Online Higher Education Market Update 2008 Market Size, Forecasts and Differentiation

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Online Higher Education Market Update 2008

Market Size, Forecasts and Differentiation

Online Higher Education Learning Collaborative

Eduventures, Inc.

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Copyright © 2006 Eduventures, LLC. 2

Eduventures Study Provides Market Size and Forecast Data and Highlights Growth Factors

Online headcount forecast to reach almost 3.5 million by 2013 (c.18% of all students)

• Based on fall entry in degree-granting, Title IV schools only

• Online is defined as 80%+ of formal instruction online

Current economic downturn may initially slow growth in short-term; online will then become strongly counter-cyclical

Post-2013, more significant traditional student or international participation may be key to further expansion

A maturing market is forecast to drive a more nuanced and diversified approach to positioning and differentiation

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425,575 623,563 843,931 1,101,346 1,400,672 1,707,945 1,923,599 2,194,932 2,535,674 2,878,213 3,214,990 3,465,991 47% 35% 31% 22% 13% 14% 16% 14% 12% 8% 27% 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 2002 2003 2004 2005 2006 2007 2008F 2009F 2010F 2011F 2012F 2013F 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Online Headcount Growth

Online Market Continues to Grow Steadily and Represents ~10.6% of All Students Today and a Projected 18% in 2013

Assumes major recession from Q4 2008 through 2009- where cyclicality (weakness in some non-military tuition assistance, corporate training,

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Copyright © 2006 Eduventures, LLC. 4

A Number of Variables and Assumptions Impact Forecasts

Nature of Downturn

• Perception, severity, impact

Adults

• Post-2013 growth may be inhibited by upper limits of online share of adult market

Traditional Students

• Possibility that traditional age student participation online at program level will be post-2013 growth vehicle

International

• Role that online may play for cross-border higher education

Fall v. 12 month headcount

• Norm of Fall reporting in U.S. higher education may undercount online market size

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For Profit Schools Retain Disproportionate Share of Online Market

For-profit strengths

remain- speed to market, execution, marketing

spend/technique,

customer service, online fit with mission

Pressure on for-profit share- steady

normalization of online at publics with local/national brands, and often much lower prices points

Forecast, Fall 2013 Higher Education Market Share Online Market Share (+/-2008) Online Headcount (+/- 2008) For-Profit 7% 30% (-2%) 1,040,000 (+c.400,000) Private Non-Profit 19% 12% (-2%) 416,000 (+c.140,000) Public 74% 58% (+5%) 2,010,000 (+c.1,000,000) TOTAL 100% 100% 3,465,991 (+c.1,500,000)

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Copyright © 2006 Eduventures, LLC. 22.2% 46.5% 28.3% 3.0% 28.4% 59.1% 11.4% 1.0% 0% 10% 20% 30% 40% 50% 60% 70%

Associate Bachelor's Master's Doctoral % of Online Market

% of Offline Market

Est. Online Headcount & Market Share, Fall 2008

Associate= 339,000 (c.7.9%) Bachelor’s= 708,000 (c.7.9%) Master’s= 431,000 (c.21.3%) Doctoral= 46,000 (c.24.1%) Undergraduate= c.7.9% online Graduate= c.21.5% online

Source: OHE-LC data, NCES and OHE-LC staff analysis. Excludes certificates, first professional and non-credit

Undergraduate programs emphasize completion programs at bachelor’s level with relatively few online programs at community colleges and less

academically experienced demographic

Undergraduate Is a Relative Weakness While Graduate Level Is an Online Strength

Copyright © 2008 Eduventures, Inc.

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Online Program Growth Is Driven By a Number of Components

Component Impact The fact of online

delivery-convenience, flexibility

Basic contrast with conventional campus-based delivery

Focus on the adult learner Basic contrast with an institutional mind-set focused on the traditional age student

Mass market

programming/audience

Programming concentrated in high-demand areas; may embody a particular level (e.g. graduate) or disciplinary focus

Niche programming/ audience

Programming has no or few competitors; audience is non-standard; meets addressable need

Brand- local/regional Established reputation by geography; tough for competition to match

Brand- national/ international

National/international reputation/presence counters local brand loyalty; broadens applicant pool

Marketing spend Outspend the competition to gain visibility

Marketing technique Use of innovative/efficient marketing, including partnerships with feeder organizations, to increase visibility, control costs and improve conversion

Back office functionality Enhance understanding/efficiency of the value chain; increase customer/staff satisfaction; improve margins

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Copyright © 2006 Eduventures, LLC. 8

These Components Will Continue to Be Critical, But Not Sufficient for Differentiation

Student

decision-making becomes more demanding and rational Schools will become more self-aware of the nature/value of current approaches/assets, and will do more to position this to the market

More nuanced aspects of online offerings will become much more developed and visible, and necessitate a more complex explanation for online growth

Copyright © 2008 Eduventures, Inc.

1. Common Positioning Undifferentiated Faculty Financial Aid Pedagogy/Student Experience Pricing Scheduling/Acceleration Status/Experience/Size 2. Uncommon Positioning Undifferentiated Alumni

Awards and Rankings Credit Transfer News Section/Blogs Partnerships Platforms Student Body/Diversity 3. Common Positioning Differentiated Programming Student Support 4. Uncommon Positioning Differentiated Outcomes Programmatic Accreditation Values

Source: Competing in Online Higher Education 2008, Parts 1-3 (OHE-LC, 2008)

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Learn More About How the Eduventures Online Higher

Education Learning Collaborative Can Help You Position For

Growth

Eduventures Online Higher Education Research Tracks include:

Marketing and Recruitment Operations

Programs and Markets

Teaching, Learning, and Outcomes

For more information about our research and consulting services, please contact Lauren Berry: lberry@eduventures.com or visit our Web site: www.eduventures.com

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