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7176 MA (Marketing) Email to Tony

09/07/99

MA (Marketing Debate)

This comprehensive set of comments comes from Tony Stapleton. A number of you (on his own circulation list) will have already seen these. But, even then, I have taken the opportunity to add my own comments (in red), rather than circulating these later.

David Mercer

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Firstly, may I say that although the main debate has now switched to B82X and the tacit suggestion that we largely abandon our current proposal for the MA (Marketing) itself is rather late, coming after we have - at MBA Board and Academic Marketing Group level - formally agreed it both in outline (a number of times, and after the OUBS has been exploring for two or more years) and even in most of its detail, it is surely never too late to reconsider this; and Tony's comments do pose some interesting questions which may help us to refine our blueprint.

From: Tony Stapleton [t.stapleton@open.ac.uk]

Sent: 09 July 1999 11:49

To:   D.S.Mercer; L.DeChernatony; Judith Margolis; h.b.kassier

Cc:   M.E.Vernon; Richard Wheatcroft; k.pendlebury

Subject:    MA Marketing

I would like to make some comments/suggestions following our discussion on Wednesday:

1.  Judith repeatedly made the point that students with the CIM PostGraduate Diploma will have already studied marketing topics at a level equal to or higher than that proposed in our B825/B82X. I went through the CIM syllabus and asessment materials with Judith, and can confirm that it is highly unlikely that we can offer additional material on standard marketing topics that would add to the knowledge base of CIM diplomates.

I suspect that this must indeed be true. Hence the main reason I yesterday felt Tony's suggestion that B82X should explore marketing topics in greater depth might not meet students needs - and indeed this is, I presume, why B825 has moved away from this approach, which was originally proposed. My apologies to Tony, incidentally, since I have just sent out an email asking - amongst other things - that he lead the B82X debate on the 'marketing in-depth' model, since I thought this was the one he was suggesting at yesterday's meeting.  Again my apologies that I clearly misunderstood the point that he was making, in this context, at that meeting. No doubt everyone else followed his line of argument, but to clarify the situation could he, as part of this B82X debate, explain exactly what was his view.

2. I also believe that the concept of a Masters is better suited to students who have come through an academic route than through a professional route. It is hard to see the incentive for CIM diplomates to move on to an MA.

I am waiting to see the material David Sagar (of CIM) has provided to Colin, but I believe that in fact most of their PGDip students do come through a graduate entry route. This is, in any case, our implicit assumption in basing our approach on the experience we have gained from our own Certificate and Diploma.

3. All my experience of professional bodies indicates that students who have reached the top of the professional qualification ladder are more interested in broadening than deepening their professional knowledge. I do not see any reason to believe that CIM diplomates will be any different.

Again, I must agree. I am sure that is why almost everyone (from CIM to MBA Board) has suggested that (apart from B82X, which is needed to differentiate the MA) we should use MBA material which clearly broadens their horizons. This is, incidentally, not something other institutions do to any great extent - and should be seen as something of a USP! It was also why I yesterday suggested that the framework for B82X might be best derived from the 'Long-Range Marketing' approach we have been working to with B885, even as part of the MBA. This, despite the title, clearly takes marketing students out of their previous marketing topics and into long-range planning.

4. Then there is the question of value. Students who have gone the full CIM route (Certificate, Advanced Cert and PG Diploma) will have taken three years and will have paid about £1,000. They are not going to see a two-year Masters for £6,000 as unbeatable value!

On the other hand, it compares well with the £8,500 they would otherwise have to pay following the MBA route. But it does suggest that we might consider pricing B82X (which is a low cost elective) at £500; saving £1,000 overall, without undermining the MBA pricing, and reducing the MA overall to only £5,000. We always face lower price competitors and still gain 25% of the MBA market - perhaps because we offer a better quality and more accessible product - so there is no inevitable reason why we can't do this again here. But one of the attractions is precisely that we can explore the 'named masters' route, which the OU (and OUBS) is so keen to try, with the minimum of risk. Even if we do fail, we won't lose a great deal - in terms of money or reputation - and the OU will have learned a valuable lesson.

I therefore feel that we need to re-think the positioning of the MA Marketing. The fact that CIM is supportive of our initiative is not a sufficient justification for going ahead - they are essentially free riders.

Whilst it is fair to say that CIM have as little as ourselves to lose, it is also fair to say that they are very enthusiastic indeed about the project - and will probably put their own reputation on the line for it.

I still feel that some research on market potential would be of value, but I recognise that the meeting did not agree with this. We are therefore dependent on trying to define a product that we think will create a market for itself based on our intuition and market knowledge.

The MA is indeed intended to address new market, albeit an as yet relatively unknown one for us; whilst many other institutions have successfully offered such programmes we would of course be offering it - as usual - on a much larger scale. One nice thing about the MA, however, is that there is absolutely no danger of cannibalism of the MBA - indeed no possible threat to our cash cow,.

I would like to suggest the following:

5. We have three potential market segments:  CIM Diplomates; business studies graduates who wish to move on to a Masters; and managers who want a more focused qualification than the MBA.

Our challenge is to define a programme profile that can meet these segments, whose needs overlap but are not identical.

I agree that it is our ultimate aim to address these wider audiences; perhaps within a couple of year of launch. Indeed, Judith Margolis' suggestion yesterday that we version the new B800 replacement as our own entry route into this programme (which would still earn these MA graduates membership of CIM, but not chartered status) would provide a much easier route than our previous idea of trying to offer courses meeting the CIM sylluses. At the moment, however, we want to keep things as simple as possible - with no hostages to fortune - which is why the PGDip is initially offered as the only entry point.

6. The programme will need to offer a broadening rather than a deepening of market knowledge, so our second challenge is how to do this while still differentiating it from the MBA.

I thought that it was clear that this is exactly as we (and the MBA Board, and indeed CIM) have tacitly defined this as an objective. Clearly, we need to check the draft blueprint (which I attach as an appendix for the benefit of those who haven't yet seen it) to make certain we explain this correctly.

7. I am sure that we will all have our own ideas on how we can achieve these objectives. For what they are worth, my own views are that we could offer a specialised but still broad programme differentiated from the MBA through some or all of the following:

(i)            Syllabus. B825 is already a broadish course. We could compile a profile that would be relevant and interesting to people in marketing by offering in addition to B825 courses in, for example, creative thinking, psychology etc. We could also include a project. If we EXCLUDED B820, this would clearly differentiate the MA from the MBA.

A key to our minimal risk approach is that we have tried to avoid the costs associated with writing a completely new programme; since these could literally run into the millions - as they did with the original MBA. In any case, nobody (not even CIM) has yet asked for this; and, in any case, the range of MBA electives already offers some elements of this (creative thinking, for example). The B820 argument was aired at length at MBA Board, which came to the reasoned conclusion that, while most of our propective MAs would not justify inclusion of this course, the overlap with marketing strategy (and the closeness of marketing staff to the corporate planning functions) meant that B820 was an excellent course to meet the needs of marketing students (whilst broadening their outlook as Tony would wish).

(ii)        Entry criteria. We could restrict entry, for example, to students with CIM Dip, DMS or BA Business Studies degree.

As indeed we are: to only those with PGDip. The entry point would be restricted even when we broaden it.

(iii)    Price. We should consider pricing at a significantly lower than the MBA, to provide an incentive, say £4K for 120 points c/f the MBA £9K for 180 points. In order to preserve our margins we will therefore have to find a way of saving presentation costs: using lower-cost courses from other faculties or eliminating/combining  residential schools would be possible options.

I think this is possibly the most interesting point, and one that OUBS should consider - though - in view of its potential profitability and low risk and no cannibalisation of the MBA, at almost any level - the programme should not stand or fall on these decisions.

Any comments?

Tony

I would also ask for comments, on what is a stimulating challenge to some of the ideas we may have taken for granted.

David Mercer

APPENDIX - MA (MARKETING)

BLUEPRINT

(interim revised draft version 8/7/99)

[Note: in the final version the provisional data highlighted in the red will be validated (and or expanded upon) with June Payne/Michelle Sutton, those in blue with Colin Gray/Karen Pendlebury, those in green with Ken Giles, and those in purple with Martin Sullivan/Wayne Oakes]

INTRODUCTION

This blueprint sets out the processes leading to the establishment of a Masters Degree in Marketing. This positively supports the University's decision to develop a range of named degrees in specialist subjects; where one of the largest, and most accessible, groups of those requiring postgraduate qualifications is that made up of marketers. In particular, the chartered institute in this field - CIM - graduates around 3,000 Post-Graduate Diplomates (PGDip) each year; with up to 60,000 in its pool of existing graduates. As a result, in addition to a viable academic case, the financial case is clear cut; not least because the requirements closely parallel parts of the existing MBA programme, and investment costs are correspondingly reduced.

The key design feature is that the programme will be free-standing, dedicated to students of marketing; with no transfers - in either direction - possible between it and the existing MBA (apart from those already allowed). The first stage, equivalent to the OUBS Diploma in the MBA, accordingly will take the form of the CIM PGDip qualification (or equivalent). Students will, initially at least, take this at other institutions - where there are up to 300 existing providers of this qualification.

The second stage of this Masters programme will consist of three compulsory courses, two existing ones (B820 and B825) along with one new course, B82X which will be specific to the programme, together with one elective (chosen from the range of existing MBA electives).

As always, however, the core objective will be to provide a high quality academic offering; which should demonstrably be the best - setting the standard, especially overseas. It will also be the largest in the field, where the few serious competitive (face-to-face) offerings are available to only limited numbers of students. The programme is to be launched, and the first courses (from existing MBA offerings) presented, at the end of 2000 - and the only new course will come on stream in 2002 - with the first MAs graduating in that year.

RATIONALE & AIMS

To expand the range of Masters qualifications offered by the addition of the first such OUBS named degree.

Rationale

In recent years, a growing number of business schools have been extending their masters offerings into the area of specialist (named) degrees. These developments have been in response to the demand for more functionally oriented subjects from a pool of potential students; of which that in marketing is one of the largest. The most popular starting point for these marketing masters, however, is the CIM PGDip (or equivalent), since the  Chartered Institute of Marketing is the lead body in the field; though these institutions typically also provide their own entry level courses.

The CIM can have no direct role in running such a masters programme - where this is solely the prerogative of the OUBS. In addition, as the lead body, it must adopt a balanced position with regard to all providers. Even so, it has formally requested that we enter the market, to set the standards by which other face-to-face providers (around the world) are judged. It has also indicated that it will jointly promote our global offering.

The Masters in Marketing, which - in view of its audience of marketing practitioners - will be a practically oriented MA (rather than an MSc), should therefore be seen as a logical follow-on to these external CIM PGDiploma courses; at least initially, before we can develop our own suite of entry level courses (which match CIM syllabuses). With an existing pool of up to 60,000 CIM PGDip graduates, and more than 3,000 more graduating each year, a Masters in Marketing represents one of the largest volume programmes; where OU distance learning may be especially viable.

Financial Case

As can be seen from the rule of thumb figures below, even if we assume that only 10% of those graduating each year join our masters programme, the benefits could be substantial:

The investment costs would be significantly lower than normal - and, following the model of 'low-resource electives', even then would not include any - potentially expensive - additional audio-visual elements. In this way, we would expect the total investment to be kept below £100,000.

Indeed, the key to managing any risk involved is that the programme will largely use existing courses, and even the one 'new' course will be largely built from existing material. As a result, and as can be seen from the figures above, even at the level of 50 students per annum - a level typically projected for those larger face-to-face courses already running at other institutions which OUBS staff examine or have validated - the programme would make a reasonable margin. Indeed, in theory only a total of 35 students (over the initial five year life of the programme) would be needed for us to break-even. If, instead, we were able to recruit similar numbers to those we would expect from our own Diploma, the School (and the University) could receive net additional income of more than £1 million per annum - with limited risk, due to the benefits of economies of scale which would result from running it in parallel with the MBA. Indeed, as suggested above, we plan to keep investment costs to below £100,000; whilst pioneering new approaches to modular assembly. In this context, the only potential limitation might be that of recruiting the 200 students a year needed to allow national coverage of tutor groups for the dedicated new B82X course; and even that limit might be unnecessary where global presentation could be tutored via the Internet.

Assuming the median figure of 300 students per year joining the programme, with an initial lower level of recent PGDip graduates being balanced by greater numbers emerging from the historical pool of graduates, the cashflow model could be:

If these results were achieved, therefore, after a small outflow in year 1 the programme would become a substantial net earner.

Programme Aims

In line with our general objectives, we would aim to provide courses of the highest academic quality for marketing managers and professionals; through the provision of excellent learning materials with comprehensive support through local tutors - based on a workplace centred philosophy that enables concepts and ideas to be applied directly to their job.

More directly, we would aim to address the strategic skills and knowledge demanded of senior managers and professionals in the field of marketing. Due to the considerable overlap between these and those demanded of the corporate strategy elements delivered by the MBA, there will be significant overlap between the two programmes - with students' initial levels of knowledge being comparable. The main difference will be found in the workplace application of these skills. In addition, the narrower focus is reflected in the reduced number of electives - only one elective being offered in stage 2 - with three courses being compulsory.

As secondary objectives, the programme would be used to enhance OUBS coverage of the marketplace; and would be used to test the viability of using this (MA) model in other discipline areas.

MARKET PLACE & STUDENT CHARACTERISTICS

Market Place

Due to the specific nature of the entry to it, with the first stage comprising the CIM PGDip, the market for it is tightly defined. On the other hand, the CIM awards this - PGDip - qualification to more than 3,000 students each year. In addition, there are in excess of 30,000 CIM members who already hold this qualification; along with another 30,000 lapsed members who also hold it. Since the structures are comparable, it is reasonable to assume that the rate of 'progression' of this community, from PGDip to MA (Marketing), might also be similar; and a 40% conversion rate of the new diplomates - with no penetration of existing diplomates - would by itself generate around 1,200 entrants to the market annually. Despite developments in other leading business schools, this market is as yet poorly provide for - with face-to-face courses teaching cohorts of only 20-30 students. Accordingly, it is reasonable to assume that OUBS should, once more, gain at least a 25% share - giving 300 students per annum, more than covering the minimum 200 a year needed to justify national coverage of dedicated tutor groups. This is again with no penetration of the pool of previous graduates. If that were taken into account the total could be an order of magnitude larger.

The figures could also be much higher - possibly doubled again - if we allow for the global expansion, planned by CIM to match the coverage already achieved by the UK accounting bodies.

If we were ultimately able to also resource development of suitable CD level programmes, comparable with our new investment in comparable accounting courses, the overall potential could be much larger. Thus, the key finding, by Butler et al of McKinsey (McKinsey Quarterly 1997 No. 1), is that the share of 'interactive activities' (communication, data gathering & collaborative problem solving - all of which are at the heart of marketing activities) now accounts for half of all activities taking place in developed economies.

Student Characteristics

In many respects the profile of students entering the programme may be very similar to that of our own diplomates entering stage 2 of the MBA. In particular, the proportion of those already holding degrees would be high; not least as the CIM PGDip qualification is clearly seen as post-graduate - which is taken as a professional qualification by graduates entering the profession. The major difference would be their experience of distance learning, and this would be allowed for by the introductory induction package (coupled to B820).

The other key difference is that these students are clearly embedded in marketing operations; where - at least in theory - our MBA students are 'general' managers. This means, therefore, that we will have a cohort of students with more clearly defined needs; albeit that they too will be focused on strategic considerations.

STRUCTURE

Based on our external discussions with CIM, along with our internal ones with MBA Board and the Academic Marketing Group, the various elements of the three credit (180 point) MA (Marketing) will be:

STAGE 1 (60 points)

This would be by the CIM PGDiploma. Initially, this entry qualification would be exclusively in the form of CIM PGDip qualifications (or equivalent) provided by other institutions. Depending upon other negotiations taking place with the CIM, this could eventually also be provided by our own equivalents.

STAGE 2 (120 points)

The core position is that CIM have stated that they will support a programme built from the existing MBA courses. To meet possible AMBA requirements, however, the MBA Board wish to offer a clearly differentiated path (with the CIM PGDip as the first stage and three compulsory courses in the second stage) and at least one different, dedicated course in the second stage (B82X).

Accordingly, the second stage would take the form of four 30 point courses, three compulsory and one elective, as follows:

* available in 2001 ** available in 2002

As, based on our previous experience with direct entrants into Stage 2, at least some of these students - with no prior experience of distance learning - might be likely to experience some problems entering directly into B820, a short - 1 month - induction package would also be provided ahead of this. This would be based on existing CD/MBA packs, supported by day-schools and tutorials. In addition, the MA/B820 tutors would also positively counsel students throughout the course - if necessary with extra tutorials.