When A Low Price Leader Invades Your Space

In business theory, disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.[1]

I have to admit, I was surprised to read that anyone would consider a 10% discount and the ability to transfer up to 90-credit hours a ‘disruption,’ but that is what a recent article, Why Disruption is Stealing Pennsylvania’s Students, appears to have done.

The article is one of many written about Southern New Hampshire University’s (SNHU) recent articulation agreement with the Pennsylvania community colleges.

Dropping your price and accepting transfer credits is not creating a new market or value network when your price is already is more than $250 lower than your competitor.

What’s Going On Here?

There seems to be a couple of issues at play here.

First, Pennsylvania’s State System of Higher Education appears to be pricey.

Second, SNHU wants adult students and is willing to go out into the market and cut some deals.  And why they haven’t done more of this is a great mystery.

Beyond these two issues, there doesn’t seem to be a whole lot else going on.  Just good, old fashioned, low price leader flexing its muscles in a market they already serve – but getting a great deal of free publicity to kick-start things.

When A Low Price Leader Comes Calling In Your BackYard

Now the big question is, what does Pennsylvania’s State System of Higher Education do if anything?  Well, let’s explore some options.

Option A: Do Nothing

Sometimes your best option is to do nothing.  Hopefully, the answer isn’t to continue doing what they have been doing with the hope that everything will improve.  After all, they have reported a 20% reduction in enrollments since 2010, and that indicates something is not right within the System.

Option B: Differentiate

Yes, this one again.  Differentiation has been on the table for longer than I care to remember and for far too many that chase the adult audience, their attempts at differentiation stopped with phrases like “online learning that is convenient and flexible,” with “world-class faculty” and “caring staff dedicated to your success.”

That’s not differentiation.  Differentiation is a sustainable competitive advantage.

Option C: Serve Thy Customer

Getting out there and understanding the audiences they serve so the State System can do a better job of offering unique value.  Talk to the employers about what they need in an employee.  Talk to the people and understand what they need from a college experience and education – and even career guidance and life-long learning.

Do some voice of the customer research – regularly.  If you are targeting adults, create advisory boards with adult student representation rather than relying on student government and a traditional student on the board.

Some Final Thoughts

For private colleges, competing against lower-priced institutions isn’t anything new but with the changes in society’s view of higher education, you need to come at this challenge differently.

In the past, you might have turned to discounts – but with some institutions approaching 80-percent discount rates, that solution is financial suicide.  Others have made significant investments in developing unique programs that partner with personalities and subject matter experts (The Jack Welch MBA at Strayer).  Others create a unique, valuable and personal learning experience (Northeastern).

Written by

Strategic turnaround consultant and writer.

Leave a Reply