America's high school seniors are staking out their mailboxes this month, hoping to find a letter from the university or college of their choice that has the magic words, "Congratulations! You've been accepted." As young adults weigh their college choices, parents contemplate their financing options. Paying for college is no small financial feat these days, with the average cost of a four-year private college or university exceeding $100K for tuition, room and board alone—never mind the other thousands for a new computer, room décor, clothing, entertainment, and travel experiences. Like many parents at this time of year, we wondered what the relationship is between quality and the price of a private university or college, and decided to take a closer look.

Using U.S. News & World Reports annual college ranking as our data source, we compared the total costs—including tuition, fees, and room and board—and the ranking of schools included in the magazine's report for the top tiers of schools. U.S. News evaluates universities and college in terms of different criteria reflective of overall quality—peer assessment, faculty resources, student to teacher ratio, selectivity, SAT/ACT scores, percent of freshman in the top 10% of their high school class, and acceptance rate—and, based on scores on these criteria, ranks and divides schools into different tiers.

Now, in virtually every product category, there is a clear relationship between quality and price—the higher the quality, the higher the price. In the automotive category, for example, super premium brands such as BMW and Mercedes are priced as much as five times higher than more "economy" brands such as Hyundai and Kia. High-end retailers like Saks and Neiman Marcus can command higher prices because they offer products of higher quality along with greater service compared to a mid-tier brand such as Macy's, and certainly more than discount brands such as a Wal-mart or Target. Mobil 1 is the preeminent, highest quality, best performing engine lubricant with a price four times higher than conventional motor oils.

But when it comes to private universities and colleges, it's much more difficult to say you get what you pay for. Though there are major differences in terms of the quality of professors, students, and facilities at schools in the top two tiers, tuition prices are, for all practical purposes, about the same.

If we examine leading "brands" in the top two tiers as we did in the tables below, we just don't see the same correlation between quality and price that we see in other product categories. This can't be an accident! It's as if all schools are engaged in pricing collusion.

What's even more paradoxical, is that the premier college "brands" do most of the discounting—in other words they offer some of the best values in the category! If a family's income is below $30K, for example, a top school will discount the costs considerably to admitted students, offering an attractive financial package of scholarships, grants, loans, and work-study options to motivate students to accept. The substantial amount of the discount that top brands offer means there is, in fact, an inverse relationship between quality and price. You can get the best for less.

*Based on US News & World Report Annual Ranking

**Based on US News & World Report Annual Ranking of Best Values

As the Wall Street Journal reported recently, "among the potential casualties of the conflict with Iraq are marketing strategies." Consumer confidence, already at low levels thanks to a sluggish economy, may fall even further the longer the war continues. As confidence goes, so goes spending. "War fears and….uncertainty about the economy are impacting people's spending patterns," reported Jon Swallen, director of media knowledge at Universal McCann, "Not only are they cutting back on big-ticket purchases, they're also spending less on inexpensive entertainment." In response, marketers may just decide to put campaigns and programs on hold, opting for short-term and tactical maneuvers to generate sales.

With current events keeping many marketing—and business decisions in general—in a holding pattern, we talked with several marketing experts about what marketers could and should be doing now to keep the practice and their businesses moving forward, even in the face of uncertainty. We started with Kevin Clancy, chairman and CEO of Copernicus, to get his thoughts. Here's what he had to say:

Copernicus Mzine: No one would argue that these are tough times for businesses—between the economy, job cuts, terrorist threats, and now war in Iraq. But do you think companies should put plans for launching new campaigns, products, or services on hold?

Kevin Clancy: Definitely not. In many respects, this is a good time. Since competitive spending is down, any marketing investment will enjoy a higher share-of-voice than the same dollars a year from now. While most other marketers are holding back, less risk-averse managers can launch a preemptive strike.

Copernicus Mzine: Many firms stopped collecting data from consumers and business-to-business customers immediately following the events of September 11, out of a combination of respect, sensitivity, and concerns that the data collected would be skewed. Should companies be concerned about the same issue now with a war raging? Or should they move ahead with their research plans?

Kevin Clancy: September 11th was a much more pivotal and personal event in the minds of most Americans than Iraq II. Hey, right or wrong, two-thirds of Americans approve of the President's strategy to disarm Saddam Hussein. Although it may be more difficult to collect data today because so many people are glued to their seats watching the war unfold on television, I'd be hard pressed to offer compelling reasons why any data that is collected would be skewed.

Copernicus Mzine: If companies are toning down or putting their customer-facing plans on hold, is there anything at least internally they can be doing in the meantime to make their marketing organization smarter and stronger?

Kevin Clancy: One thing that I strongly recommend is taking a close look at old strategic and marketing plans and both primary and secondary research studies that have been filed away, gathering dust for months or years. We're often dumbfounded when, at the start of a strategic engagement, we review stuff the client has available and are surprised by how rich it is. In one case a major hotel chain hired us to do a very large strategy study and, in our digging around their existing information, unearthed a similar project the company had done with a major consulting firm only two years earlier. The problem was that the study was never implemented and, as a result of managerial rotation, no senior person charged with hiring us knew of the study's existence until we did our excavation.

Copernicus Mzine: If you had the ear of every CEO in the world for five minutes, what would you say to them about marketing in these tough and uncertain times?

Kevin Clancy: I'd tell them to stop wasting scarce resources on marketing and advertising programs that don't work nearly as well as they could or should. Stop relying on (bad) intuition to launch embarrassing ad campaigns, unsuccessful new products, services, idiotic pricing strategies, etc., which all yield a negative ROI. Stop repeating the same mistakes over and over again!

For heaven's sake get it right the first time. Invest the time, energy and money to blend the best creative and experienced brainpower with rigorous analysis of unimpeachable data to create and implement truly transformational strategies; strategies which change the trajectory of brands, companies, and sometimes entire industries.

Kevin Clancy is the co-author of Counterintuitive Marketing: Achieve Great Results Using Uncommon Sense, recently named a finalist for the Berry-AMA Book Prize for top book in marketing by the American Marketing Association Foundation. You can reach him with questions and comments at kclancy@copernicusmarketing.com.

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Just two years ago, we opened the virtual doors of the Counterintuitive Marketing Hall of Fame and Shame as a tribute to the marketing blockbusters and disasters of the recent past and present. We've examined nominations from readers, industry reports, and the business press, looking for shining examples of marketing's good and bad to add to the ranks of members once again.

This year's Famers have achieved great marketing success adhering to marketing fundamentals such as targeting and positioning, and obsessively implementing programs. Shamers, on the other hand, made strange marketing decisions which undercut their brands.

Without further ado, we proudly present the 2003 inductees:

Thanks to everyone who participated in this year's nomination process. For more on our inductees, please visit www.counterintuitivemarketing.com/hall.html, and check out our Hall of Famer and Shamer of the month picks at www.counterintuitivemarketing.com/hallofthemonth.html.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at info@copernicusmarketing.com

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From his apprehensions about taking the CEO's job in the first place to the synopsis of the lessons he learned during the change process at IBM, Lou Gerstner's Who Says Elephants Can't Dance is a very good read. IBM's downward spiral took place so quickly, there were very few people who thought anyone could turn the company around—let alone build it back in record time into the powerhouse it is today. Gerstner's insider's look at how the turnaround transpired offers some solid insights into the power of leadership and long-term strategic thinking.

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The American Marketing Association (AMA) will hold its 2nd Annual Strategic Marketing Conference: Meeting Tomorrow's Challenges Today, on May 19-21, 2003, at the Park Plaza in Boston, Massachusetts. We'd like to offer Mzine readers a special discount off the admission price: register three colleagues and get the fourth registration free.

The conference boasts a dynamic set of speakers—senior marketers from leading companies, authors, academics, and even a few consultants and visionaries, as well as our very own Kevin Clancy—who will present strategies and tools to meet the business challenges of today and tomorrow. Topics will include marketing innovation, customer equity, value pricing, trust-based marketing, and contingency marketing for the future. Most importantly, there will be perspectives, guidelines, and ideas on implementation for each of these topics.

To take advantage of this special offer, print and complete the registration form provided online by visiting www.marketingpower.com/strategy and fax or mail all four registrations to:

Strategic Conference Incentive Offer
American Marketing Association
Professional Development Promotion
311 S. Wacker Drive, Suite 5800
Chicago, IL 60606
Fax: 312.922.3649
Attention: Nicole Morris

The AMA will contact you to confirm receipt of registration. This offer is only valid through May 2, 2003. Full conference information is available at www.marketingpower.com/strategy or by calling 800.AMA.1150.

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