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MARKETING HIGHER EDUCATION: THE MBA EXPERIENCE 31

Marketing higher education: the


MBA experience
John Nicholls, John Harris, Eleanor Morgan, Ken Clarke and David Sims
Business schools should improve their marketing or stand accused of not practising what they preach

Introduction profitable enterprises in a competitive world for the


Hebron[1] has argued for a marketing approach in higher creation of wealth in society”. Whether or not the
education; otherwise there has been relatively little objectives are the same – and some would question the
published research outside the USA on the marketing profit aspect – MBA courses and their methods of
aspects of activity in educational institutions, including delivery now differ enormously. There are one-year and
those offering Master of Business Administration two-year degrees, full-time and part-time degrees,
degrees (MBAs). This seems strange in view of the campus-based versus distance learning MBAs,
increasing competition among them as providers of “consortium MBAs” with foundation companies, single
services and the importance of some of the issues to the company programmes and others, including action
health and even survival of some of these institutions in learning approaches.
the present climate. For example:
In the early 1980s it was estimated that there were 28
● How far are educational institutions really institutions in the UK offering MBA degrees, mainly the
“customer-oriented”? members of the Conference of University Management
● Do they choose the most appropriate market Schools (now renamed the Association of Business
segments for their organization’s strengths? Schools (ABS)). Professor David Ashton, chairman of the
● Is there consistency between the segments
ABS, has stated[3] that there are now 92 institutions
targeted and their product offerings? offering these courses. They include business schools,
university schools of management and other educational
● How far are they aware of the complexities of the establishments, with private sector providers becoming
decision processes of the “buyers”? increasingly involved. Competition is fierce; operating
● Is it appropriate for educational institutions to margins are expected to decline and some organizations
become “marketing-oriented”? are likely to be forced to drop out of the market, or at least
In this article we explore some of the above marketing to drop some of their courses.
issues in higher education in the context of MBA degrees,
As Which MBA? [4] points out, it is difficult to define
the main source of fee income for most business and
exactly what constitutes an MBA degree because of the
management schools in UK higher education.
variety of product offerings. In the early 1980s it was
likely that the market did not perceive the differentiation
Viewed in terms of the product life cycle, the launch of
in offerings. Clearly, however, as the market has matured,
MBAs in the UK took place in the 1960s, growth occurred
the typical customer appears to have become more
in the 1970s and particularly 1980s, and the 1990s have
knowledgeable and discriminating. For example, Beard[5]
probably seen the arrival of the maturity stage. Indeed, it
shows that there is a clear awareness of the main modes
is generally agreed that there has been a 10-15 per cent
of study, issues of content, and the reputation of the MBA
dip in demand associated with the recession: most
providers among those entering MBA degrees.
business schools state that they expect moderate growth
to resume as the recession ends.
Almost all organizations offering MBA degrees
necessarily have management expertise and most have
According to Kempner[2], all MBA courses have the same
marketing expertise, since these subjects are taught on
objectives: “to develop managers who will run efficient,
their courses. It is somewhat ironic that some of the
current market offerings appear to suggest that their
International Journal of Educational Management, Vol. 9 No. 2, 1995, pp. 31-38 organizations have made insufficient use of their own
© MCB University Press Limited, 0951-354X internal marketing resources. Moreover, there appears to
32 INTERNATIONAL JOURNAL OF EDUCATIONAL MANAGEMENT 9,2

be a lack of awareness of the marketing process required involve more buyer deliberation. He distinguishes four
to develop a product such as an MBA. Duncan[6] types of consumer buying behaviour as shown in Table I.
suggests that educational establishments do not really Consumers go through complex buying behaviour when
practise marketing, and that what is carried out tends to they are highly involved in a purchase and they are aware
be rudimentary. of significant differences between brands. Marketing
MBA programmes clearly involves the selling of an
At the University of Bath we have had experience of expensive product (in terms of both money and time),
developing and concurrently running four very different significant brand differences and infrequent buying.
MBA degrees[7], viz.: a long-standing full-time MBA on Murray[10] suggests that, in the face of greater risk and
which the majority of students are largely self- uncertainty, services customers engage in extended
supporting; an executive part-time degree with founding decision processes. There is a distinctive information
companies where the majority of students are sponsored acquisition pattern for service customers; personal
by their companies; an executive part-time degree in sources of information become particularly important.
Malaysia run as a joint venture with the Malaysian
Institute of Management; and a dedicated MBA degree
run for executives of British Airways. This mix of
offerings raises another interesting issue: who is the real
customer? Is it the student, the student’s current
employer, the future employer, the joint venture partner,
Services customers engage
or society at large? in extended decision
The joint authors of this article, all of whom have been processes
involved with the design, admissions process and
teaching of MBA degrees at Bath, feel that many of these
Until recently there appeared to be little evidence
issues are worth exploring further. In this article we look regarding MBA students’ information-gathering
first at some general issues facing marketers at behaviour. Nicholls and Wong[11] conducted a study of
educational institutions, and then examine the marketing MBA students’ motives at seven UK business schools
of MBA degrees in the light of previous survey data and based on 255 mailed questionnaires and a response rate of
evidence arising from our collective experiences of 41 per cent. Fifty-three per cent of the respondents listed
running the four Bath MBA degrees. personal contacts as being a main source of information
and in total 89 per cent sought some personal advice. The
survey was backed up by a semi-structured interview
Educational services and buyer behaviour study with 27 students. About half of the latter felt that
In a recent review of marketing in service industries, they were unhappy with the information they had
Edgett and Parkinson[8] point out that it is now generally received from the business schools, and a few thought
accepted that the marketing of services is sufficiently that the information they had received had turned out to
different from the marketing of physical products to be quite misleading.
deserve separate treatment. The four unique
characteristics that distinguish services are intangibility, The recent survey by Beard[5] conducted on behalf of the
inseparability, perishability and heterogeneity. By their Association of MBAs (AMBA) provides more recent
nature, services cannot be touched, tasted or possessed; information from a larger survey. It was based on
this leads to consumer difficulty in evaluating an
intangible service offering. A service is inseparable from
the source of the service; production and consumption Table I. Buyer decision-making matrix
take place simultaneously. Services are perishable since
they cannot be stored; yesterday’s course vacancy cannot High Low
be sold. Heterogeneity simply means that services are involvement involvement
difficult to standardize; this makes it difficult to control
quality. Services differ considerably in the extent to which Significant Complex Variety-
they are people-based or equipment-based. Educational differences buying seeking
courses including MBAs (other than those by distance between brands behaviour behaviour
learning) are usually heavily people-based; the staff are
part of the product. Few differences Dissonance- Habitual
between brands reducing buying buying
behaviour behaviour
Assael[9] suggests that the buyer’s decision-making
processes vary with the type of decision, and that the Source:[9]
more complex and expensive decisions are likely to
MARKETING HIGHER EDUCATION: THE MBA EXPERIENCE 33

evidence provided by some 2,000 MBA students at 28 co- institutions practising effective marketing will be more
operating business schools in response to detailed likely to prosper.
questionnaires completed on entry into the MBA
programme and on graduation. MBA providers tend to
assume that the relevant groups will be aware of the MBA Developing marketing strategy
as a course of study. However, this evidence shows that 23 Modern marketing practice suggests that in many cases
per cent of those on part-time courses and 15 per cent on markets should be segmented, i.e. the organization
full-time courses only became aware of the degree a year should recognize that different customers have differing
or less prior to entry. Table II provides details of how needs and wants, and that the market is not
students became aware of the MBA they actually attended. homogeneous. To be useful, a segment should be
measurable, substantial, stable and accessible – it should
The importance of personal recommendation here is clear, be possible to reach the chosen segment by a specifically
particularly the recommendation of people who had done designed marketing mix. It is argued that when
the course previously. The applicant’s company appears to organizations have understood the different market
be relatively unimportant for full-time students. The main segments they should target one or more of these
impression from the survey is of individuals making their segments in accordance with their own particular
own enquiries, with those going on full-time programmes organizational strengths, and should then position
consulting a large number of sources. themselves in the marketplace so as to appeal to these
segments. However, the market for MBAs has been
The educational market has been international for many undergoing rapid expansion and equally rapid evolution,
years and Far Eastern students, for example, tend to take and it may be difficult to understand clearly the segments
a conscious decision about whether to study in the UK, which exist. Moreover, the organization needs to be
Australia, the USA or indeed whether to study at home. careful to ensure consistency between the targeted
In Europe, the EU Erasmus Programme and other segment and the “product offering”. There is little point in
initiatives are designed to increase student mobility, and teaching strategic management to 22-year-olds on a
the objective of the former is that at least 10 per cent of all “conversion course” from history or engineering if they
degree students should have a period of study in another do not have the experience to understand the concepts
EU country. Worldwide there is evidence that institutions being taught.
are seeking to expand into other countries. In this
increasingly competitive situation it is likely that those Having obtained an understanding of buyer behaviour
and segmentation, the marketers of educational services
need to understand the development of marketing
Table II. How students became aware of MBA courses strategy and the “marketing mix”. A popular
classification developed in the 1960s suggested that the
marketing mix generally consists of the “4-Ps”: product,
How found out Full-time Part-time
about MBA attended (%) (%)
price, place (distribution) and promotion. This framework
can be adapted to categorize the relevant features for
each marketing variable in the case of educational
Personal recommendation by: services. A revised marketing mix for MBA degrees could
someone who had done course 23 26 be as follows[12]:
someone from another school 15 8
someone else 14 8 ● Product: course subjects, options offered,
additional student services.
Enquiring direct 27 27
● Price: fees, scholarships, bursaries, admission
Through company worked for: requirements.
management development department 4 14
own boss 2 5 ● Promotion: advertising, personal sales contact,
colleague/mentor 5 7 public relations.
company sponsoring MBAs 1 2 ● Place: delivery methods, class location, class
AMBA directory 19 6 timetables, teaching methods/styles.
Press/media However, many academics feel that the 4-Ps model is
advertisement 6 15 inadequate for the marketing of services. Cowell[13], for
article 15 5 example, offers two additional “Ps”: “people and process”.
He includes people because the staff are part of the
Other answers 42 21 offering itself, especially in high-contact service
(Multiple replies permitted) operations. The second additional “P”, namely process, is
concerned with the logistics of the service delivery.
Source:[5]
Although many of the concerns in this area would
34 INTERNATIONAL JOURNAL OF EDUCATIONAL MANAGEMENT 9,2

traditionally fall into the operations management sphere, customer relationship. Suppliers are frequently expected
Cowell suggests that there should be a blurring of the to customize their offerings to individual customer needs,
borders between marketing and operations managers, and sales tend to go to those suppliers who most closely
because of the nature of services. co-operate with the buyer on its specifications and
delivery requirements. The demand in industrial
So far, our discussion has been about consumer marketing is a derived one and, moreover, it is likely to be
marketing – we have assumed that the student is the more volatile than the demand for consumer goods. In
customer. Beard[5] found that about 80 per cent of the business-to-business marketing there is purchasing by a
survey respondents had initiated their MBA application professional buyer (or at least a buying unit) whose job it
themselves as a planned career development, and that the is to attempt to make a rational purchasing decision. In
overwhelming majority of full-time students were industrial marketing there are typically far more people
financially self-supporting. The assumption that the involved in the decision to buy, including “technical”
student is the customer reflects our experience at Bath experts, users, senior executives, and the company buyer.
with the longest running of our MBA courses, the full- In business-to-business marketing the marketer is
time MBA. Typically, less than 15 per cent of the students involved in a complex series of events through which
are sponsored by their organizations. Even so, there is a buying and selling companies identify each other as
need to promote the course to organizations as potentially of value. Each may then grow to know the
prospective employers of MBA students on graduation other party and may exchange information, goods,
and, as with most MBAs, there is a substantial project services and money. The process may be repeated
component to the course which requires company links to continuously or irregularly over many years. The events
be forged and nurtured. can be likened to some romantic interpretation of how
people search for each other and then “date”. As their
Of course, the term customer may mean many different relationship develops they may marry, but if the marriage
things. In an article which looks at the nature of the goes wrong and either party does not come up to the
marketing prescription and its value for public and other’s expectations they may divorce[17].
private sector offerings, Wensley[14] develops a
speculative taxonomy based on two dimensions, the
extent to which the service is supplier- or user-specified,
and the distinction between active and passive users.
Where the service is supplier-specified and the user
passive, the term “patient” may be appropriate; where the
In business-to-business mark-
service is user-specified and the user active, the term eting events can be likened to
“customer” may be the most appropriate. In the case of
MBA degrees there may be a limit as to how far the romantic interpretation
students can be active users because they may lack the
expertise required to judge quality (see, for example,
[15]), but even here student representatives and liaison Industrial buyers are subject to many influences when
committees can make inputs. The service is certainly they make their buying decisions. Webster and Wind[18],
in their classic text, have classified the various influences
user-specified in the sense that the MBA candidate has
on industrial buyers into four main groups:
about 113 very different services offerings by 92
environmental (such as the level of demand and rate of
institutions from which to choose.
technological change); organizational (such as the
company’s objectives and procedures); interpersonal
(such as questions of authority, status and persuasive-
Business-to-business marketing ness); and individual buyer influences (such as the buyer’s
Recent developments in consortium MBAs and single age and education). There is an insufficient general
company MBAs mean that the application of consumer database for us to discuss these elements as they apply to
goods-marketing principles in business schools should be all MBAs in the UK, but we can examine them in relation
enhanced by what has become known as business-to- to three other MBAs developed in Bath. These are the
business marketing, or industrial marketing. It is part-time Executive MBA, the Malaysian Executive MBA
important for industrial marketers to understand buyer- and the British Airways Open MBA. Fuller descriptions
seller relationships including the process through which of these courses can be found in Harris et al.[7].
purchases take place, who in the buying company has the
most influence on purchasing decisions and the The Executive MBA was designed in the late 1980s when
motivations of the buyer. Gross et al.[16] highlighted considerable interest in MBAs had been generated by a
some of the major differences between consumer and number of reports on the future training and educational
industrial marketing. The latter tends to have a smaller needs of British management (see, for example, [19]). If
number of large buyers. There is usually a close supplier- we take the term “customer” to denote the payer, then
MARKETING HIGHER EDUCATION: THE MBA EXPERIENCE 35

there were rather few, since the course was run mainly for by the company itself; it was thus called the British
managers from regionally based founding companies. Airways Open MBA. Essentially the course was
The students are sponsored by their firms, are regarded negotiated between top management at British Airways
as destined for senior positions and have an average age (the human resources director) and the director of the
of 35. However, the students are also customers in that Centre for Executive Development at Bath, and a
they have a say in whether or not they go on the course, significant fee was agreed. Thereafter responsibility for
and their experience affects the long-term university/ co-ordinating the development was devolved to less
company relationship. Founding companies can send up senior people in both organizations; on the Bath side, this
to three executives on each course, and so this can be consisted mainly of the joint directors of studies. The
described as a “consortium MBA”, although the spon- students put their names forward for selection but British
soring companies have changed somewhat over the years. Airways paid the fee; in effect there were two customer
types again.
The supplier-buyer relationship was close as the degree
was developed. Each of the founding companies was The design included core compulsory subjects, like the
allocated to an individual professor who nurtured the other MBAs, with the orientation of subjects being more
relationship. There is now a greater variety in the types of akin to the full-time MBA than the part-time variants; by
relationship between the founding companies and Bath request of British Airways there was little “customizing”.
staff. A distinctive feature of the design was the integrating
stream, running as a spine throughout the programme.
The Malaysian Executive MBA is also a part-time MBA.
The School of Management, in conjunction with the
Malaysian Institute of Management (MIM), started this
MBA in July 1986 following an active search for Discussion
appropriate MBA partners by the MIM. The course is So far in this article there has been an implicit
aimed at students who are well established in their assumption that a marketing orientation is appropriate in
managerial careers and seeking to develop them further. establishments of higher education. However, the concept
Many students are virtually financially self-supporting. of marketing planning is now well-established elsewhere
The course is 30 months long and is partly “customized” in the public sector in the UK; indeed, Cousins[21] shows
to the needs of the Malaysian participants. The average that a higher proportion of organizations in the public
age of the students is around 35 and all are middle or sector now produce written marketing plans than in the
senior managers. Teaching is undertaken both by Bath private sector. Many academics in educational
and Malaysia-based academics. Bath faculty teach establishments seem to feel uncomfortable with an
approximately one-third of the course in concentrated increasing marketing orientation, regarding marketing as
periods of residentials, of which there are three in too close to sordid commercialism, and expect students to
Malaysia and one on campus at Bath. Malaysian faculty compete for selection rather than institutions actively to
teach in Kuala Lumpur on designated Saturdays and market themselves to suitable customers.
Sundays.

A close supplier-customer relationship is more difficult to


establish in this type of degree because of the distances
involved and because there are in effect two types of Universities cannot assume
customer, viz. the MIM and the students; the latter are
seen only intermittently by Bath staff. The MIM pays their existence is guaranteed
Bath a fee that is not related to student numbers, and
undertakes most of the marketing decisions. The increase
in perpetuity
in student numbers and excellent ratings received (see
[20]) are due partly to the efforts of Bath and the MIM to But the reality is that universities in the UK are already
co-operate closely and partly, no doubt, to the early life having to compete for student numbers and hence for
cycle position of MBAs in Malaysia combined with the fees; the fees may not constitute the majority of the older
strong growth in the economy. universities’ income, but competition exists, and is
increasing. In the current economic climate universities
The other degree which involved elements of industrial cannot assume that their existence is guaranteed in
marketing was developed for British Airways, which had perpetuity.
embarked on an extensive programme of management
development. As part of that effort, the School of The case for a marketing orientation with MBAs is even
Management was selected to run an MBA for those clearer as the Higher Education Funding Councils do not
within the company who wanted to take such a course for provide financial support for such degrees, student fees
personal development, rather than for a cohort selected are high and, as mentioned in the introduction, there is a
36 INTERNATIONAL JOURNAL OF EDUCATIONAL MANAGEMENT 9,2

high level of competition. One example may suffice: most schools elsewhere suggest this type of approach is not
MBA courses require prospective students to take an unusual.
aptitude test known as GMAT, and to have the test
organizers send the results direct to the university. In Taking Assael’s buyer decision-making matrix[9], MBA
1991-92, 97.3 per cent of candidates for Bath’s MBA also choice by students would be categorized as one where
had their results sent to other universities, suggesting complex buying behaviour takes place. Because of the
that applicants perceived those institutions as being enormous risks faced by the student, educational
competitors. organizations probably need to give considerably more
thought to the ways in which risk can be reduced for the
If it is accepted that educational establishments should student and to aid the student’s decision-taking processes.
become involved in marketing, the question must be This would include fast, accurate and informative
asked, “How far do they really organize themselves to be feedback to enquiries, further use of interviews as a two-
customer-oriented, and how far do they understand the way process of information gathering and selection,
needs and wants of those customers?” This issue is perhaps a more proactive approach to promotion and
complicated by the fact that it is sometimes difficult to perhaps, too, greater use of alumni associations.
know who is really the customer. Even when it is clear Members of these associations could act as important
that business-to-business marketing is involved, it may opinion leaders and, since 89 per cent of students appear
be less clear who is the key decision taker in the client to seek some personal advice, this could be a crucial
organization. Where the responsibility for marketing lies element in successful marketing. It may be particularly
with academics rather than central administration or difficult to communicate with mature individuals who
other administrative staff employed specifically in a have left their universities many years previously. Given
marketing function, they do not necessarily have the the intangibility of the service offering, a well-produced
experience to be experts in marketing. videotape might help the prospective student to eliminate
some of the uncertainties. Moreover, since Beard[5] points
out that “progressing my career to a more senior level” is
The authors are arguing neither that academics should
a major student motive for wanting to study for an MBA,
lose sight of their professional attitudes and values, nor
perhaps universities need to furnish more evidence of
that they should forget that they may have more
career progress among their alumni.
constituencies than typically found in the private sector,
but instead that in today’s changing educational
environment a new balance must be found between
commercialism and professionalism, with the adoption of
a marketing orientation.
Members of these
Marketing strategy should form part of an overall
corporate strategy, yet, as Hardy et al.[22] point out, associations could act
strategy development appears to follow rather unusual
paths in the case of educational institutions. Decision- as opinion leaders
taking processes may be complicated by the organizational
structure, the various publics to whom educational
institutions have to address themselves, and perhaps It was argued earlier that in a large market, organizations
particularly by the values and culture of the organization, may need to segment the market into smaller
to which reference has already been made – academics do homogeneous groups of wants/needs. Generally speaking
not necessarily enjoy promoting their services. there are three different times at which students may
decide to do MBA degrees in the UK: before starting their
It could be argued that, when any new product offering is careers, when planning to move from junior to middle
being developed, a systematic procedure should be used management, or when aspiring to change from middle
just as it would be in the case of a profit-making management to senior positions. At Bath we have
enterprise; that there should be full environmental avoided the first MBA group entirely, although we do
scanning, a comprehensive market assessment, definition have strong undergraduate business degrees. Another
of internal resources, competitive analysis, segmentation/ segmentation decision means that we do not run
targeting/positioning leading to development of the full distance-learning programmes. The segments chosen
marketing mix, and finally implementation and obtaining should of course be consistent with the organization’s
feedback. The management of the new product offerings internal strengths, and with the product offerings being
at Bath has not been as systematic as this, and indeed the made. Tailor-made distance learning courses require a
development of the Malaysian MBA and the British scale of operation beyond the reach of many management
Airways MBA could both be described as opportunistic schools. It is inappropriate to recruit students
and reactive. Discussions with colleagues in business predominantly from the Third World, for example, if one
MARKETING HIGHER EDUCATION: THE MBA EXPERIENCE 37

is offering them only a diet of courses designed for post- and how far are they designed for the perceived
industrial countries. needs/wants of the students?” This takes us back to the
issue of user-specified versus supplier-specified services.
Syrett[23] suggests that several educational institutions Is there a danger that some institutions with a strong
on both sides of the Atlantic are currently facing an reputation may be tempted to adopt the attitude that
identity crisis as they consider their market positioning. students can be persuaded to want what is on offer?
Do they want to remain higher education establishments AACSB in the USA and AMBA in the UK provide some
offering an extensive range of undergraduate and quality reassurance through their accreditation schemes.
postgraduate courses, including MBAs, or become more But academics need to work harder to find the right
like private training consultancies, largely concerned
balance between user and supplier specification; they can
with short courses?
at least obtain feedback from current students (to check
Another aspect of positioning is price, i.e. fees charged. how well the course matches expectations) which can be
Fees for MBA courses are typically well above the norm used in course development.
for postgraduate taught courses. This is partly because
they are expensive to run and partly because they have
been expected to make a contribution to other activities Conclusion
within the providing institutions. At Bath, for example, Educational establishments have far to go in terms of
fees for the full-time MBA have been raised substantially sophisticated marketing, and particularly identifying
since 1990 and are now £8,000, regardless of nationality. and tailoring their offerings to actual market needs. One
We would probably have put up our fees earlier if we had of the challenges is to do this and then to communicate
been a conventional profit-making business, particularly to potential customers and, indeed, to industry
since there is a risk that low fees may denote low quality generally that they have succeeded. As far as
to some applicants. management courses are concerned this is not made
easier by the speed of change in management theories
and in the marketplace in general. However, unless
business schools succeed in improving their marketing,
they will stand accused of not practising what they
Closely linked to preach. This article has examined some of the issues to
positioning is the concept be addressed and ways in which marketing might be
improved in the light of theory and recent evidence,
of branding drawing particularly on the authors’ experience with
four different types of MBA course.

Closely linked to positioning is the concept of branding.


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John Nicholls is a Lecturer, John Harris, Eleanor Morgan and David Sims are Senior Lecturers, and Ken Clarke is a
Research Officer at the School of Management, University of Bath, Bath, UK.