“Universities are no longer nonprofits, but the highest-gross-margin luxury brands in the world,” NYU Professor Scott Galloway wrote recently.
Professor Galloway has been exploring the crisis of higher education in the U.S. lately, accelerated by the pandemic. Of all the wrecking ball implications of Covid-19 on brands, the impact on higher education is one of the most dramatic. And as with other industries, it’s less of a new problem, than an acceleration of problems already under way.
The value proposition for U.S. higher education has long been out of whack. One telling statistic: a study found that universities believed they were providing graduates with 80% of skills they would need in the work place, but employers felt graduates were only arriving with 40% of those skills.
Yet Covid-19 is putting the broken value proposition in high relief. As many Universities start to shift to online-only (after accepting full tuition deposits), the vast majority are holding firm to the same tuition price they charge for an in-person experience, asserting that nothing has changed in the value proposition. Princeton approved a 10% tuition discount, but they are in the minority.
I think there are lessons here for any brand. Covid-19 is forcing a re-evaluation of how brands across the board are valued. It resets the playing field. Ultimately the value of any brand is determined not by the team that works on the brand, but by potential consumers of the brand.
Professor Galloway predicts a coming reckoning for higher education brands slow to adapt:
“Universities will face a financial crisis as parents and students recalibrate the value of the fall semester (spoiler alert: it’s a terrible deal). In addition, our cash cows (international students) may decide xenophobia, Covid-19, and H1-B visa limits aren’t worth $79,000 (estimated one-year cost of attending NYU).
“This has been a long time coming and, similar to many industries, we will be forced to make hard decisions. Most universities will survive, many will not. This reckoning is overdue and a reflection of how drunk universities have become on exclusivity and the Rolex-ification of campuses, forgetting we’re public servants not luxury brands.”
This is a time for all marketers to sense-check the value proposition of their brands, not based on how things were 6 months ago, but how things are today. What’s happening with higher education is a cautionary tale not to get complacent. I think the often-quoted Churchill advice applies: “never let a good crisis go to waste.”
Here are a few related cartoons I’ve drawn over the years: