Shopping Effort Classification: Implications for Segmenting the College Student Market.
Market segmentation strategies based on levels of consumer shopping effort have long been utilized by marketing professionals. Such strategies can be beneficial in assisting marketers with development of appropriate marketing mix variables for segments. However, these types of strategies have not been assessed by researchers examining segmentation frameworks for various types of programs in higher education. This paper attempts to fill this void in the literature by specifically examining ways that levels of customer shopping effort might be utilized to more effectively segment markets for higher education programs. The relative effectiveness of various elements of the marketing mix is also examined and recommendations are provided for colleges and universities attempting to target various markets segmented by levels of consumer shopping effort. ********** Customers are the key to any successful business. This, of course, is true for institutions of higher education. Colleges and universities must acquire and retain students to be successful. Typically, colleges and universities spend large amounts of money on promotional efforts to attract students. Additionally, colleges and universities increasingly are developing and funding programs specifically aimed at student retention. However, the potential target market for a college level education is extremely diverse, consisting of a number of very different segments. In order to maximize efficient use of limited funds, individuals involved in higher education marketing must therefore be aware of the different segments which exist, and target segments with an appropriate marketing mix. Such a strategy will produce not only a higher initial return on promotional investments in terms of number of students attracted, but should also result in higher retention rates. Literature Review Targeting potential customers correctly is a necessity in order for higher educational institutions to thrive. Correct targeting is critical to the success of any marketing effort. As Cao and Grucda (2005) noted, various segments differ greatly in their response to a particular institution's marketing mix. However, simply attracting potential students to a university in not sufficient for success. Student retention is also critical for success. Retention is frequently utilized as a criterion for evaluation of the quality of colleges and universities. Clearly, unsatisfied students are unlikely to remain at a university, and are also likely to spread negative word of mouth regarding the institution. Thus, satisfaction and retention clearly impact performance (Boulding, Staelin, Ehret, & Johnston, 2005), and retention is related directly to the quality of relationships between institutions and their customers (Gustafsson, Johnson, & Roos, 2005). How and why students elect to attend a particular institution of higher learning is clearly imperative to insuring high levels of satisfaction, and thus creating a high level of customer value (Lewis, 2005). Because of the importance of good customer relationship management and measurement on profitability (Mason & Dastoor, 2007; Ryals, 2005), and the importance of customer management to both marketing (Payne, & Frow, (2005) and a firms' overall marketing strategy (Rogers, 2005), it is critical to target a customer segment which is most likely to be satisfied with the offering of the institution of higher learning (Cao & Gruca, 20O5). Researchers have identified several different ways that the market for higher educational programs might be segmented. For example Kline, Scott, and Clark (2001) found that significant differences in preferences for various institutional attributes existed between "community oriented" and "campus oriented" students enrolled in a large urban university. Research by Cafun, Eidson, and Palmer (2007) also found variations in preferences to exist between subsets of students segmented by on-campus versus off-campus residency, older versus younger students, and upperclassmen versus lower classmen. …