The K-12 education landscape has changed dramatically over the past four years. According to the latest survey from National School Choice Week, 72% of US parents considered new schools for their children in 2023, compared to 52% in 2022.
As demand for school choice broadens, the total student population across the country is decreasing. By 2031, enrollment in K-12 public schools is projected to decline by 5.5%. Parents are quickly becoming more discerning consumers of education, and in a contracting market, this means competition among schools will only increase for years to come.
Given these facts, the decision to open a new school or expand a school network should not be taken lightly.
Frequently, school founders are compelled by a moral imperative to address a perceived failure, shortcoming, or gap in the educational market. They are guided by heartfelt conviction and a passion to improve the lives of students, families, and their communities. Individuals with such entrepreneurial spirit do not build new schools without a strong underlying “why.”
The goal of a rigorous market and competitive analysis is to thoroughly test that founder’s “why” against external market realities. Such an analysis must answer two critical questions: (1) Is it possible to launch a new school of choice for the families we envision serving? (2) How can we advance a winning proposition?
These questions can be answered by gathering quantitative and qualitative data, then applying those findings to guide school planning and startup strategies. Without a rigorous litmus test, the most heartfelt conviction in the world may not be enough to get a successful school launched.
Market & Competitive Analysis
A robust market analysis provides essential information on the demographic, socioeconomic, and cultural factors that influence how and why parents choose schools. Historical patterns and trends contribute to building a high-resolution image of family preferences and demands. This image does not merely offer a lens into what families prioritize when choosing schools: it confirms whether a new school’s vision and mission would meet market needs and demands.
In addition to a clear understanding of the target population, new schools must also be equipped with an analysis of incumbent and anticipated competition. Examining competitors’ performance outcomes, enrollment trends, and program distinctives will illustrate how competitors position their schools to appeal to families. This research can reveal gaps in local educational offerings and demonstrate how challenging it might be to carve out a durable competitive advantage.
In answering the two critical questions, a market and competitive analysis helps stakeholders develop essential strategic resources and make key decisions.
Is it possible?
- Financial planning
- Enrollment growth projections
- Facilities access and affordability
- Market opportunity and likely demands
- Program development priorities
- Risk assessment and mitigation
How to win.
- Customer value proposition
- Key competitive differentiators
- Marketing channels
- Student recruitment tactics
- Coalition-building opportunities
- Program distinctives
Conducting a Robust Market Analysis
In addition to the decennial census, the U.S. Census Bureau also collects interim surveys. Each year, about 3.5 million addresses are selected for the American Community Survey (ACS) to compose a representative sample of the population and confirm community trends across the country.
The ACS releases two types of estimate each year:
- 1-Year Estimates: These estimates, based on the previous year’s data, cover geographic areas with populations of 65,000 or more. They offer the most current insights but have a smaller sample size, which can result in higher margins of error.
- 5-Year Estimates: These estimates are based on data collected over the previous five years. They cover all geographic areas regardless of population size and offer more detailed data. Although the data does not provide the most current year-to-year changes, it is more accurate with smaller margins of error due to the multi-year sample size.
The American Community Survey data is the best public source for key demographic and socioeconomic trends likely to influence school growth. Data points can be organized across geographic areas ranging from state, county, or city level all the way to individual census tracts. The Census Bureau website offers maps for select geographic areas and data points to visualize comparisons.
Key data points available:
- Total population
- School age population
- Grade level enrollment
- Number of households with children
- Education attainment
- Median mortgage values
- Commuting habits
- Median population age
- Racial demography
- Public versus private school enrollment
- Number of families with children
- Median income for household and family
- Owner-occupied housing
For schools seeking to increase enrollment or open a new location within the same market, plotting the residential addresses of current and former students will provide a definitive visualization of trends throughout the school’s service area. Examining internal enrollment trends yields clarity on how closely the school’s lived experience corresponds with what is happening in the surrounding service area.
Examining data points from 2020 to the most current ACS 5-Year Estimates will provide school leaders and founding groups with quantifiable market trends to address the following questions:
- Did the school age population grow or decline and in what areas?
- Where or what is the potential service area around the school?
- Are there enough students for the school’s enrollment to reach financial sustainability?
- Does the model and educational experience meet the target population’s needs and preferences?
- Does the population have the financial wherewithal to enroll?
- How is enrollment likely to affect the school’s financial projections?
- Will the facility have sufficient space at rates the school can afford?
- Are housing markets making the service area desirable for families with school age children?
- Does the market offer desirable and affordable housing for faculty and their families?
- Is transportation to and from the campus likely to be a barrier to entry?
A quality market analysis equips leadership to make informed decisions on growth feasibility and strategy irrespective of the stage of school development—planning, launch, early stage, expansion, or static state.
Conducting an Effective Competitive Analysis
Incumbent institutions normally have key advantages over new market entrants, including brand recognition, strong reputation, loyal patrons, and positive word of mouth. New entrants must overcome these advantages by identifying gaps in competitors’ models, curricula, program offerings, and performance outcomes. Through targeted research of the existing local schools, new schools can reduce head-to-head competition, target a specific segment of the market, and build strong brand recognition and loyalty.
The best resource for building an actionable competitive analysis is often the state education agency. This could be a statewide board or administrative department of education. Almost all states gather enrollment, academic, financial, and demographic data to inform a system of school accountability—from all public, and possibly many private, schools.
Competitive Data Points of Interest:
- Year-to-year enrollment
- Student population demographics
- Per-pupil funding
- School model/designation
- Graduation/matriculation rates
- Overall state rating
- State testing outcomes
These data points provide key insight into who competitors serve, how they deliver their education, and how well they are performing.
Rigorous competitive research requires cross-referencing with additional sources to identify institutions within the target service area and confirm the data points identified above. Examples include Niche.com, PrivateSchoolReview.com, GreatSchools.com, school district websites, and individual school research.
If the scope of the surrounding service area permits, diving deeper into each competitor institution can yield a clearer understanding of how similar schools are positioning themselves within the market and what aspects of each school attract parents. Such research reveals the distinctives each school is likely marketing and what family segments they are targeting.
Next Level Insights for Competitive Analysis
Curriculum/School Model:
|
Institutional and Program Differentiators:
|
With a clear line of sight on the marketable distinctives of competitors, new school entrants can identify gaps in the competitor offerings or areas where the proposed school can capitalize on unmet demands to provide sought-after services. Again, the goal is to minimize head-to-head competition, which favors incumbent institutions.
Equipped with a comprehensive understanding of the competition, leaders of new schools can develop key differentiators which distinguish the school against the wider market by offering something wholly new or of exceptionally high quality. The overall goal is to carve out a durable competitive advantage, which will enable the school to appeal to families, even in a field crowded with many schools of choice.
Contextualizing the Market and Competitive Analysis
To fully flesh out a market and competitive analysis requires quantitative research and recognition of high-level trends that influence school feasibility and growth. Such factors range from the local to the national in their applicability. In a specific market area, one may see gentrification or public transit development acting on education demand. At the state level, private school choice programs are enacted, or micro-schools may be growing. Nationally, trends include changes in the school-aged population and declining religious affiliation. Consider these specific market trends it’s advisable for school leaders to follow:
Wider Considerations:
|
|
Conclusion
In the rapidly evolving K-12 landscape, a robust market and competitive analysis is more than a single strategic tool among many; it is the most critical step in overcoming the complexities of school startup and growth. The dynamics it examines can demonstrate a new school’s feasibility, but go further by sharpening existing institutional focus. By rigorously analyzing market trends and competitor offerings, schools can position themselves to meet the specific needs of target families, enhance their marketing appeal, and increase their potential for success.