, and distribution to inform, motivate, and service these markets (p. 6).

The marketer is one who helps shape and present the market offering. This normally requires some specialized knowledge of the value that is sought in exchanges by others. The role of marketer is inevitably described as a creative one. Marketing is conceived as a two-way communication experience in which the marketer looks to some grouping of consumers to manifest a need, which the marketer seeks to fulfill. The marketer is clear about the idea that she should have a role in shaping the product, and that it is her role by definition.

Higher education exists in a market environment in at least six respects. First, and most apparent, it serves as a producer of educational products and services for its client population of students. It seeks to market those services to those who would seek educational offerings. Second, educational institutions seek to attract donations of value. This activity falls less comfortably within some understandings of a market, and relies upon complex concepts of exchange as a foundation of marketing. Third, knowledge-based services are provided to grant and contract funders. Fourth and fifth, educational institutions seek approval and general support from a larger community and the society at large. This outreach falls under more complex perspectives, touching on social and cultural environments and relationships. Finally, higher education institutions exist in a market relationship with their suppliers and personnel. These interactions suggest that the theoretical constructs of marketing should bear upon institutions of higher education. Though there may be many differences, the operations of the markets in which higher education participates should be consistent with market theory.

Some differences are notable. Higher education has very complex products, and it is not a simple matter to identify and attribute value-producing activity. The exchanges in which higher education participates typically involve highly intangible matter. The institution itself is often motivated by real goals that arise from coalitions within, rather than from the employer or owner. It competes in the market with other institutions, but lacks a profit motive to provide a measure of success. With regard to the creativity of marketing, higher education generally has not permitted the professional marketer to participate in shaping its practices. The implications of these and other differences are examined in the study.

This study begins with a discussion of the general theories of marketing and exchange theory. Theories of the firm describe the nature and motives of the producing enterprise. Market paradigms and theories of competition include a look at the meaning of financial performance and the resource advantage model of competition. Theories of the consumer explore the consumption experience, relationship marketing, humanistic marketing, and postmodern perspectives. The conclusion draws a few pointed observations from the analysis.

I. General Theory

Various approaches have been taken to classify and categorize constructs in the field of marketing, such as functions, properties, activities, and other aspects. The single most pervasive listing is the marketing mix and its "Four Ps" components: Product, Price, Place, and Promotion (Waterschoot & Van den Bulte, 1992). The concept of the marketing mix dates to 1953 and referred to "the mixture of elements useful in pursuing a certain market response" (p. 84). Writers then started to itemize all those things that affect the marketing mix. The 4P approach, attributed to Jerome McCarthy in 1960, became the dominant classification, which persists as a staple of marketing literature today.

The concept has not been without problems. There has been no agreement on just what this group represents categorically, and the fourth P, Promotion, often has been recast as communication. The list does correspond to a list of "generic market functions" offered by other authors: configuration, valuation, facilitation, and symbolization (Waterschoot & Van den Bulte, 1992, p. 86). The idea of classifying functions was further developed as:

1. Configuring something valued by the prospective exchange party.
2. Determining the compensation and the sacrifices the prospective exchange party must make in exchange for the offer.
3. Placing the offer at the disposal of the prospective exchange party.
4. Bringing the offer to the attention of the prospective party, keeping its attention on the offer, and influencing_normally in a positive way_its feeling and preferences about the offer. This is communicating the offer (p. 89).

This functional taxonomy is helpful in describing the work of marketing. Recognizing that any item may be executed perfunctorily, it is not difficult to see that these are generally accepted necessary conditions for exchanges to occur.

Attempts to define a general theory of marketing began appearing in marketing literature in the late 1960s. Robert Bartels (1968) advanced a General Theory based upon seven specific theories. Although found to be problematic, the effort did provide a baseline for framing a marketing definition.

In Bartels's scheme, the theory of social initiative asserts that marketing is what a society does to provide the products in needs. The theory of economic separations says there are a variety of separations between producers and consumers _ such as time, distance, information, and resources _ which are overcome by marketing. The theory of market roles, expectations, and interactions says there is a range of roles society plays in the market interaction, such as manager, employee, consumer, competitor, and community. They all have a variety of expectations of the interaction, which is, itself, the marketing process. The theory of flows and systems says that elements flow through a variety or system of interactions in the marketing process. The theory of behavior constraints says economic factors represent only one of the many constraints in the interaction. The theory of social change and marketing evolution says system and behavior patterns are not static, but are continually evolving. The theory of social control of marketing says society exerts control over the marketing mechanism.

Bartels's General Theory is very general. It is fundamentally definitional and provides little insight to the dynamics and mechanism of marketing. In 1965, Wroe Alderson (1965) advanced a functionalist theoretical approach to marketing. He examined the marketing process in order to determine how it works and concluded there are two significant, dynamic functions that interact. Alderson conceptualized the functions as organized behavior systems operating in heterogeneous markets. He argued that the marketing process is one that begins with "conglomerate resources in their natural state," and concludes with "meaningful assortments in the hands of consumers." Marketing is the placing of those assortments.

Alderson described a theoretically homogeneous market as one in which there is unsegmented demand for certain types of goods which are the same as those offered. In a perfectly heterogeneous market each segment of demand can be satisfied by a single segment of supply. The job of marketing is to match these segments.

The principal organized behavior systems are the household and the firm. The household has power as a system because it offers a surplus to its participants that they would not expect to enjoy alone. Firms exist as a specialization of production, and have a survival motive, because its members believe they can receive more for their production within the firm than acting alone. Households are primarily consuming entities, and firms are primarily producing entities.

The assortments desired by each household differ and collectively represent a heterogeneous market. Firms compete for differential advantage in obtaining the patronage of households, which leads to innovation in marketing (improvement in creation of assortments for the heterogeneous demand). To meet heterogeneous demand, heterogeneous supply occurs when new firms enter the field, which they do because they expect some differential advantage that would give them an "ecological niche." Competitors move to neutralize this advantage through activities which are intended to enhance value to their own advantage.

Alderson's representation of market functioning can be seen easily to embrace the education services activities of higher education. First, the household generally remains the organized behavior system that seeks the education products for its members. The demand is very heterogeneous, as families seek a broad range of education products. The firm, as embodied in the educational institution, develops core products for specific segments of the market of households. Offerings and programs are broadened to provide more services and serve a broader range of the heterogeneous demand. The role of the market is to bring together these services with that demand, placing, as it were, the appropriate assortment of education products in the hands of the consumer. A particular segment of demand may go unfilled or poorly filled, and existing institutions may elect not to innovate to serve it. The market mechanism thus creates the opportunity for new institutions to seek differential advantage by serving that demand, or serving a demand more satisfactorily than existing institutions. Existing institutions might then move to neutralize that advantage. In cases in which they would compete directly for the patronage of some segment of the same households, they would attempt to create greater value for the consumer.

These foundational efforts to describe marketing as a process and to articulate the functional components of the market serve to lay the ground for understanding higher education as a market entity. A much more fundamental concept, however, is the role of exchange as the root of a market transaction.

II. Exchange as a market event

The idea of exchange as the foundation of marketing has been a central theme for many scholars. Some have felt that only certain types of exchanges _ transactions involving money or items of clear value _ are appropriate concerns for marketers. Others see a much broader range of exchanges as falling within the market domain and the discipline of marketing as the study of exchanges (Bagozzi, 1979).

A broader view of exchange recognizes the importance of interests. Literature on negotiation places particular emphasis on the ideas of creating and claiming value around interests (Fisher & Ury, 1991; Lax & Sebenius, 1986). Two parties may consider exchange of particular goods for money. However, each party typically has other interests at stake in the transaction, and can create value by serving the other party's interests, thereby expanding the scope of an agreement. For instance, a vendor has an interest in a continuing relationship, and a purchaser has an interest in personalized attention. The vendor may be willing to accept less money in return for a promise of a future satisfactory exchange if the present one is completed successfully. These interests can be understood very broadly, to the point of including psychological and emotional rewards, as well as tangible returns and behaviors.

Exchanges can be categorized according to their structure and participants (Bagozzi, 1975). In restricted exchanges, commonly seen as transactions, there is a direct quid pro quo. This type of exchange, in which two actors give to and receive from each other, is widely recognized as a domain for marketers. In generalized exchange at least three actors are involved, and each does not benefit directly from the actor to whom she provided value. Rather, they enjoy a collective benefit, or receive benefit directly from a party other than that to whom they gave value. Complex exchanges recognize some direct exchanges between parties while each receives a general benefit. Almost all of the exchanges for higher education can be considered complex and generalized.

The generalized and complex types of exchange include such highly organized interactions as the marketing channel and public welfare. The marketing channel thrives on complicated exchanges and interactive behaviors to exert influence throughout a web of suppliers and service providers. Putting aside the question of its role as a market participant, public welfare represents a complex exchange among the general public, the government, and welfare recipients. Returns for the general public include a sense of security for minimal economic needs and prevention of the negative social and economic consequences of a population that cannot meet minimum economic needs.

The content of exchanges may be utilitarian, symbolic, and mixed (Bagozzi, 1975). In symbolic exchanges the object of exchange has more meaning for the consumer than any utilitarian value it might hold. In fact, most exchanges are not direct economic interactions, but "are probably characterized by the transfer of bundles of physical, psychic, and social entities" (Bagozzi, 1979).

A broad understanding of the significance of exchange theory and the matter of exchange is critical for higher education. The abstract nature of the education experience, the enormous symbolic value of higher education experiences, the lack of apparent tangible benefit for charitable giving, and the complicated relationship with community settings and society at large go well beyond the fundamental economic exchange.

Exchanges that are fundamental to higher education relate to six different constituencies and take place with as many different purposes for the institution. Three involve the institution in the role of producer, providing value primarily in return for monetary resources. One places the institution in the role of consumer, exchanging money for production resources. And one blurs the producer/consumer distinction. The most evident is the exchange interaction with the student. Other exchanges exist with research and contract funders, with donor patrons, with suppliers and personnel, and with the community and society at large. It is important to recognize the range of interests that constitute value in these exchanges.

The exchange with the student is typically the most visible and fundamental to the institution, in that it represents the core product value the institution ostensibly exists to create. As a restricted, utilitarian economic exchange, the institution agrees to provide an education experience of a defined sort, along with some level of supporting services for a stated price. However, what each party actually receives in the exchange goes well beyond this bare interaction.

The returns for the student in this exchange are complex. Not only does she receive an education experience, but everything associated with it has tremendous meaning. The field of study, degree, and imprimatur of the institution all have assigned symbolic meanings and values in the culture at large, in the culture in which the student will abide in her work life, and in the culture in which she abides in her personal world of family and friends. The fact that she is pursuing higher education at all carries its own cultural value, as well. All of these symbolic values will have implications for her opportunities and potential capacities in her future.

For the institution, in addition to the tuition and fees, the student, herself, also constitutes a "physical, psychic, and social entity." Some of the properties of the individual student may be very desirable to the institution for its own purposes. A strong athlete or musician may win school recognition, which can improve its reputation and market position. A member of an ethnic minority may make important cultural contributions to the education experience of other students, as might a strong scholar or student leader, adding benefit and value to the core product of the institution.

The exchange takes on complex aspects when the generalized benefit of the collective contributions of all students is considered. By giving money to the institution, a student receives benefit from other students who are a third party in the exchange, and a generalized benefit in the education environment that is created by the specific students selected by the institution. It is notable that, although the institution may intend for the student contribution to occur by design, it is not the institution that is adding the value directly. The student is recast in the role of resource; in fact, the institution selects these resources in that it selects some students and not others, and all students do not pay the same tuition and fees.

A second exchange that involves the core work of the institution occurs with grants and contract funders. Of all exchanges for income, this appears to be the most direct and economic, but it can be deceptive. The grant funder solicits proposals to perform research or develop new practices which the funder believes should be done, selects from among competing offers, and awards the grant to particular individuals and institutions. In return, the institution, through its personnel, performs the service. Even if the grant is awarded to an individual, the institution is involved if it is part of her professional activity with the institution. The grant funder receives the service performance in direct return, but may also benefit from the creation of a resource dependency at the institution, special attention to its issues by the institution and the personnel involved, and, some would contend, the possibility of influence upon the ideological independence of the institution.

For its part, the institution primarily receives funds to support the activity of the grant. In actuality, the grant exists more often as a partnership between the grant funder and the institution. The institution may desire to pursue a particular research interest or to develop certain changes in practices for its own reasons, and undertakes agreement with the grant funder that meets both its own interests and those of the funder. Broader benefits accrue to the institution, because the grant provides the support needed to specialize some aspects of its enterprise, providing the benefits of specialization to other institutional efforts. The grant may employ, for example, a specialist scholar. That expertise, while primarily directed toward serving the grant, will also be available to colleagues, students, and others, and will affect the internal structures of the program, department, and institution, itself.

The successful acquisition and completion of a particular grant by a particular institution often has symbolic significance, as ascribed by the higher education and grants making community. Through the grant the institution acquires recognition as a location where particular knowledge resources reside. That reputation has value to the institution in leveraging its appeal to students and potential faculty. It is also critically important in leveraging additional awards from the same and other funders.

Differing slightly from grants, contracts are let for institutions to perform defined services using its particular resources. Such activities may include specialized in-service training programs, educational or cultural presentations, conferences and workshops, or preparation of special intellectual property. These are sometimes treated similarly to grants by the institution, and they have many common aspects. The by-products of the exchange are equally complex, and serve multiple interests for both the institution and the funder.

The institution enters into a generalized exchange relationship with the local community, one in which both parties may be considered producers and consumers. The community accommodates the institution, its disruptions, and its pressure on services, and provides political support and community services, while the institution provides knowledge based services, convenient access to learning, cultural amenities, economic stimulus, and social prestige.

The institution also enters into an exchange with the segments of society represented by its control authority and manifest in its student pool. In this case the institution provides education services of a defined nature in return for various resources, particularly monetary. State institutions are involved highly in this exchange, and denominational schools have similar arrangements to varying degrees. For independent institutions there is less differentiation from the exchanges with donors. The school provides a particular kind of education experience in return for resources and other forms of support, such as preferential social and professional access for graduates.

The institution has a less apparent exchange with those who donate money, because the benefit to the donor is less visible. Value for the consumer, or donor, is clearly determined by individual needs, and in many cases, matter of high value to one may be of less value to another. Given that there may be tax advantages to giving, the net perceived cost to the donor is likely to be something less than the face value of the donation. Both the symbolic and utility values of the donation also may be less for the donor than they are for the institution.

In return for largess, the donor receives acclaim for her altruism, both by the institution and by society at large. This may be very fulfilling personally to the donor, but in many cases it also opens up important social and economic opportunities. The institution may grant special privileges within its own purview, while recognition as a donor is required for an invitation to sit on many boards of directors, which can then lead to certain powers and other advantages, both social and economic. Thus, these opportunities include those that are not directly provided by the institution, as well as those that are, again emphasizing the complex nature of the exchange.

The exchange relationships the institution maintains with its suppliers and personnel mark its role as consumer, and its position at the end of the marketing channel. This relationship differs little from that of large scale service industries with their suppliers and personnel, although the specific arrangements with faculty may have few parallels beyond the academy. For the most part, these supplier and personnel exchanges are bargained interactions with all parties attempting to maximize their returns. These exchanges are also subject to agreements involving non-economic factors and contingencies.

Higher education is clearly involved in the market through its various exchanges with a variety of constituencies. Those exchanges are highly complex and involve substantial benefits mixing utilitarian and symbolic values. Interactions between institutions and their constituencies resemble profit sector exchanges in some ways, but rely upon different sets of value and costs. These differences are inherent in the different motives of the enterprise itself, as suggested by theories of the firm.

III. Theories of the firm

The market exists as organized behavior systems seeking exchanges to satisfy needs. The consumer part of the system is assumed to be motivated by consumption needs, but it is less clear what might constitute a production need. Production, in fact, can be more realistically conceived as a means, rather than a goal. What is the incentive to produce?

The motives and purposes of the firm are important factors in its market behavior, and various models have been advanced to understand firm motivations (Anderson, 1982). The schematic approach of the neoclassic model vests all decision-making in the single owner-entrepreneur, whose intent is to maximize the dollar amount of profit. The market value model bases business decisions on how they will affect the market value of the enterprise itself. The agency costs model recognizes the corporate structure, where managers act as agents of the owners, but may have conflicting interests. A behavioral model sees the firm as composed of coalitions of individuals who often have competing interests, making overall maximization of goal performance impossible. In the resource dependence model, the firm focuses on maintaining its resources and support from external coalitions. Anderson's constituency based theory draws upon the behavioral and resource dependence models, and focuses upon internal coalitions and their relationship to external constituencies.

When applying marketing theory to public enterprises, the lack of a profit motive complicates the discussion. Profit motive in higher education is substantially limited to some small, highly specialized schools and proprietary institutions, which may be led by private entrepreneurs. It is very rare that a traditional institution might change ownership or be publicly traded, as could occur for most for-profit firms. While some decisions might reflect concern for the value of the institution, they are more likely to reflect public relations considerations. The concern is for appeal to students, donors, and the supporting public, and not for those who might acquire its assets. Colleges and universities are directed by boards of trustees, who represent the community and the primary funders. The board does not represent a defined body of shareholders concerned with maximizing profits, but is normally concerned with maintaining resources and their efficient use in pursuit of major goals. The president, as the board's agent, is expected to manage the institution toward board goals. There are some costs to resources involved in this agency, but they are not costs to profits and returns to shareholders. As descriptive models for institutional motives, the neoclassic, market value, and agency costs approaches rely too greatly upon profit as a primary measure of institutional values.

The behavioral, resource dependence, and constituency based theories are more descriptive of higher education institutions. These models view the firm as a social construction, with distributed decision making. The real operational goals arise from coalitions within the firm and interacting with the firm, rather than arising exclusively from the ownership. Higher education institutions are enterprises constituted of many coalitions, loosely-coupled systems, and conflicting goals that compete for priority attention (Birnbaum, 1988). Internal functioning follows collegial, bureaucratic, political, and anarchical models, all of which defy clear goal-setting and maximization of effort toward goal performance.

The resource dependence model and Anderson's constituency based variation view the underlying objective of the firm as survival, which it pursues by maintaining a sufficient flow of resources to the enterprise. This focuses the firm's efforts on maintaining its legitimacy with external coalitions that will keep its resources flowing. These external coalitions can be viewed as constituencies, both to be served and to be managed.

The constituencies in the case of higher education, include those comprising the parties to the exchanges in which it participates: students, grant and contract funders, the community and society, donors, and suppliers and personnel. The institution can be expected to construct a marketing response to each constituency by determining the needs of each constituency in the exchange, and then shaping a goal set and offering to serve it.

Service to these constituencies, however, often means simultaneous pursuit of conflicting goals within the firm or institution, resulting in satisficing of some goal performance rather than overall goal optimization. The constituency based model observes that within the institution different groups or coalitions focus on different external constituencies, and these groups receive status and attention to their goals, according to the importance of the constituency they serve for maintenance of the flow of resources. The critical constituency for resources at a given moment will be given priority, and the goals of the internal coalition that attends to that constituency will be given greatest attention at the given moment. Other exchanges may not be maximized at the same time.

In higher education the resource chain is indirect and the power of particular internal coalitions complicates the workings of this model. Yet, institution settings tend to exhibit differentials of power among development offices, admissions offices, legislative and coordinating board liaison offices, academic leadership, student affairs leadership, and administration and finance leadership. The resource dependence and constituency based models would account for this differential in power as a matter of influence over differentially critical resources.

In terms of market behavior, then, higher education can be seen as performing in the market with at least six constituencies, each controlling resources of some sort. Each constituency receives attention, but the institution cannot simultaneously maximize its gains in exchanges with all these constituencies.

If there were only one firm or institution, and consumers' preferences were substantially met, there would be no market except as might exist among suppliers for the institution. The market is defined as a competitive environment, which has been described by a number of different models.

IV. Market paradigms

The general operation of the market has been conceived in its simplest form as the movement of goods and services from net surplus supply areas to net demand areas (Fisk & Meyers, 1982). It has also been seen in terms of demand-driven production to relieve market scarcity. The neoclassic competitive market paradigm views entrepreneurial survival and growth as arising from successfully matching or improving upon competitors' offerings to meet consumers' needs, which are only slightly differentiated.

The neoclassic picture of a competitive market is based on an idea of "perfect competition" (Hunt & Morgan, 1995). The theory reduces all complexities in firm, consumer, and market behavior to direct, unitary interactions, and assumes perfect information for all parties of all exchanges. All parties seek to maximize their gain in all exchanges, and over the long term, the market will tend toward an equilibrium, in which returns will equal total costs of production. Consumer demand is homogeneous in that everyone wants approximately the same thing and can equally afford it, and it can be provided by any producer. All producers have equal access to all productive resources, and production is adjusted so the market price equals production costs with no surplus products, resources, demand, or revenues.

Few scholars believe this model accurately describes almost any existing markets or economies, but many see it as the ideal state toward which market forces tend. Many fundamental assumptions of the model are employed in the construction of other explanations of market and firm behavior.

New models have been developed to represent the contemporary market place of highly heterogeneous demand, complex business organizations, and a constantly evolving market environment. Evolutionary systems change theory builds on the idea that the ability of a firm to survive and succeed depends upon its ability to detect and meet the needs of marketing "niches" (Fisk & Meyers, 1982). It does this through successful interactions and responses to feedback loops in the marketing system. Evolving needs in the niche, and the behavior of competitors create a dynamic market environment, constantly moving it toward disequilibrium, until it takes on enough new properties to become a market of a substantially different sort. The surviving firms are those that can adapt best to the new environment. A market niche, for instance, can become so saturated with competition that producers and consumers begin to re-segment according to new configurations and priorities of consumer need, effectively creating a new niche. For their evolutionary survival, individual firms must have dynamic systems in place to engage organizational learning and to manage their own adaptation to these changes.

Control entities for higher education institutions (state coordinating boards, denominational assemblies, boards of trustees of individual institutions) commonly define the broad constituencies to be served, and each school further segments the market to define niches upon which it can focus its efforts. State coordinating boards determine mission classes for public institutions that set out levels of offerings and the relative importance of particular constituencies. Some institutions are encouraged to attract research grants, for example, while others are told to focus primarily on teaching, and that of a particular level and range of matter. Control authorities also have recognized that the aggregate return for continuing to compete for and serve some market segments is not worth the investment in necessary resources. Recent years have marked the painful experience of closing some programs and institutions because too few consumers have chosen those options.

In all cases, the market is a dynamic environment, and competition for students, for grants, for public support, and for donors requires response to feedback loops and assessments that are inherent in the market mechanism. Institutions, however, are known to be very slow to implement change, particularly in the offering of education experiences. New niches of market demand are continually evolving, including new education programs, community services, research interests, and donor perquisites. According to the evolutionary systems change model, the surviving institution will be that which adapts to the evolving environment. If consumer need can be parsed to reveal a segment of unfilled need, there is room for a marketing entrepreneur.

Market environment and the entrepreneur.

The neoclassic models see the market environment primarily as affecting the firm, and minimize the possible impact of the firm on the environment. It is now clear that the firm that seeks to gain advantage has the capacity to alter the environment for all firms (Savitt, 1987). Where the neoclassic model saw the market environment tending toward equilibrium, the role of the entrepreneur can be seen as purposefully disrupting equilibrating forces by creating new alternatives for consumers and constraining the opportunities for competitors.

The entrepreneur seeks to alter the environment, simultaneously disrupting established patterns in producer and consumer behavior, while building strong connections with consumers for her own production. Environment altering strategies include maximizing consumer access and time directed at selecting and consuming the entrepreneur's products, while minimizing access and time directed at selecting and consuming competitors' products. The entrepreneur may also attempt to inhibit access by other market participants to certain tangible and intangible resources while maximizing her own access. Retail producers follow these strategies in their competition for shelf space and advertising space, and in their promotions for repeat sales. Financial institutions provide inducements for consumers to entrust them with all their financial affairs, and they assess fees or penalties for choosing to go elsewhere.

In higher education, a variety of competitive strategies are often used, if less visibly. Institutions and faculties act politically through professional and accrediting bodies to ensure that all institutions insist that students face certain education experiences that they might otherwise avoid. Institutions frequently rely on coordinating boards to limit or define competing programs at other institutions. There are typically many restrictions on transfer of credit from other institutions. Branch campuses are developed in population centers not conveniently served by competing schools. Donors are given special incentives for regular, repeat donation, and they are encouraged to enter into planned giving, thus pre-emptively tying up funds that others might solicit. These and similar strategies seek to modify the competitive environment in favor of the institutions seeking advantage. What the successful institutions achieve is a resource advantage.

Financial performance in higher education

The firm described in the resource dependence and constituency based models produces to survive. To the extent that it may be unable to attract sufficient consumers to its product in the future, the firm competes in order to survive. Survival alone, however, is insufficient for understanding competitive success.

A particularly valuable competitive measure is the firm's financial performance. Market position and effectiveness are not directly observable, but must be inferred from other indicators (Hunt & Morgan, 1996). In a profit motivated enterprise, financial performance provides a clear feedback communication regarding its ability to compete efficiently and effectively for consumer preferences. Higher education lacks the profit motive, and a similar aggregate indicator is difficult to find.

Financial performance can be indicated by a variety of measures, including profits and return on investment, but these can be expected "to vary somewhat from firm to firm, industry to industry, and country to country" (Hunt & Morgan, 1995). The flexibility to define financial performance according to an industry criterion is a critical distinction for higher education. Institutions may measure the accumulation of particular funds against prior years and other institutions, such as levels of tuition, grant, or donor income and state funding. But these do not express financial performance in general. In fact, financial performance in higher education finds a very different expression from that in profit industry.

Clearly, institutions of higher education do compete among themselves and with other entities in the six exchanges or markets identified. They do take strategic action, and there are expectations for what should accrue from successfully competing. If a given institution were asked what possible gains it sought from an improved market position, it would be unlikely to cite greater surplus income for improved compensation to executives and lower draw on state funding and foundation revenues.

In fact, the list might include better salaries, better facilities and equipment, more staff, more services, new programs, reduced faculty workloads, smaller classes, and more scholarship or tuition-reduction support for students. Depending on the institution, its control and its mission class, a desire for more students is likely to be focused, as in better prepared students or more students for particular programs. For the most part, these gains that are to be realized from a better market position are evidently targeted toward further development of the resource base itself.

This observation suggests that, in a manner exactly opposite that of for-profit industry, financial performance in higher education is really expressed by the institution's capacity to invest money rather than extract it. The capacity to invest money is an indirect indicator of the capacity to competitively attract investment through its exchanges, just as profit performance indirectly indicates the ability of a firm to competitively attract favorable market exchanges. Given the desired benefits of successful competition, above, the financial success of the institution is most appropriately expressed by its capacity to invest in resources to produce a unit of value for the consumer. The capacity to invest might be measured by such factors as aggregate income streams, net resource value above costs, or some formula that might capture resource value. Smaller classes, lower faculty workloads, better facilities, more staff, better salaries to attract better faculty, and more services represent increased investment in resources allocated for the benefit of each student, presumably to improve the education experience. Increased funding for prestigious opportunities for donors, greater expertise at the service of grants and contracts, and more clinics and cultural services for the community represent the increased allocation of resources, enabled by greater funding, realized from successful competitive behavior. What is more, this approach on the part of the institution becomes self fulfilling because it further enhances its comparative resource advantage.

A study of correlation between national rankings of institutions and their resource capacity as related to some appropriate unit of production should be informative. Recent rankings of Ph.D. programs illustrate the point (U.S. News & World Report, 1998, pp. 87-94). Recurrent names in the top five graduate schools for each of twelve humanities and sciences fields are institutions recognized to have tremendous resources, financial and otherwise. These include Harvard, Stanford, Yale, and Cornell Universities, and the University of California - Berkeley, among others. The basis for these rankings is reputation within discipline "for scholarship, curriculum, and the quality of faculty and graduate students" ( p. 189). Two of these criteria are clearly resources _ curriculum and faculty _ and the other two _ scholarship and students _ are outcomes theoretically indicative of the quality of resources. The fact that the survey is reputational implicitly recognizes the power of the reputation resource. There seems little question that the top ranked institutions have the capacity to invest heavily in these resources.

Because of the great differences in mission characteristics among higher education institutions, however, comparisons of resource investment capacity are inappropriate across mission classes. Isolated, state liberal arts colleges should not be compared with elite private universities, nor with major state research universities. In recent years benchmarking programs have sought to define an appropriate mix of peer institutions in order to make appropriate comparisons of financial and other measures.

Profit taking may be seen as a value-extracting activity, which is not within the goal set for most higher education institutions, and financial performance may be considered by some to be an inappropriate measure. Numerical comparisons abound in efforts to find meaningful distinctions, including enrollment numbers, selectivity, standardized test scores, job placement rates. Others do measure some form of resource allocation, such as student-faculty ratios, technology resource-to-student ratios, and sizes of endowments. Measures of mission fulfillment, such as graduation rates and job placements, may indicate performance within a closed relationship between the institution and its mission target, but they fail to capture position in a competitive market. Nor do they aggregate standing with all six constituencies to indicate overall competitive health in the way profit performance does.

Most institutions are competitive with other producers seeking consumer attention, including comparable institutions and those that are quite different, and including some non-educational alternatives. The assessment of competitive position requires an abstract indicator of success that connects with the institution's purpose. That purpose in higher education is to bring resources to bear for its offering to its mission target population, suggesting that its capacity to invest in resources, which is dependent on its capacity to attract investment, is indicative of its competitive success. Given that capacity, the institution reinforces its market position by taking a resource-advantaged position.

Resource advantage theory

Resource advantage theory rejects almost all of the fundamental assumptions of the neoclassic model (Hunt & Morgan, 1995). Demand is heterogeneous, highly segmented, and constantly evolving. Neither consumers nor producers have perfect information, and what information they can acquire is often costly in time or money. The self-interest producers and consumers may have in maximizing their exchanges is constrained by a variety of personal, social, and legal influences. The resources employed by the producing firm are both tangible and intangible, and include such important factors as core competencies and other capacities of a higher order that are not widely distributed. These resources make each firm unique to some degree, giving it the potential to hold a comparative advantage over other producers in the market. The role of management is to implement strategies that yield a position of competitive advantage. This is done by neutralizing advantaged producers through imitation, substitution, innovation, or acquisition of unique resources.

The resource advantage theory of competition operationalizes success as "superior financial performance" (Hunt & Morgan, 1995). This is to be measured against some referent which "might be the firm's own performance in a previous time-period or that of a set of rival firms, an industry average, or a stock market average" (Hunt & Morgan, 1996). While neoclassic theory saw net profits as accidental departures from perfect competition and, therefore, somewhat suspect, the resource advantage theory sees superior financial performance as the primary objective in firm behavior. As indicated above, financial performance in higher education must be measured differently from for-profit enterprises.

The resource advantage model recognizes that each firm is a unique entity, a product of its history. It has a unique mix of resources it has acquired or developed at its disposal, and the basis for a firm's competitive position is its mix of resources.

A comparative advantage in resources exists when a firm's resource assortment (e.g., its competencies) enables it to produce a market offering that, relative to extant offerings by competitors, (1) is perceived by some market segments to have superior value and/or (2) can be produced at lower costs (Hunt & Morgan, 1995).

The emphasis on unique resources as the primary basis of competitive advantage is particularly apt for higher education. In the market for students, for example, multiple institutions may offer highly comparable programs, but the education experience among institutions will vary greatly. The differences will range from such tangible issues as cost, location, facilities, and time of offering, to such intangible factors as faculty expertise and demeanor and the mix of students sharing and contributing to the experience.

Institutions compete in several ways. As with other knowledge industries, advantages exist with unique personnel resources. If one individual is reasonably unique, she is capable of committing her services wholly, responsibly to one position, and institutions will compete among themselves for this limited resource. Other institutions may attempt to acquire equivalent or superior faculty resources. They may innovate, perhaps by team teaching or by developing the capacities of existing faculty. Or they may find a new resource that offers superior performance, such as might be found by applying technology in the place of some faculty capacities. Resource advantage theory observes that different assortments of resources may be equally effective in producing the same value for some consumers, suggesting that many institutions can offer equally effective education experiences in a given field, though they may differ in the particular mix of resources employed.

The same resources may not provide the same advantage to different institutions, however, because the resources may be interconnected with other resources at the same institution. The effectiveness of a given faculty member may differ between two institutions because the professional environment, collegial interactions, and the influences upon the faculty member will differ. The most difficult resources for other firms to acquire are the complex resources that are highly interconnected, or those tacit resources that are created in place. These qualities are common to knowledge resources in higher education.

The resource advantage model accounts for loss of advantage through internal and external factors (Hunt & Morgan, 1995). Internally, a firm can fail to invest in its unique resources, fail to understand what advantages particular resources contribute, or fail to adapt as the competitive environment changes. These dangers are particularly notable for higher education, and avoiding them is not simple.

Given the complexity of factors involved in the education experience, it may be difficult to identify or weigh the importance of many of them. Important factors, such as student mix, may or may not be recognized as a resource in the experience by the students themselves, and to some extent by the institution. There are few mechanisms in place to fairly evaluate differences in the effectiveness among institutions for the same program. Measures would be unlikely to capture the institution's contribution to student motivation and the rapidity of cognitive growth in a particular situation, and such assessments as satisfaction surveys do little to pinpoint influential factors. Often institutions may not compete directly upon the basis of many of its unique resources because it is unclear about their identity or influence.

There are evident links between investment and resource enhancement in some cases, such as personnel and facilities. In cases when the resource itself is unclear, it may be more difficult to determine where the investment should be made and at what level. Institutional reputation, for example, is a powerful resource for the institution, which it bestows upon graduates and maintains over time to their reputational benefit. Yet reputation occurs in response to so many factors, many of which may be poorly understood, that it is difficult to determine priorities for investing in it.

Identification of the value added for the consumer is a particularly difficult knot to unravel, and the institution whose product relies upon the amount of education value added may not appear to be competitively superior. Highly selective institutions may have very high completion rates, but those students who complete programs at less selective institutions my have equally high academic achievement on standardized assessments. If the product is defined as programs of instruction that lead to a specific level of achievement, the value added and draw on education and support resources at the less selective institution theoretically will be greater than at the more selective institution. For the more selective institution to compete, it must offer a value component that the less selective institution cannot. For the most part, this would appear to be reputation, superior amenities, and elite opportunities, and it invests heavily in resources to provide those rather than or in addition to education values. Social culture equates selectivity with social standing, which is leveraged by the graduate for economic standing, which is leveraged by the institution to reinforce its resource base. That base allows it a comparative resource advantage, which is recognized by its superior financial performance as capacity to invest in resources. This reputational advantage can also be leveraged for favorable exchanges with other constituencies.

Failure to adapt is always a potential problem for institutions of higher education. Most mechanisms for change in the education experience demand long time frames for structural development and reorientation of faculty. Different kinds of institutions adapt at different rates, depending on the magnitude of internal processes such as shared governance, and the interests of internal coalitions that come in conflict. There are also concerns about the impact of efforts to meet what are seen as primarily near-term needs. Reputation may be at stake. Loss of highly interconnected resources may weaken other value components of the offering. Some tacit resources may be lost, though later shifts may return them to importance.

External factors in loss of advantage include actions of consumers, government or competitors. Changes in consumer taste may turn resource investments into liabilities, government regulation or changes in law can neutralize resources that have yielded advantage, and competitors may acquire superior resources. Consumer taste has shifted in higher education, as is evident in foreign language programs. Laws and regulations have ramped up particular program requirements to the point some institutions could no longer compete for those consumers. Competitors are ever seeking opportunities to serve more students more conveniently. Comparable actions affect competitive advantage with other constituencies, as well.

The resource advantage model primarily focuses on the firm and its capacity to compete in the market. What firms compete for are exchanges with consumers. Models of consumer motivation and interaction with the market reveal much regarding the resources that will contribute to the advantage.

V. Theories of the consumer

The question of who the consumer is for higher education is complex. The education experience is undertaken by the student, who is usually considered the consumer, but it may not be the student who selects the experience or the institution, and it may not be the student who pays for it. If society's needs are considered, the student may be only one of the actual beneficiaries of the education product. Parents and family represent another possible consumer, particularly as purchaser. They often constrain the choice of institution and substantially underwrite its costs, and current policy considers higher education expenses explicitly to be a family obligation. The family is not generally a significant beneficiary of the student's education, except sharing in whatever symbolic value it may provide. For state institutions, society at large substantially underwrites much of the cost of the education experience and might be considered the consumer. Its interest is more generalized, but more utilitarian in that it wants an educated citizenry and an educated workforce of a certain magnitude and level of preparation.

The neoclassic view of the market relies on the ideal that mutual and open exchange will meet society's interests in providing the products it needs. The model hails the sovereignty of the consumer in determining what is produced and what it should cost. In fact, consumers participate in a web of transaction systems, including such elements as private exchanges, underground markets, and the open market (Firat, Dholakia, & Bagozzi, 1987). Within the open market, consumers are part of multiple markets, and are thought to be free to enter and leave them at will. In the neoclassic view, this gives them the voice and vote of the pocketbook regarding consuming needs. In reality, barriers exist of various kinds. Consumers may not have the economic resources to enter a market, access to distribution, ability to acquire complete information, the problem-solving capacity to compare and figure out the offerings, or time to shop, transact, and consume. In a market economy the interests of the consumer are thought to be articulated directly through the market interaction, which means that consumers with the most monetary resources have the most effective voices in the market environment. Production is most likely to be directed toward serving their needs for consumption, because they have the greatest capacity for exchanges due to their greater resources to exchange for value.

It is important to observe and allow for alternative communication and incentives to elicit responses from the market. Those with fewest monetary resources also have needs for consumption, some of which can be met in non-market exchanges through social networks. In other situations they may resort to using political channels rather than market interaction to communicate needs, resulting in various forms of government interaction in the market. Regulation may be used to modify some consumer barriers, for instance, or public agencies may be created to provide products in a way and at a price that the market does not, as in the case of public education at all levels. Such resolutions require that the consumer develop other forms of power than monetary, and assume a posture that is sometimes adversarial to the market and its participants.

In higher education, as with some other complex industries, communication through the market can be slow and highly ambiguous. In the market for student enrollments, the consumer and the product are not clearly identifiable. If the consumer is specified as the individual student, and if the student had open choice to select the specific education experiences she desired, degree programs undoubtedly would look quite different. Parents and society, as consumers, usually articulate much broader preferences. They want meaningful degrees, an assortment of skills, and distinguished achievement.

The market for students is highly segmented, suggesting that consumers are communicating their preferences. There are segments for a great many individual programs and degrees, for a wide range of institution sizes and types, and for levels of selectivity and prestige conferred upon graduates. American higher education is considered the most diverse in the world. This array of choices has occurred through entrepreneurial entry and identification of niche demand, and through consumer choices expressed through the market. Where consumers have lacked access to desired programs because of cost or other barriers, they have moved politically to have those programs implemented at some public cost, or passed laws requiring removal of particular barriers, such as prejudicial admissions and disability barriers.

Grant and contract funders engage in elaborate communication processes with institutions to articulate their interests, and their awarding behavior clearly communicates their expectations regarding the nature and qualities of services desired. Similarly, donors are expressive directly regarding their interests, and institutions that fail to listen are unlikely to do well with them.

Society is concerned for the number and qualifications of graduates, but the interaction with the community is more complex. Both parties assume both roles of producer and consumer, and often the community is unaware of this nature of relationship with an institution, or the idea that it may be participating in a market exchange. The institution must work harder to determine the value aspects of its offering in the exchange, because the community is less adept at revealing them.

The shaping of an offering on the part of the producer requires understanding of consumer needs, so that appropriate value may be offered. This calls upon the producer to consider the implications of the offering for the experience of the consumer.

The experience of consuming

One approach to the consumer is to examine the experience of consuming, rather than simply the decision to purchase (Holbrook, 1987). The idea of separating the concept of purchase decision from the act of consuming has less relevance, perhaps, for retail oriented marketers, but it is significant for service marketing and instructive in considering the consumer in higher education. Consumers are primarily engaged in consuming behavior rather than buying behavior, and consuming is not a decision or brand choice activity. The behavior of consuming focuses on intangible factors rather than tangible ones, and represents investment of time, effort, and ability, as opposed to money. There are also complex emotional components in the experience of consuming. Finally, whereas decision behavior regarding product choice is conveniently bounded in time, the consuming behavior may not be. The product may have a durability property that is conceptually infinite.

For higher education this focus upon the consuming experience suggests several observations. The decision experience for the traditional student, including campus visits and other preparatory activities, may extend over the space of a year, but the consuming experience is substantially longer and more intensive. The investment involved for the consumer is monetary, to be sure, but higher education is consummately experiential. The consuming experience may be attached to objects and activities, which are tangible and directly observable phenomena, but the objective of the experience is quite intangible and barely measurable in many of its important dimensions. The real consuming activity is the engagement of some cognitive and affective change. The durability factor also suggests that the consuming behavior_that is, the use of the specific education experience_does not end with conferral of the diploma. It extends to some degree throughout one's entire life.

The consuming experience for grant and contract funders is more structurally bounded, but the experience for donors does extend beyond the decision to bestow. Donors receive recognition and certain benefits, many of them intangible, from their beneficence, and successful appeals to donors are known to give particular attention to donor experiences.

Real concerns for the consuming experience imply thorough knowledge and understanding of the consumer as an individual. This does not occur without effort by the firm, and it suggests the importance of the relationship itself between the producer and consumer.

Relationship marketing

It is generally a given in marketing that it costs more to attract a new customer than to keep a returning one. This has placed new emphasis on the nature of the relationship between producer and consumer. The result is the concept of relationship marketing, which allows the producer to engender repeated exchanges with the same consumer by establishing a relationship of trust and communication, and to understand better how to shape the offering to suit consumer needs.

The goal of relationship marketing is to maintain consumer satisfaction over time. This can be defined as consumer-perceived value, which is the ratio between benefit and sacrifices as perceived by the consumer (Ravald & Gronroos, 1996). Total costs to the consumer may include indirect costs for such concerns as delayed delivery and distance to service, and psychological costs, which can include purchasing effort and aggravation, unsatisfactory interactions with the producer, and worry over producer commitment or behavior.

In some versions of the relationship marketing concept, the marketing focus is entirely on the relationship and not on the product (Gronroos, 1996). A firm would not find competing on the core business alone to be sufficient, and must compete on the total offering, of which the product itself is but one element. All elements of the offering are examined for their value-producing aspects, and those which do not provide consumer value are eliminated. Firms develop strategies to bring to bear those resources that maintain a continuing satisfactory relationship with the individual consumer.

A strong relationship with the consumer allows the producers to shape the benefits to meet consumer need, increasing the net value. Some producers will attempt to add value in order to increase price, which will not increase net value, or ratio of benefit to total cost. Consumers, however, prefer no price increase to increased benefits. That is particularly understandable when the value added is unrelated to consumer need, effectively yielding a lower net value to the consumer.

Higher education fits the profile of producers who can benefit from the relationship marketing approach (Tomer, 1998). It has the ability to make long-term commitments to students, donors, grant funders, and communities. It seeks harmonious, non-opportunistic relationships, and it is a high service provider rather than primarily dependent upon transactions.

A relationship marketing approach focuses upon close study and interaction with the consumer over time in order to tailor the value in offerings to suit consumer need. Institutions that use such an approach to students, for example, should exhibit reduced exit transfers, greater completion rates, and increased long term student commitment. A relationship marketing approach to those communities or social groups from whom students are drawn primarily would seek to hone the education product offerings to meet their needs as a constituency. A relationship marketing approach to the community should serve to enhance the local environment in which the institution operates by helping it become more responsive to community needs. It is clearly advantageous to maintain strong relationships that lead to repeated exchanges with donors and grant and contract funders. As a consumer, the institution is subject to relationships with suppliers, and welcomes relationships that allow it to shape the offerings more to its particular needs. The latter relationship typically is more highly structured, particularly in state institutions, but it does not preclude ongoing relationships with suppliers that are mutually beneficial.

The flexibility for students/consumers to select alternative institutions/producers has increased in recent years because of program standardization and variation in the pool of target students. In effect, each term's enrollment represents a return purchase by, or exchange with, the student. The core product, when conceived as specific courses of instruction, has been made entirely modular and the modules, under pressure from a number of sources, practically have been made interchangeable. Students may transport easily course credits from one institution to another to fulfill common requirements. It is true that degree programs do exact some penalties for moving around, and the closer to the degree, the more difficult to move, but student mobility has increased, nevertheless.

In terms of relationship marketing, institutions concerned about the retention issue would acquire deep knowledge regarding consumer needs through investment in an interactive relationship with the target student/consumer and her socio-cultural context. They would then examine the total offering of the education experience for its composition of consumer-perceived value. Benefit elements would be enhanced as possible, and sacrifice elements would be minimized. Students often encounter unanticipated or indirect costs, and experience many psychological costs above and beyond the academic coursework. They frequently run afoul bureaucratic systems and unhelpful staff, for instance. A relationship marketing approach to the source cultures of students regarding tuition and fee increases in recent years might have mitigated the image of higher education as greedy and insensitive. The approach would have tried to find ways of adding value that would improve the net consumer-perceived value to the student and her family, and of better communicating the constraints upon the institution,

Development officers usually work closely with donors, trying to tune in to their value needs, and providing as much value as possible for the donor. Relationships with grant and contract funders are structured, with opportunities for enhancing relationships varying with the type of funder involved.

A relationship marketing approach to the community is critically important. The offering by the institution is often not clear, but in return it seeks support and accommodation by the community on a repeated basis. Each time the institution needs a street closed for a homecoming parade, parking allowances for a major event, acceptance of service learning programs, or voices of support to legislative leaders, it represents a new request, and conceivably, a repeat exchange. It lacks the quid pro quo features of a transaction, but the institution has the capacity to provide value for the community in exchange for cooperation and support.

The market for the local community exists as a choice to "purchase" convenient access to education services, inexpensive or free clinical services of various kinds, economic stimulus and activity, knowledge industry atmosphere, cultural offerings, and other amenities from a particular institution. The "price" amounts to accepting social disruption and pressure on services, while providing tax considerations, cordial treatment of personnel, political support, and cooperative zoning and traffic planning. While it may appear that both the community and the institution are locked into a relationship rather than a market, both do have alternatives.

A structural principle in negotiation is the determination of alternatives to agreement (Fisher & Ury, 1991; Lax & Sebenius, 1986). In any exchange, each party determines a cost for failure to reach agreement, and this becomes the "bottom line." The community may lack the option of acquiring these benefits from another educational institution, but to the extent that they are needed, it may find other ways to acquire them. The community may find, for instance, that the price is too high for the quality and amount of benefit it receives in exchange. It cannot eject the institution from the community, but it may be less than cooperative, and attract or build its own cultural, clinical, and educational alternatives. The institution has fewer market options in that it may not seek easily the cooperation it needs in another community for less consideration. It may, however, undertake greater use of its own resources to compensate for what it cannot get from the unwilling community. The better answer for both parties, obviously, is to find ways of reaching agreement.

What is particularly unusual in this market is that "the community" is an aggregate consumer entity, but its members behave individually. Representative voices have limited authority, which means the institution must work harder to hear what the preferences of the consumer may be. It is more difficult for the institution to evaluate and prioritize its efforts to shape its offering in the exchange, and to determine which resources to direct toward that effort. A relationship marketing approach would appear to have particular value for this constituency.

For the institution, the objective of relationship marketing to the community is to engender cooperation in repeated exchanges over time. To achieve that relationship, the institution would seek ways of learning about community needs for value, and then go about providing that value as possible in its total offering. The range of appropriate value additions could include such factors as specialized services, greater access and inclusion, and reduction of total costs, including indirect and psychological costs.

Humanistic marketing

Commentators have taken notice of questionable practices of some marketers. Where marketing is considered as technique, in its purest form it has been labeled results oriented and amoral, generally ignoring the implications of its results, and replacing human values with exchange values (Moorman, 1987). The picture of the consumer in this perspective suggests she is lazy, self-centered and suspicious, interested only in the product and not the seller, unresponsive to new approaches and products, not very bright, and easily persuaded (Kotler, 1987). An alternative is a humanistic view of the average consumer. That view suggests she is active and interested in learning about the product, seeks fulfillment of a larger set of needs that includes reliability and service as well as the product itself, has interest in the organization as well as the matter of the exchange, responds to new products and selling methods, and knows how to select products to serve long term interests.

A similar perspective considers the product and its presentation in ethical terms (Mokwa, 1987). That view maintains that each product should be considered for its implications for human experience and human character. The market, its products, and its practices should all work to advance the interests of human experience and human capital.

Admissions offices approach prospective students under many of the same pressures as sales representatives in businesses. Numbers are critically important, and the pool of potential consumers is constrained by such factors as academic achievement and economic resources. The academy values highly considerations of integrity, and admissions offices are required to represent the institution honestly, but some exaggerations are known to occur. Accrediting organizations have found it necessary to implement standards for integrity in materials for public dissemination, and criticism has developed over the accuracy of the institutional environments implied in some "view books."

Rarely do these concerns arise from duplicitous intent or a less than generous view of the constituencies institutions serve. The consumer is being asked to enter into a lengthy relationship which she can leave at will, and the institution can ill-afford a reputation for misrepresentation. The ethical/humanistic view best describes the approach higher education must take of its prospective students, as well as its donors, grant funders, suppliers, faculty, community, and society.

Postmodern perspectives on the consumer

One of the more challenging efforts in contemporary marketing theory seeks to interpret the market and consumers through postmodern perspectives (Firat & Venkatesh, 1995). While the theory is quite complex, some fundamental ideas are appropriate to the discussion at hand.

Postmodernism is conceived as an extension of modernism, and postmodern theorists recognize a critical mass of incremental change under way. They attempt to describe what they believe to be the emerging paradigm. These commentators see the cumulative deterioration of many elementary perspectives that have dominated modern thought since the Enlightenment, including the primacy of rational order and control, and reliance on objective reality. They contend that these perspectives are simplistic today and do not describe life as lived.

In postmodernism, representation has also come to mean the construction of the real as played through the human imagination without reference to objective reality. This means that intervention into reality is possible not only by the application of technology but also by other forms of human control. The construction of reality, therefore, suggests that reality is not always treated as a given but is subject to manipulation for aesthetic or commercial purposes (Firat & Venkatesh, 1995).

The opportunity this creates for the market is enhanced by the power the market has acquired over time as the sole determinant of legitimacy. As social institutions have deteriorated or retreated, the market has remained. Even its own critiques are commodified and tested in the market.

Postmodern theorists recognize that there is a complex relationship between the object, its symbolic value or meaning, and the consumer. Symbolic values have become what is marketed, not the object, and the consumer then uses that symbolic value to construct her own life.

The understanding that no object has any inherent function or value independent of the symbolic gains greater acceptance, and the illusory separations between the real and the simulation, the material and the imaginary, the product and the image dissolve. This dissolution enables the consumer to actively engage in the aesthetics of life experiences (Firat & Venkatesh, 1995).

The process by which the consumer constructs reality for herself from the symbolic values around her is inherently creative rather than destructive, which opposes the modernist notion of the producer as creator of value that is destroyed in the act of consumption. She assumes the creative role of the producer, and complicates or obliterates the distinction between producer and consumer as entities. The consumer, thus, is studied, not as someone "seeking to satisfy an end (needs), but as someone seeking to produce (construct) symbols" (Firat & Venkatesh, 1995).

The value of these perspectives for higher education is unclear at the moment, but could take on greater significance as changes occur in the higher education marketplace. Many aspects of the postmodern perspective are hinted in market factors for higher education in the recent past and emerging future. Symbolic values have long been important in interactions with students, donors, and the community. Choice of institution may often mark greater recognition of the name value than the nature of the education experience. Many institutions have learned that the inherent value of the education experience is not so visible to the culture at large as the symbolic meanings that are ascribed to it. As with marketing for clothing and fragrances, great attention then becomes focused on these symbolic values in communicating the offering.

It is notable that the producer/consumer relationship in higher education is unclear for some of the exchanges. The student must participate significantly in the construction of her own learning, so the institution cannot be considered strictly as the producer of learning. The student also substantially affects her own education experience in many other ways, complicating many consumer assumptions. Also, for the traditional student, higher education is generally intended as a "life constructing" experience, itself. The relationship with the community is one which almost obviates the consumer/producer dichotomy entirely, because each is simultaneously producing value to be consumed as a resource by the other.

The introduction of technologized modes for delivery of education experiences may suggest connections with postmodern theory. These modes serve to distance the consuming student from the tangible reality of the educational institution. Conceivably, this might allow the consumer to construct, or have constructed for her, an imaginative reality of an institution that better meets her needs for symbols. As the technology advances, the nature of the experience may assume more spectacularized characteristics, insinuating it further into the student's fabric of symbolic experience. For many students, the notion of a physical campus could disappear entirely.

There has always been a market for "mail order diplomas," but there is an apparently increasing market for what many academics see as "soft" degrees and institutions. These programs ostensibly serve those who lack the resources to undertake a more traditional education experience. Some elite, highly selective institutions maintain substantial continuing education programs that are quite popular, although credits earned are equated at less than full value, if accepted at all, toward a degree program. Without challenging the inherent utility value of the learning, a postmodern view would question the relative significance of the content of these programs, compared to their symbolic value for a population that heretofore has found such symbolic value inaccessible.

VI. Concluding observations.

The picture of higher education that emerges through the marketing lens is complex and problematic. Four large areas of discussion are suggested: the complexity of the higher education product, the complicated social construction of higher education institutions, the operation of financial performance in higher education, and an approach to the market that seeks consumers for an existing offer.

(a) The products of higher education are very problematic.

In a general sense, higher education produces education experiences for its students, and students with certain educational preparation for the larger society. In a specific sense, the producer is ambiguous. The student is simultaneously a consumer of the education experience, a resource for the product provided to society and for the development of other students, and a producer of her own learning. In a literal sense, higher education produces courses of instruction for students. All other experiences, including all support services, are additions of value intended to enhance the consumer's ability to acquire the value of the courses of instruction. Assessment of the value of the education product, and of the resources that contribute to the value, is therefore very complicated.

(b) As an organized behavior system, higher education is particularly complex, which complicates its market response.

An institution's mission goals may be defined by control authorities, but its operating goals are more often determined by internal coalitions that are highly organized. These coalitions attend to different constituencies, and the ability of these coalitions to collaborate in shaping market offerings is limited. Further, the time frame for responsiveness is also protracted, when compared to profit-oriented enterprises.

Throughout most of higher education, the coalition most influential in shaping the education offering, the faculty, maintains very limited relationships with the target market consumers, and is unreceptive to guidance from any who do maintain close relationships. This is not to say that no relationship exists, nor that none is attempted. Faculty look to the professions to provide the criteria for the education offering and consider the profession to be the constituency they serve. It is one constituency to be served by the program, a component of the society constituency, but the interests of the student, who controls the actual resource flow more directly, often are not taken seriously. Further, the authority of faculty is institutionalized in a powerful shared governance structure, which serves very well to isolate decisions about the education offering from influence of investment appeal. Much of this can be attributed to short term self interest, but much is also the result of profound convictions about the appropriate nature of the education experience. In higher education, as in other business, sober judgments must be made about the shape of the offering in terms of the strategic positioning of the institution and the appropriate fit of its core competencies and unique resources. The education offering should not easily shift to whatever is currently hot (Kotler & Fox, 1995).

The independence of the faculty and the complex nature of their work also makes it very difficult to add value through changes in practices, and often requires significant investment of resources. Where change implementation in the core product in other industries may be a matter of weeks or months, in higher education it sometimes can be generational. For-profit industry also can invest heavily in retooling, retraining, restructuring, or new facilities when it sees that there will be at least compensatory return. The lack of comparable evident connections makes it more difficult to commit the kinds of resource allocation needed for change in higher education.

(c) The operation of financial performance and its interconnection with resources is a fundamental idea in higher education, and it must be thoroughly understood.

This study has proposed that competitive standing be measured by financial performance as capacity to invest in resources. Where profit-motivated firms examine the monetary value that can be extracted from the enterprise, this proposition focuses on how much can be invested. What remains unclear is an understanding of limits and how capacity to invest relates to competitive advantage.

The profit from an organization is limited by its ability to attract favorable exchanges and return on investment. In order to achieve the highest profit, defined as income in excess of production costs, investment in resources is limited to the threshold that will support a market offering that can generate optimally productive exchanges. The most successful competitors will be those who can extract the most profit as income in excess of resources and production costs. In other words, superior financial performance.

If financial performance is measured by capacity to invest in resources, there is no theoretical limit on how much can be invested. However, it must attract the investment to allocate to those resources, and that represents the limiting factor and the motivation for competition. The institution must shape a market offering that attracts investment, which comes from tuitions and fees, grants and contracts, donors, state funding, and other activities. These funding authorities are the consumers, and they provide investment at the level they believe the institution is providing a product that suits their value needs. In other words, the open market does operate on the basis of the a traditional exchange of values. The difference from for-profit enterprises is that, because profit is not an objective, there is no reason to extract value in excess of costs, and all revenue is considered invested.

Recent reductions of investment by state funders suggest that the value of the product provided by higher education institutions has less value to the society at large than the costs, as represented by its investment. It may continue to have value for the individual student or grants funders, but the value offering to society at large is insufficient to continue to attract the same level of investment. The judgment may concern directly the education product, but it also may apply to reputation and other value components.

The operation of this interaction can help analyze policy. For example, calls to raise admissions standards have complex implications. More stringent admissions standards would reduce the number of students entering, although perhaps not the number completing, reducing the draw on resources allocated to serve students not completing. Reduction in entering students also reduces investment of tuitions by those students. The institution has two options, to accept contraction and reduce its investment in resources, or to compete more aggressively for the smaller pool of more highly qualified students. In order to compete for tuition investment by those students, who have already developed orientations toward other producers/institutions, the institution must enhance the value of its offering, and realign resource allocation to support it instead of students who are underprepared. A thorough understanding of the target consumer is required, in order to add desirable value, which suggests the importance of a relationship marketing approach. Then, the institution must behave entrepreneurially and disrupt any present equilibrium and established patterns of market behavior while creating new bonds with qualified students. As noted above, these actions are not simple matters in higher education institutions.

(d) There is a proactive role that institutions can take, which is not explicitly considered in discussion of these theories.

The emphasis in this study has been on understanding consumer needs and adapting to them, but it is possible to seek out consumers who need an existing product. Kotler and Fox (1995) provide an explicit guide for doing this. An expansion of this is to consider the responsibility each institution may have to proselytize for its mission, and for the values of higher education.

Institutions individually and collectively might pursue a social marketing approach (Kotler & Roberto, 1989). Social marketing is the practice of using marketing techniques to persuade people to undertake some socially constructive change. The objectives may include simply providing public information and public education, persuading the maximum number of people to take a specific action, inducing people to change behavior for their own good, or attempting to alter deeply felt beliefs and values (pp. 18,19). Institutional missions embody certain commitments and principles concerning higher education itself, and to the extent that institutions believe in their missions, it is appropriate to persuade others of the value of that belief (Many consider inducing others to share the belief would violate principles of intellectual freedom). Higher education might serve long term interests if it can successfully persuade the largest number of people to value, seek, and support certain kinds of higher education experiences.

(e) A conscious market approach for higher education institutions raises a several other questions worthy of consideration.

If an institution is in a market relationship with the community, there are implications for institutional behavior with regard to competition. The institution provides a market offering to the community in the form of services, amenities, and prestige, among other things, in return for accommodation and support. How aggressively should the institution compete with alternative providers of value products that meet some of the same needs for the community? Should an institution seek to create and maintain a community dependency in order to increase the potential cost to the community of a lack of agreement on matters of concern to the institution?

The focus of this discussion has been on the traditional student, for whom a broad range of desirable values can be offered. There is some evidence that older students carry a different market orientation. First, those with clear education objectives have a much narrower range of value needs. Second, they more likely will have personal resources to invest, but they will be more demanding regarding the offering, and more critical of its value in relation to their investment. Third, the exchange will tend to be more restricted, and there will be less supporting investment from community and society to fulfill the needs of older students. The benefit is seen as being greater specifically for the student than for society at large. For these reasons, appeals for exchanges with this constituency may require a very close understanding of its specific value needs.

These are a few of the observations and questions that can be drawn from an examination of higher education through the theoretical perspectives of marketing. It is reasonable to conclude that institutions might find ways to improve internal practices and market interactions by examining their own markets and internal operations through these perspectives.

VII. Summary

This study has argued that higher education exists in a market environment in at least six respects. It serves students, it seeks to attract donations, it serves grant and contract funders, it seeks approval and general support from the community, fiscal and general support from society, and it conducts exchanges with suppliers and personnel. These interactions clearly place higher education institutions in a variety of markets.

This study looked at general theories of marketing and exchange theory, and described the nature of the exchanges with these six constituencies. Theories of the firm were explored, concluding that higher education is best described as a constituency based, resource dependent, social organization. In considering market paradigms, the basis of competition in higher education was described by the resource advantage model, which specifies the objective as superior financial performance. This study argued that financial performance in higher education is indicated by an institution's capacity to invest in resources, rather than profit-producing ability. In examining theories of the consumer, this study argued that a relationship marketing approach to the consumer would yield the best information upon which to shape the market offer and to engender repeat exchanges. The concluding observations noted particular concern for the ambiguity of the matter produced by higher education, the functioning of financial performance operationalized as capacity to invest enabled by capacity to attract investment, the implications of deeply invested internal coalitions for market response in higher education, the possibility of an approach that seeks consumers for an existing offer and the use of a social marketing approach, and questions concerning competitive posture in the community and distinctive aspects of the market for non-traditional students.

Further scholarship might pursue a number of propositions and implications suggested here. Thorough analysis of matters of value offered by higher education for the purpose of parsing the value components would be extremely helpful in determining resource investment. Kotler (Kotler & Fox, 1995) provides some help in his applied approach to marketing higher education but primarily focuses on one constituency. The concept of financial performance as capacity to invest in resources would benefit greatly from some empirical support. Further elaboration of the constituencies served by higher education institutions, and their interaction with various internal coalitions would help devise better processes for shaping market offerings. The complexity of the situation is suggested by the idea that the education offering directly serves multiple constituencies, at least including the student and the profession. A fuller explication of the interaction with the community seems warranted, because the matters of exchange should be more thoughtfully considered by both parties. Qualitative researchers should examine institutions that are using social marketing approaches to assess effectiveness and capture best practice.

Institutions of higher education face increasing pressures from many sources. The value of the education product is being questioned, and investment by society is being reduced to the level that accords to consumer-perceived value. It may be that the consumer is tiring of accepting an offering from traditional institutions that no longer carries the perceived value that merits the investment. It may be a problem with the core product, or it may concern other values_or the absence of other values_associated with it. It may be also that higher education has failed to persuade the culture of its own value as it understands itself. Meanwhile, entrepreneurs attempt to segment the market with carefully developed offerings, and leapfrog the traditional institutions' advantage of tacit and interconnected resources by investing in technology. To understand and respond in order to survive the gaining competition, a market orientation will be critical for institutions of higher education.

[Return to top]

Bibliography

Alderson, W. (1965). The heterogeneous market and the organized behavior system., Dynamic Marketing Behavior (pp. 23-51). Homewood, Ill.: Richard D. Irwin.

Anderson, P. F. (1982). Marketing, strategic planning, and the theory of the firm. Journal of Marketing, 46(2), 238-248.

Bagozzi, R. (1975). Marketing as exchange. Journal of Marketing, 29(October), 32-39.

Bagozzi, R. P. (1979). Toward a formal theory of marketing exchanges. In O. C. Ferrell, S. W. Brown, & C. W. Lamb, jr. (Eds.), Conceptual and theoretical developments in marketing (pp. 431-447). Chicago, Ill.: American Marketing Association.

Bartels, R. (1968). The General Theory of marketing. Journal of Marketing, 32(Jan.), 29-33.

Birnbaum, R. (1988). How colleges work: The cybernetics of academic organization and leadership. San Francisco, Cal.: Jossey-Bass Publishers.

Brown, S., & Fisk, R. (Eds.). (1984). Marketing theory: Distinguished contributions. New York:: John Wiley & Sons.

Fennell, G. (1987). A radical agenda for marketing science: Represent the marketing concept. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 289-306). Lexington, MA: Lexington Books.

Firat, A. F., Dholakia, N., & Bagozzi, R. P. (1987). Philosophical and radical thought in marketing. Lexington, MA: Lexington Books.

Firat, A. F., & Venkatesh, A. (1995). Liberatory postmodernism and the reenchantment of consumption. Journal of Consumer Research, 22(3), 239-268.

Fisher, R., & Ury, W. (1991). Getting to yes: negotiating agreement without giving in. (2nd ed.). New York: Penguin Books.

Fisk, G., & Meyers, P. (1982). Macromarketers' guide to paradigm development. In R. F. Bush & S. D. Hunt (Eds.), Marketing theory: Philosophy of science perspectives. (pp. 281-285). Chicago, Ill.: American Marketing Association.

Gronroos, C. (1996). Relationship marketing: Strategic and tactical implications. Management Decision, 34(3), 5-15.

Holbrook, M. B. (1987). O, Consumer, how you've changed: Some radical reflections on the roots of consumption. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 156-177). Lexington, MA: Lexington Books.

Hunt, S. D. (1983). Marketing theory: The philosophy of marketing science. Homewood, Ill.: Richard D. Irwin, Inc.

Hunt, S. D., & Morgan, R. M. (1995). The comparative advantage theory of competition. Journal of Marketing, 59(2), 1-15.

Hunt, S. D., & Morgan, R. M. (1996). The resource-advantage theory of competition: dynamics, path dependencies, and evolutionary dimensions. Journal of Marketing, 60(4), 107-15.

Kotler, P. (1987). Humanistic marketing: Beyond the marketing concept. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 271-288). Lexington, MA: Lexington Books.

Kotler, P., & Fox, K. F. A. (1995). Strategic marketing for educational institutions. Englewood Cliffs, N.J.: Prentice-Hall, Inc.

Kotler, P., & Roberto, E. L. (1989). Social marketing: Strategies for changing public behavior. New York: The Free Press.

Lax, D. A., & Sebenius, J. K. (1986). The manager as negotiator: Bargaining for cooperation and competitive gain. New York: The Free Press.

Mokwa, M. P. (1987). Ethical consciousness and the competence of product management. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 57-76). Lexington, MA: Lexington Books.

Moorman, C. (1987). Marketing as technique: The influence of marketing on the meanings of consumption. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 193-215). Lexington, MA: Lexington Books.

Ravald, A., & Gronroos, C. (1996). The value concept and relationship marketing. European Journal of Marketing, 30(2), 19-30.

Savitt, R. (1987). Entrepreneurial behavior and marketing strategy. In A. F. Firat, N. Dholakia, & R. P. Bagozzi (Eds.), Philosophical and radical thought in marketing. (pp. 307-322). Lexington, MA: Lexington Books.

Tomer, J. F. (1998). Beyond transaction markets, toward relationship marketing in the human firm: a socio-economic model. The Journal of Socio-Economics, 27(2), 207-229.

U.S. News & World Report. (1998). Exclusive rankings: Ph.D. programs. Washington, D.C.: U.S. News & World Report, Inc.

Waterschoot, W. v., & Van den Bulte, C. (1992). The 4 P classification of the marketing mix revisited. Journal of Marketing, 56(October 1992), 83-93.

---

All non-original content used by permission.
All original content protected by copyright © 1996-2000 Arthur L. Dirks.
Send comments to Arthur Dirks [adirks@bridgew.edu]
Webdesign by Dirks Designs
Return to Main Site Index
BSC Home