• Consumer Behavior and its Impact on the Non-Degree Market

    by Joe Morgan, Vice President, University Partnership Development, Pearson

    A young person listening from laptop and taking notes in paper

    #2 in a series

    In my first post The student as consumer, and the burden of choice, I suggested that when learners face a high stakes purchase (the full degree) and information overload, they often narrow their decision to either known institutions or those that rank on Page 1 of search results. The endless aisle sounds great until you have to walk down it. The learners’ simplification strategy and conscious or unconscious bias excludes lesser-known institutions from the consideration set, even if they may be the “best fit.''

    In this post, I examine consumer behavior and its impact on the non-degree market. Those who have worked in direct-to-consumer businesses (either digital or brick-and-mortar) will recognize the language of consumer behavior – trial, offer, purchase, add-on purchase. For learners as consumers, this language is profoundly relevant, and it is vital to the institution’s strategy for non-degree program offerings.

    How consumer-learners reduce perceived risk

    In their study, Behavioral Changes in the Trial of New Products, Shoemaker and Shoaf found that consumers respond to the perceived risk of trying a new product by reducing the consequences: they buy a smaller quantity (trial). The growth of the non-degree market (certificates) is that very behavior in action.

    For the new traditional learner – older, more diverse, navigating career and family obligations, concerned with increasing debt, and having spent years away from any formal academic setting – entering a full degree program raises the stakes. Their anxiety is palpable. The resulting behavior is predictable.

    If a learner is uncertain about moving forward, or unsure they can succeed, they update their beliefs through a consumption experience (the trial). What better consumption experience than to begin with a “smaller-quantity,” affordable, low-stakes certificate program that provides an immediate, career-enhancing credential and a powerful signaling opportunity to the learner’s social and professional networks?

    Non-degree programs and a wider view of student acquisition cost

    I hear many question the economic value of certificates to the institution, relative to the cost of acquiring each student. In isolation and barring substantial scale, one would be hard pressed to show meaningful economic return on a modestly priced certificate. But that misses the bigger point. If viewed as a valuable student acquisition strategy, the university generates exposure, awareness, and trial by delivering short form, employment-relevant content.

    With an appropriately constructed “offer” (freemium, credit bearing, pathway to degree admissions, university credential, digital badges) for these certificates, the institution creates affinity. Upon completion, and with a student’s newfound confidence, some of those learners will enter a degree program at that same institution (the “purchase”). When reskilling and upskilling becomes necessary, the student returns to what is now familiar (the add-on purchase). Coursera calls this “the flywheel effect”:

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