The Expenditure per Student Myth
There is a market segmentation myth that leads many K-12 marketers astray. They have been trained to segment the public school market based on expenditure per student. It seems logical on the surface: Schools in districts that spend more per student have more money to purchase my product. There’s just one problem: it almost never works.
Expenditure-per-student data doesn’t predict a school or district’s likelihood to purchase for a fairly simple reason: state and federal funding is allocated to level the playing field for low-income areas—and that money comes with strings attached. The figure below shows average district expenditures per student organized by the percent of low-income students. The difference in distribution of local, state, and federal funding is apparent.
The lowest-income institutions receive the lion’s share of federal and state funding. As a result, they have higher than expected expenditures, but their purchasing is highly influenced by outside education policy. They are the prime target for products and services that are designed to help students meet No Child Left Behind targets.
The average expenditures per student of middle-income districts are similar to those of low-income, but the bulk of the funding is from a blend of state and local sources. They are the home of “typical” schools, and their purchases are more influenced by local needs and state requirements.
High-income districts have the fewest restrictions. They are predominately locally funded, and are the only group of school systems with higher than average expenditures per student. The schools in these districts are obviously excellent targets for offers that depend on discretionary funding.
How do you segment the K-12 market without expenditure-per-student data? MCH Strategic Data has developed several improved targeting tools:
- NCLB Intensity segments school systems according to the number of School-Wide Title I program schools in the district. High NCLB Intensity districts receive the majority of federal funding. Their purchasing decisions are largely driven by NCLB concerns. Districts with low NCLB Intensity have no School-Wide program schools, so local needs dominate their purchasing decisions.
- MCH’s exclusive RPM—Response Potential Model ranks the nation’s districts and schools according to their likelihood to purchase supplemental education products. High RPM schools tend to be large and wealthy.
- Wealth Score segments areas from the highest average income to the lowest average income.
Your MCH representative will work closely with you to determine a segmentation strategy that effectively targets your key prospects.