Charlie Alfred’s Weblog

The Significance of Context

This time of year, many high school seniors think seriously about college.  Along with their parents and guidance counselors, they identify colleges they think they might want to attend.  Some students make plans for campus visits.

Eventually, each of these seniors chooses to apply to a short list of colleges and universities.  The number of applications the typical student submits is constrained by the time required to prepare one, and in some cases, the fee that must accompany the application.

Some of the students apply to prestigious Ivy League colleges.  Many of them have excellent grades, high SAT scores, and a resume full of extracurricular activities.  Others who apply to these schools don’t have  stellar grades or SAT scores.  They might have parents who are alumni (and large donors to the annual fund).  Others might be a member of a minority group which the college seeks for diversity reasons.  Still others may apply to these colleges as a “stretch” application.  While they don’t expect to be accepted, the high odds gamble justifies the time to prepare the application and the fee to submit it.

Another group of students might apply to large state universities.  Some of them may have lettered in two varsity sports for four years; they may hope to get admitted on a full-ride athletic scholarship in an NCAA Division 1 program.  Other students might be applying to the same universities because in state tuition is lower at state schools. Still others may be motivated to stay close to home by high school pals or girlfriends.

What does this example have to do with context?

The macro level admissions process can be seen as an intentional system.  The participants include students, parents, guidance counselors, colleges, universities, and standardized testing organizations.  As an abstract aggregate, they play well understood roles.  Students identify the colleges they will apply to, frequently with advice from parents and guidance counselors.  High schools submit transcripts and testing agencies report test scores to the colleges and universities.  Colleges and universities evaluate the applicants and financial aid requests.

However, it is at the micro level where contexts clearly emerge.  Take any generic participant in the macro process.  At the micro level, each is different, having its own subjective criteria for assessing benefits, constraints, and uncertainties.  For example, two Ivy League colleges might have a very different mix of minorities, female students, or students on scholarship.  One college might have a large financial aid dowry to use to entice promising applicants.  Another might not.  One might have few openings in its pre-law or pre-med program, while another might be nearly full in its schools of computer science or chemical engineering.  In short, each college has a very different set of forces acting on it, and these forces play a big role in shaping its subjective assessments.

The same conclusion can be drawn for each of the other participants in our example – parents, students, guidance counselors, etc.  Each of them is subject to their own set of forces, which shape their subjective evaluations of benefits, constraints, and obstacles.  Blue collar parents might sacrifice material things and insist that their children get a college education, so that their children will have a better life.  Parents who dropped out of college or did poorly might try to dissuade their children from even attending.  Parents who are proud alumni might pressure their children to attend their alma mater.

For each abstract role in our intentional system, it is useful to organize like-minded participants into groups.  For our purposes, like-minded participants have the following characteristics:

o  They play the same (or very similar) role in the system.

o  They want the same small set of key benefits

o  The amount of value they perceive from different levels of these benefits is similar.

o  They have the same view when ranking these key benefits in order of importance

o  They are subject to similar environmental factors (e.g. constraints and uncertainties)

For example, consider a group of parents with annual income levels between $50,000 and $75,000.  This is the first child they are sending to college, and they might have 1 or 2 younger siblings at home.  They have saved around $20,000 for this child to attend college.  Their child was a B student in high school, and scored between 1000 and 1100 on their SAT’s.  It is critical to these parents that their child earn a Bachelors degree from a respected school, but the major is less important.  They would like their child to attend a college within 250 miles of home, so that they can drive home periodically.

We consider this group of parents to be like-minded, because they want similar things, and are exposed to similar constraints and uncertainties.  In the absence of financial aid or student loans, financial considerations will limit the potential set of colleges.  Choices among colleges might be driven by academic reputation and geographic location, as well as financial aid and opportunities for part time jobs.  Local colleges, which provide the opportunity for their child to commute might seem especially attractive.

Other groups of parents are likely to have a different mind set.  For example, those who are financially well off, and have saved/invested enough to fund their child’s education may not have their decisions as constrained by money.  Or, parents of children who are all-state athletes may be motivated by the opportunity to be awarded the most attractive athletic scholarship.

Members of each group think like and decide like the other members of their group.  We say that they have equivalent value models.  In other words, they look at value in very similar ways: how much value is seen in a certain benefit; which tradeoffs make sense; how much some constraint limits value; and how much uncertainty reduces value.

Marketing types use the name market segmentation to identify the process of defining like-minded groups.  We use the term value modeling here, because product or service marketing is just one of many places where these concepts and techniques can be used effectively.

For a deeper explanation of market segmentation, see Malcolm McDonald and Ian Dunbar’s excellent 2004 book, Market Segmentation: How to Do It, How to Profit From It, ISBN 0-7506-5981-5

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