MARKETING STRATEGY FOR

HAGADOL ENTERPRISES
By Michael Mwanandimai
Summary
The tertiary education industry in Zimbabwe is slightly competitive.10% of the local universities
and colleges account for 82% of the enrolments (this includes Zimbabweans who enrol in foreign
institutions). The socio-economic environment has not helped either, the depreciation of the local
currency and the hyperinflation are eroding disposable incomes. Foreign currency is scarce and
that poses a challenge for students who want to enrol outside Zimbabwe.

Looking at the current business model for Hagadol education, you will see several issues that need
to be resolved for example:

 Line extension problem. The education unit does not have a distinct brand name, but
borrows its name and shares it marketing platforms with other business units.

 No clear value proposition. The educational business unit does not point out how it will
create value for its customers and why customers should choose it over competitors (how
it differentiates itself)

 Lack of a digital marketing strategy. The digital marketing channels are all lacking the
three critical marketing messages/campaigns -awareness, informative, persuasive. To
generate sales, a customer must be moved down what we call an AIDA chain. (See the
diagram below). There seems to be no content or marketing campaigns being done though
the digital channels to address each of the stages
After analysing the competitive nature of the of the industry and the current products that the
company is offering, I believe the only way to grow revenues is through adopting two strategies

 Market penetration (targeting current markets with existing products) -Concentrate of

increasing awareness and being price competitive (compared with both local and South
African universities, where most of the students go. Sharda should be a better price
performing substitute)

 Diversification – Targeting new markets using new products. The educational business
unit right now has one major source of revenue, a very serious flaw. Hagadol should
consider integrating forward and getting accreditation with well know professional bodies
such as BCS, CIPD, CI, & ACCA.There is a global trend towards favouring professional
qualifications over university degrees. Given the current unemployment in Zimbabwe,
most students want a qualification that is globally recognised, and that is why we have
seen local universities like UZ, adopt professional qualifications such as ACCA.

The rest of this documents looks at the context of Hagadol (industry analysis), a description of the
choices available and an outline of what needs to be done /looked at. Going into the finer details
requires an in-depth knowledge of the company (I will need more informtion) and more time to do
research.
 INDUSTRY ANALYSIS
Threat of New Entrants

*Large Economies of scale

* Capital Intensive
*Strict rules and regulations which can be costly to
implement

HIGH BARRIERS TO ENTRY

Bargaining Power of
Suppliers Rivalry Among Bargaining Power of
Existing Competitors Customers
* Generic goods
* Low Switching costs *Moderate Industry * Many small buyers
*Diffused supplier concentration growth *Low Buyer switching costs
*Low Risk of forward integration *Low Exit barriers *Very little product differentiation
* High Fixed Costs *High price elasticity

LOW SUPPLIER HIGHLY

BARGAINING POWER COMPETETIVE LOWER CUSTOMER
BARGAINING POWER

Threat of Substitutes

*Better relative price-performance of substitutes

*Low switching costs

THREAT OF SUBSTITUTES IS HIGH

 Industry Rivalry

The Zimbabwean tertiary education industry includes approximately

• 20 degree-granting universities
• 13 polytechnic colleges
• 13 teachers’ colleges
• 43 vocational training centres
• 41 private colleges

Although tertiary education appears to be fragmented with over 130 competing entities, the
industry is concentrated. Over 82% percent, of the total annual enrolment of approximately 44 800
students, being enrolled in only 13 of these colleges or universities. The consequence of this
enrolment pattern is that 10 percent of the industry players have a market share of 82%.

As demand for higher education increases, state-supported universities are more likely going
to limit enrolments with the for-profit sector swiftly responding to the increased demand with an
equivalent increase in supply. The private and for-profit enterprises are much more flexible,
responsive to market conditions, and are keen to accept change. This is the opposite of the
traditional government supported universities, because of their governance structures.

Normally, organizations tertiary education institutions have a high fixed cost to total
operating cost ratio. This financial structure necessities operating at full capacity, as measured by
enrolment, to have a chance of enjoying economies of scale and scope. However, the for-profit
segment is an exception. Most of these organizations rent classroom space, do not provide
accommodation for students and have limited library resources, lowering their fixed costs.

Industry Rivalry Assessment

The tertiary education industry has a high fixed cost to total cost ratio and is highly
concentrated, increasing competitive rivalry.

Barriers to Entry

Government-backed universities and colleges are typically huge organizations with wide-
ranging administrative operations, extensive facilities and grounds, priceless brands and an
alumni base that can have a longstanding legacy. The financial resources required to generate and
maintain long-term assets, including grants, mean they enjoy large economies of scale,
which undoubtedly are challenging barriers to entry.

Another barrier to entry is intellectual property within most university systems. They protect
and monetize university research, which brings in additional cash, and enjoys the existing
economies of scale, economies of scope and departmental synergies.
 Another barrier to entry worth mentioning is the requirements and restrictions imposed by
accrediting associations. These organizations, while upholding curriculum standards, brand
image, and performance metrics, also cunningly protect the members with an “accredited by”
license.

Barriers to Entry Assessment

A high fixed cost structure, government regulation, huge economies of scale and scope and
limiting curriculum accrediting processes, all act as high barriers to entry and serve the existing
schools well by protecting their share of the market.

The threat of Product or Service Substitution

The variety of educational “products” is vast, and it continues to increase due to the advances
in information technology.

Switching costs affect product substitution. Transferring between universities or colleges is

relatively fluid. The tangible and intangible switching costs of moving from one college/business
school to another are low because due to the availability of similar curriculums.

Young adults are more likely to change compared to older adults. In the tertiary education
industry, younger adults have a higher tendency to substitute than older adults do

The threat of Product or Service Substitution Assessment

There are approximately 130 universities and colleges in Zimbabwe. That gives the market
variety and yet most students attend only 10 percent of the schools.

The price disparity is huge between the public, private and for-profit higher education
segments. For the private and for-profit sector prices are elastic. The overall assessment of the
threat to substitute is high and not beneficial to the industry incumbent.

The degree of Buyer Power

With roughly 44 800 students enrolling each year into tertiary education institutions
and without a specific market segment representing most of the market, buyers are fragmented and
dispersed spread across the market. This caps the power any one specific student may have when
negotiating tuition fees, admission requirements and other facilities.

The degree of Buyer Power Assessment

Buyers are dispersed across the market and hence these potential students have restricted
buying power on the tertiary education industry.

However, the availability of free and instantaneous information about the course and
curriculum descriptions, college facilities, and college rankings give potential students more power
of choice.
 The degree of Supplier Power Assessment
Universities and colleges offer large stable contracts to suppliers, making bids
very competitive. Most suppliers supply generic products and services and have low motivation
and capacity to integrate forward. Therefore, their ability to influence the industry is low.

An Overall Higher Education Industry Assessment

The overall assessment of the tertiary education industry for both the current players and
potential entrants is neutral. While the overall tertiary education industry analysis may seem vague
and does not of standout, most strategic planning experts argue that industries with a neutral
competitive assessment pose some of the greatest challenges to leaders and managers.
MARKETING STRATEGY

There are four generic portfolio management strategies that can be used to grow a business and
they depend on whether one is targeting existing or new markets and whether the company will
be marketing existing or new products.

Market penetration

If the company wishes to grow relative to competitors based on the products which it sells in
existing markets it can only do so by increased penetration, and hence by an increase in market
share. If the market is mature it follows that sales can only be gained at the expense of
incumbents, while if the market is growing the company must continuously acquire a larger share
of market growth than competitors. Growth will depend on PRICING and MARKETING.

Product development

It may be concluded that no further product penetration can be achieved, and it is necessary to
add characteristics and perhaps abandon some existing characteristics; it could also be due to the
product approaching the end of the product life cycle. The replacement can be an enhancement of
an existing product or a revised version with a different set of characteristics, but it is important
that it at least fulfils the requirements of the replaced product, and/or satisfies changing consumer
preferences. This type of growth involves the company in investment in product development
and a shift away from the set of products in which it has built up expertise producing efficiently
and marketing effectively.

Market development
The search for new markets for existing products can take several forms, such as finding markets
in new geographical locations and identifying unexploited segments or niches. This means that
new techniques need to be developed for selling products with known characteristics, and this
requires effective strategies for market entry. This, in turn, raises issues relating to the product
life cycle, as entry into a growth market requires a different approach to entry into a mature
market. But as with market penetration, the success of the growth strategy depends on PRICING
and MARKETING approaches.

Diversification

In this context, diversification has a meaning, in that the company enters new markets with a new
set of products. In this case, there is no direct experience of marketing strategy which can be
applied, while the company has no experience of production.
This is a risker strategy than the other 3 because the business is moving into new product-market
segments in which it has very little if any, experience

Adopting a diversification strategy necessitates having a clear idea about what to expect to gain
from the strategy and an objective appraisal of the risks. However, if the right balance between
risk and reward is struck, a diversification strategy can be highly rewarding.

STRATEGIC CHOICE

It will be difficult to adopt the product development strategy because right now the service we
are selling is not our (we are affiliates) hence we have little control over the service development
The market development strategy, in this case, would involve marketing in a different geographical
area (in this “new market “ would be defined in geographical terms). This is costly and poses
cultural, legal and regulatory obstacles.

That leaves two strategies

 Market Penetration
 Diversification (here “new market” will be denied as unexploited segments that prefer
substitute products)
MARKETING STRATEGY-MARKET PENETRATION

A market penetration strategy concentrates on PRICING & MARKETING Below is a list of

some of the tactics that can be adopted to boost revenues.

COMMUNICATION CUSTOMER

 Digital marketing  One stop package egg assists

 Informative marketing students get off campus
 Awareness campaigns accommodation
 Owned content creation
 Journals & traditional media
 Consider promotional activities

MARKETING
STRATEY

CONVINIENCE
COST
 Online registration
 Engage RBZ so students can get a
favorable exchange rate  Online payment platform
 Penetration Pricing  Faster turnaround times
 Redesign business processes & 
pass benefit to customers
 Adopt the EBS model (they
negotiate discounts for
developing countries)

MARKETING STRATEGY-DIVERSIFICATION

This strategy involves introducing new products and services to new markets and in this our case
we should consider forward integration. Rather than promoting one University, we can get
affiliations and accreditations from other Universities and professional programs boards such as
BCS, CIPD, CIM, ACCA, etc. Professional programs are becoming increasingly popular.

COMMUNICATION CUSTOMER
 Separate and distinct brand.  Other professional
 Professional content creation undergraduate programs
 Digital marketing BCS, CIPD, CIM, ACCA
 Clear value proposition  Forward Integration


MARKETING
STRATEY

COST CONVINIENCE
 Lean structure
 Target costing and  Web based learning
benchmark prices against  Personalized learning
those of local universities  Affiliate partners in other
 Price segmentation cities (Bulawayo)
 Production of unique
educational material
BUSINESS CANVAS
Key Partners
Who are our Key Partners?
 Sharda University (affiliation)
 Subsidiaries (Hagadol Online
Newsletter & Hagadol
Consultancy)
 Research Institutions
 Alumni
 Professional bodies
 MOOC’s
Key Activities
What Key Activities do our Value
Propositions require?
 Many executive & education
programs
 Professional qualifications
 Leadership articles
 Online management tools for
corporate learning
 Case studies
 Content generation and
monetization
Key Resources
What Key Resources do our Value
Propositions require?
 Prestige
 Brand
 History
 Notable people
 Former students
 National reference
Value Proposition
Which one of our customer’s
problems are we helping to solve?
 Undergraduate studies from
a globally recognized
university.
 MBA (An intensive program
leading to a recognized MBA
degree)
 Executive Education (custom
programs designed to help
senior executives expand
their global perspective)
 MOOC’s (online programs
designed to help you master
essential business concepts)
Customer Relationships Customer Segments
What type of relationship does each For whom are we creating value?
of our Customer Segments expect us
to establish and maintain with them?  Future executive leaders
 Undergraduate Students
 Personalized (face-to-face)  Business ecosystem
 On-demand  Enterprises
 Learn by Doing
 Membership Perks
 Recommendation
Channels
Through which Channels do our
Customer Segments want to be
reached?
 Campus Faculty
 Websites
 Books
 Magazines
 Social media Blog
 Social networks
 Events and seminar

Cost Structure Revenue Stream

What are the most important costs inherent in our business model? For what value are our customers willing to pay?
How much does each Revenue Stream contribute to overall revenues?
 High salaries for lecturers
 Marketing & advertisement  Course fee
 Facilities  Registration tee
 Content generation & Digital distribution  Arrangement fee
 Websites  Hagadol Online Newsletter (subscription)
 IT maintenance  Consulting services
 Trainings  MOOC’s