Students’ Perceptions of Public vs. Private Higher Education Institution Brand Value in Croatia

Abstract

Due to the transition process in Croatia that started about three decades ago, higher education institutions (HEIs) are forced to intensively involve themselves in market competition and become market and entrepreneurial oriented in order to keep up with new trends in higher education. The branding process in HEIs has become one of the major activities in creating value and gaining market position in many countries, including Croatia. The aim of this study is to provide a deeper insight into and understanding of differences in brand market value perceptions of students of public and private HEIs in Croatia. Altogether, 443 students (242 from a public HEI and 201 from a private HEI) responded to a questionnaire based on Aaker’s model of brand equity, from which a t-test and a correlation analysis showed that the public HEI was significantly better only in the dimension of other proprietary brand assets, while in the private HEI all other dimensions of brand market value were evaluated better. However, brand market value itself was significantly higher in the public sector HEI, mainly due to the perception of “value for money” and functional benefits, i.e., employability. The study identified several factors that need to be taken into account when branding private and public HEIs in Croatia.

1. Introduction

The transition process in Croatia that started about three decades ago has brought numerous challenges in marketing and management, not only in business but also in the public sector. Higher education, traditionally of the public sector, has become intensively privatized and numerous private higher education institutions (HEIs), especially in the area of business and management education, are emerging. Altbach [1] considers private higher education to be the fastest-growing segment of postsecondary education worldwide. Moreover, joining the Bologna Process has resulted in increased international competition in higher education, forcing public HEIs to intensively involve themselves in market competition and become market and entrepreneurial oriented in order to cope with new trends in higher education [2,3].

The higher education market in Croatia today is composed of both private and public HEIs. The first private higher education institutions in Croatia were licensed in 2000. Enrollments in the private sector institutions have grown significantly since then. According to the National Agency for Science and Higher Education [4], there are nine public and three private universities currently operating in Croatia. Within the public universities there are 82 faculties, academies and departments, and there are additionally 11 polytechnics and three colleges. Private universities function as single units with different programs. In addition to three universities, there are six private polytechnics and 15 private colleges. The majority of private HEIs are in the area of business and management education.

Several pros and cons of the privatization of higher education are mentioned in the literature. Supporters of the process emphasize private HEIs’ flexibility and responsiveness to labor market requirements as well as their role in creating a competitive environment that forces public HEIs to become more efficient and market oriented [5,6,7]. As opposed to that, those who disagree with this trend often see the risk of turning education from a public into a private good, which can potentiate inequality in access to higher education [8]. According to Jahić [9], private HEIs in Croatia are still faced with widespread mistrust over poor academic quality, poor conditions for studying and serving as “degree mills”, producing academic credentials without upholding rigorous academic standards.

The branding process in higher education institutions has become one of the major activities in creating value and gaining market position in many countries, and lately this has also become the case in Croatia. It is a long-term process that requires two types of activities. Firstly, HEIs need to develop unique and efficient communication with existing and potential customers (students). Existing students are important as potential opinion leaders and WOM creators, so their satisfaction is a “must” in order to obtain desirable feedback from them. Potential students need to be efficiently informed during the decision-making process of purchasing education (i.e., which HEI to choose) [10]. Secondly, HEIs need to continuously analyze all the factors that impact brand development and act according to the identified trends. Although universities have multiple stakeholders and some studies emphasize the importance of external stakeholders in university branding [11], students are definitely the most important ones—they are the consumers who make their buying decisions, i.e., the choice of university to attend, based on its brand perception. This perception is not necessarily similar to perceptions of other university stakeholders, and it is therefore crucial to take students’ perspectives as a core aspect in the university branding process [12,13].

The aim of this study is to provide a deeper insight into and understanding of differences in brand market value perceptions of students of public and private HEIs in Croatia. Brand market value is the relationship between the brand and the consumer, i.e., it is the way in which the brand is experienced in the market [14]. Brand market value is the precondition for brand financial value and therefore it makes sense to measure it. The new trends in higher education described above led the authors of this study to recognize branding as a marketing activity that can contribute to the competitive positioning of HEIs in Croatia. In order to meet the aim of the study, the authors use Aaker’s model of brand equity, as it is one of the most frequently used models in branding research. Since there are only a few studies on HEI branding in Croatia, and none on the comparison of HEI brand value between private and public HEIs, this study aims to bridge this research gap and provide managerial implications for HEIs.

The study is structured in the following way: the literature review follows the introduction, after which the research is presented with a description of the methodology, an analysis and discussion of the results and finally the conclusions made.

2. Literature Review

Since HEIs across the world have become “marketing oriented” and students increasingly became “consumers” [15], it becomes increasingly interesting and important to study different marketing approaches they adopt.

Due to increasing competition in the higher education market, branding has become a strategic imperative for universities and other HEIs in order to develop meaningfully differentiated brands with which to communicate their strengths [16]. It serves as an efficient marketing tool, aiming to attract, engage, and retain students as well as position universities [17]. Furthermore, university branding helps in creating student–university identification, with the effect of various university supportive behaviors such as university affiliation, suggestions for improvement, advocacy intentions and participation in future activities [18].

In the context of higher education, marketing in general, and specifically branding, serves to contribute to a better understanding of a mostly intangible product, define the central message and create a memorable image and experience [19].

Bennett and Ali-Choudhury [20] follow the same proposition and emphasize three major components of university brand building: University branding at its core represents a set of promises to an external environment. These promises firstly include the reputation of the HEI, employability and career development possibilities as well as socialization during study period. Secondly, they represent a set of distinctive characteristics that create a HEI’s brand: its position in the higher education market and its scientific and educational orientation. Finally, a university brand needs to have efficient external communication of the brand through its name, logo and slogan.

Some studies [13,21,22] suggest identification of core and supporting university brand equity dimensions, where the core ones are brand awareness, perceived quality, brand association, brand trust, learning environment, emotional environment, university reputation and brand loyalty, and the supporting ones are library services, dining services, residence halls and physical facilities.

Nicolescu [23] perceives university branding as part of both product policy and promotion policy, emphasizing its specific characteristics compared to branding in the business sector: the different interpretation and elements of image and reputation, preference of reputation, brand creation, difficulties related to differentiation possibilities and the challenge of having different stakeholders with different perceptions of the HEI brand elements and their importance.

University branding in relation to students as major university stakeholders has been studied from different perspectives: from confirmation of the link between HEI brand orientation and perceived service quality [24] to discussion of the role of brand ambidexterity in students’ commitment to HEIs [21] to the importance of branding as one of the factors that influence students’ decision-making [25,26]. Several studies have shown that a positive HEI brand image is positively correlated with students’ satisfaction [27], students’ experiences [28] and students’ loyalty [29,30]. The results of the study by Panda et al. [31] indicate that university brand image plays an important role in a student’s positive perception of an HEI and thus contributes to its competitive positioning. All findings from these studies clearly illustrate the importance of students as stakeholders in building university brand value.

Some researchers [32,33,34] suggest that recognition of the quality of academic and non-academic staff and other resources, campus life that provides additional features to the perception of students’ lives and guidance (access services) and perception of future career development possibilities are the most salient promotional features that are used in the marketing and branding of universities.

Tran et al. [33] conceptualize university brand image as a reflection of functional (location, infrastructure, facilities, admission cost, etc.) and emotional (reputation, trustworthiness and satisfaction) aspects, or, in other words, the totality of perceptions and feelings that stakeholders associate with a particular university [35], and therefore as a multidimensional construct.

The importance of HEI brands can be illustrated with the findings of several studies [36,37,38] that often find that reputation and/or image are the major factors for choosing a particular HEI. With regard to public vs. private HEI branding, Judson et al. [39] emphasize the importance of brand identity development for both.

An interesting study from the USA [39] found differences between the importance of university selection criteria between those who attended public and private HEIs with respect to their brands. Private university students appeared to value reputation, selectivity, personal interaction, facilities and cost, whereas public university students valued programs, athletics, reputation, cost, housing and location. While reputation for students at public institutions was limited to perceptions of a quality education and accreditation, students at private institutions viewed reputation as including name recognition, reputation of the university and reputation of the faculty. These findings suggest that although university branding initiatives need to be customized by the type of institution, both student types now seek a modern university experience that includes the latest technology, community involvement and an attractive campus environment.

The Croatian higher education market is still characterized by a strong domination of public HEIs. Currently there are 119 higher education institutions in Croatia, namely 8 public universities, 2 private universities, 68 faculties and art academies and 1 university center at public universities, 4 private polytechnics, 11 public polytechnics, 22 private colleges and 3 public colleges [4]. The distinction between public and private higher education concerns founding and ownership: institutions founded by the state are considered public, while institutions founded by private persons as well as institutions founded by local (municipal) authorities or the church are considered private [40]. A study by Aristovnik and Obadić [41] indicates significant inefficiency in public higher education spending, meaning that relatively high public expenditure per student could have resulted in relatively better performance regarding outputs/outcomes, i.e., a higher rate of higher education school enrolment, a greater rate of the labor force with higher education and a lower rate of the unemployed who have a tertiary education. At the same time, private HEIs cannot afford such luxury, since their existence depends on their outputs.

However, for both public and private HEIs in Croatia there are two sets of challenges: demographic (long-term negative population growth and youth emigration), which decreases demand for both types of HEI, and economic (declining living standards), which significantly impacts the potential of private HIEs to attract new demand. This situation additionally contributes to the importance of efficient HEI branding.

Croatian HEIs in the area of business and management are faced with the highest level of competition between private and public sector institutions, as the number of private ones is increasing at a very dynamic pace. The major “threat” for public business HEIs coming from the private sector is the fact that teachers are usually practitioners that provide more practical insights, especially for those that are planning their future in the business sector. Moreover, they provide direct contact with the business sector, which results in a higher rate of employability than in public sector institutions [7].

Although there are several models for measuring brand equity in the literature (Brand Asset Valuator (BAV), BrandZ, Customer-Based Brand Equity (CBBE) model and others), they are all based on Aaker’s brand equity model. That is the reason why this study applies this model. Moreover, all studies found and analyzed in this paper that applied Aaker’s model only analyzed separate dimensions, but not all of them [42]. There are only a few that are applied in the higher education context. The model consists of five dimensions. The first one is brand loyalty, which measures the extent to which people are loyal to a brand. Brand awareness measures the extent to which the brand is known. Perceived quality is the measure of the extent to which the brand is considered to provide good quality. Brand associations inquire what the brand is associated with. Finally, other proprietary assets as a dimension looks at intellectual property rights, patents, cooperation with other HEIs and other elements that contribute to HEI competitiveness [43].

3. Materials and Methods

This research is designed to identify differences in students’ brand value perceptions between private and public HEIs in Croatia. It is based on two case studies since case studies of branding may help broaden our understanding of the challenges faced by higher education institutions today as they struggle for legitimacy, students and financial resources in an increasingly competition-oriented education market [44]. Altogether, 443 students (242 from a public HEI and 201 from a private HEI) responded to a questionnaire based on Aaker’s model of brand equity, where brand value is perceived as a function of the five dimensions described above: brand loyalty value, brand awareness, perceived quality, brand associations and other proprietary brand assets. The adaptation of the questionnaire to the higher education context was made in accordance with previous studies [20,28]. Besides this, the questionnaire included socio-demographic data of respondents.

The whole questionnaire consisted of 38 questions, and most of them were constructed as a 5-point Likert agreement/disagreement scale with offered statements. Respondents needed about 15–20 min to fill in the questionnaire.

To analyze the data, a t-test and a correlation analysis were used.

Sample Description

The sample of 443 respondents from two HEIs—one private and one public—included students that study business and management at undergraduate and graduate levels.

Table 1. Sample characteristics.

	Public		Private		Total
	Number	Percent	Number	Percent	Number	Percent
Gender
Male	80	33%	86	43%	168	38%
Female	162	67%	115	57%	275	62%
Age
18–25	230	95%	159	79%	390	88%
26–32	10	4%	30	15%	40	9%
33+	2	1%	12	6%	13	3%
Study Level
Undergraduate	155	64%	151	75%	306	69%
Graduate	87	36%	50	25%	137	31%
Total	242	100%	201	100%	443	100%

shows the major characteristics of the sample with regard to whether they studied at either the public HEI or the private HEI in addition to the total figures.

4. Results

The study implements Aaker’s model of brand equity, since it was the first comprehensive model of brand equity. Moreover, since this model of brand equity is seldom and mainly only partially applied in the higher education context [42,45], the authors took it as a challenge to measure its applicability in the Croatian higher education context. The correlation between brand market value and the dimensions of Aaker’s model was tested by Pearson’s coefficient of linear correlation, and a positive and significant correlation (p < 0.01) between brand market value and all dimensions measured by the model was discovered, which is shown in

Table 2. Correlation analysis of the dimensions of Aaker’s model and brand market value (public HEI and private HEI).

	Brand Market Value
	Public		Private
	r	p-Value	r	p-Value
Brand loyalty	0.72	0.0000 **	0.64	0.0000 **
Brand awarness	0.67	0.0000 **	0.55	0.0000 **
Perceived quality	0.81	0.0000 **	0.67	0.0000 **
Brand associations	0.66	0.0000 **	0.64	0.0000 **
Other proprietary brand assets	0.64	0.0000 **	0.62	0.0000 **

** p < 0.01.

.

In the case of the public HEI, the correlation results indicate that the strongest association was between perceived quality and the perception of its market value (r = 0.81), while other proprietary brand assets had the weakest, although significant, correlation with brand market value. In the case of the private HEI, all dimensions of the model had less dispersed values, with perceived quality as the strongest and brand awareness as the weakest associations with brand market value.

The reliability test was done in order to obtain the value of Cronbach’s alpha for all variables. Since this study is of an explanatory nature, the Cronbach’s alpha coefficient should be equal to or above 0.60 [46]. This is satisfied for all variables, as is shown in

Table 3. Cronbach’s alpha values.

Variables	Cronbach’s Alpha	No. of Items
Brand loyalty	0.879	5
Brand awarness	0.682	4
Perceived quality	0.794	5
Brand associations	0.957	31
Other proprietary brand assets	0.851	10

. Therefore, all variables are reliable for the study.

The students’ perceptions of value differences between brand market value and different dimensions between the public HEI and the private HEI are shown in

Table 4. Significant differences between different dimensions of brand value in the public HEI vs. The private HEI.

	Public		Private
	M	SD	M	SD	p-Value
Brand loyalty	3.91	0.83	4.06	0.80	0.0575
Brand awareness	3.67	0.53	3.85	0.57	0.0011 *
Perceived quality	3.64	0.59	3.94	0.63	0.0000 **
Brand associations	3.46	0.57	3.90	0.67	0.0000 **
Other proprietary brand assets	3.99	0.61	3.85	0.66	0.0147 *

* p < 0.05; ** p < 0.01.

.

The table indicates that there are significant differences between students’ perceptions of the public HEI and the private HEI at a 1% significance for brand awareness, perceived quality and brand associations. At a 5% significance level there is a difference between perceptions of other proprietary brand assets, while there are no significant differences in the dimension of brand loyalty. Figure 1 shows these differences more clearly.

Regarding dimensions of brand market value, students of the public HEI evaluated only the dimension of “other proprietary brand assets” as significantly better, which measured the social environment of the HEI, sport and free-time activities organized by the HEI, learning/teaching environment, career development assistance and students’ involvement in HEI management. On the other hand, students of the private HEI evaluated all other dimensions of brand market value better, and the difference is the largest in the dimension of brand associations, which was measured by brand personality, feelings of community, warmth and closeness with the HEI. According to Bulotaite [47], a strong HEI brand is capable of developing these feelings among the stakeholders, especially students.

The second most important difference that speaks in favor of private HEI brand value is the perceived quality. It was measured by the following items: satisfaction with the study program, choice of study program and perceived education service quality. This result is in contrast with a previous study in Croatia [8] and some other transitional countries [23] that showed students’ preferences for public HEIs, due to the perceived better quality.

The private HEI was also perceived better in terms of brand loyalty and brand awareness. Better perception of private HEI brand awareness can probably be ascribed to the fact that private HEIs use advertising and other promotional tools more intensively than public ones, which are budget limited on one hand and on the other do not feel the pressure to use them, since there is still significantly higher pressure to study at public HEIs. Maringe and Gibbs’ study [48] found that “traditional universities” (i.e., public) allocate about 5% of their income to marketing purposes, in comparison to over 20% of income allocated to the same purposes by private, market-oriented institutions. Other studies [49] have shown the positive impact of advertising on higher brand awareness for different products.

A deeper analysis of single items included in the dimensions of the brand value model has shown the following: Respondents from both the public HEI and the private HEI gave the highest mark to the item “memorable name” (4.63 in the public and 4.60 in the private HEI). Other highly evaluated items in the public HEI were sports and other free-time activities and facilities (4.31), brand personality—businesslike (4.24), satisfaction with study program (4.09) and willingness to recommend the HEI to others (4.05). In the private HEI other highly recommended items were staff availability (4.36), brand personality—businesslike (4.31), satisfaction with study program (4.25), and willingness to recommend the HEI to others (4.23). The study looked deeper into these evaluations and t-test analysis showed statistically significant differences in the following cases:

• Satisfaction with study program (public HEI 4.09; private HEI 4.35; and p = 0.0260);
• Willingness to recommend HEI to others (public HEI 4.05; private HEI 4.23; and p = 0.0000);
• Sports and other free-time activities and facilities (public HEI 4.31; private HEI 2.96; and p = 0.0000).

According to the obtained results and analysis of different dimensions of Aakers’ model of brand equity, the overall better perception of HEI brand market value was expected to be significantly higher for private HEIs. However, our results were the opposite—the direct evaluation of HEI brand market value was significantly higher in the public sector HEI. The statistically significant difference is shown in

Table 5. Students’ perceptions of brand market value based on value for money and employability.

	Public		Private
	Mean	SD	Mean	SD	p-Value
Brand market value	3.63	0.85	3.35	0.80	0.0004 **

** p < 0.01

.

Brand market value was measured on two items: “value (knowledge) for money” and “employability after finishing the program” at each HEI. This measure is adapted to the product, i.e., service specifics, but is in accordance with Aakers’ definition of brand equity as perceived value for money on one hand and functional benefits on the other [50]. Both items have shown a significant difference between the public HEI and the private HEI:

• Employability of public vs. private HEI students (public HEI 3.44; private HEI 3.24; and p = 0.0125);
• Value for money (public HEI 3.81; private HEI 3.29; and p = 0.0000).

This result is understandable, since the price for higher education in the private sector is significantly more expensive compared to the public sector, and it seems that private HEI students still don’t perceive the advantages of private HEIs in terms of graduates’ employability.

5. Discussion

First of all, this study has confirmed the multidimensionality of university brand value. The traditional simple definition of brand value as the function of the perception of value for money as well as brand functionality, although significantly impacting brand value perception, does not capture the full meaning of university brand value. Therefore the applied Aaker’s model has provided a deeper insight into specific dimensions which are crucial for successful university brand value creation. It also emphasized the importance of congruence of all dimensions with students’ expectations.

According to the findings of this study, it seems that the higher brand market value of the public HEI is related to the perception of better value for money and perceived better employability obtained at the public HEI, as well as the availability of other, non-educational activities and facilities that contribute to the quality of students’ lives. The perceptions of value for money imply uneven market positions of private HEIs in Croatia, where the education service quality is perceived as about the same as in public HEIs, but the price is many times higher. The results also indicate the previously found negative publicity and/or stereotypes related to private HEIs [8,9], where private HEIs are perceived as having significantly lower employability than public ones. Both of these aspects negatively affect perceptions of private HEI brand value.

The only recent comparable study was conducted in Latvia [51], which is also a transitional economy. The study is based on the Customer-Based Brand Equity (CBBE) model and the results corroborate major findings of this study: In general, the students of both state and private HEIs perceive their university’s brand similarly, but there are some differences between how students of state and private universities assess their brands. Public HEI students are more critical about the brand of their university in all aspects researched. However, the Latvian study provides no notion on negative stereotypes that are present in the case of Croatian private HEIs.

Although estimations say that “traditional universities“ (i.e., public) allocate about 5% of their income to marketing purposes, in comparison to over 20% of income allocated by private, market-oriented institutions for similar purposes [48], it should be better and more efficiently utilized to increase brand value perception. These resources should, however, be carefully allocated to specific activities, since some studies imply that there is no evidence that marketing activities—whether controlled in the form of managed marketing communications or uncontrolled in the form of word of mouth—have any impact on the extent to which the university brand is valued [52], unlike other products [49]. Moreover, the private HEI did not succeed in utilizing the real higher employability rate of private HEI students, which was found in a study by Korda [7].

This study also shows the importance of other indirectly education-related issues that students find important, and they are definitely aspects that private HEIs should improve, such as organization of social life, sports facilities and similar; mainly those belonging to dimensions that support university brand equity.

Regarding public HEIs, it remains for further investigation to find the reasons and elements that could improve students’ levels of satisfaction with study programs and motivate them to recommend the HEI to others. Roskosa and Stukalina [53] suggest program quality assurance, cooperation and well-organized cooperation between all stakeholders as the basis for successful university brand development. It is, however, clear that basing brand strategy only on traditions and existing stereotypes about private HEIs is very risky in the long-term: time provides space for traditions and stereotypes to change over time.

6. Conclusions

Since the research on higher education branding is still very much at a pioneer stage [45,54], the aim of this study was to get a deeper insight into differences between public and private HEI brand value in Croatia as perceived by students. Such an approach provides new perspectives on HEI branding and contributes to broadening theoretical and managerial knowledge in addition to the identification of challenges that public and private HEIs are facing in the transitional economy.

Since private HEIs are rather new in Croatia, they lack traditions and heritage that are an important part of HEI branding [55] and have to fight with uneven market positions due to their “expensive product” and existing negative stereotypes. These are the major points that private HEIs should focus on in developing their brands.

On the other hand, the public HEI’s brand in this study seems to be of higher market value, but some critical elements need to be considered and addressed by its management: they need to focus on students’ satisfaction, which is rooted in perceived service quality, and on the creation of university brand personalities that would increase loyalty and students’ willingness to recommend the HEI to others.

The distinctive contribution of this research is in its empirical contribution through analyzing HEIs as an example of a service and identifying the determinants of brand value from a consumer’s point of view in a public HEI and a private HEI in a transitional economy context.

7. Research Limitations and Further Research

There are several limitations of this study. The major one arises from two facts: one is the fact that only two HEIs (one public and one private) were analyzed, so results are only indicative and can hardly be generalized. In order to overcome this limitation further research on a representative sample of public and private HEIs is necessary. The second one is the fact that private and public universities operate in different ways in Croatia—private universities are mostly similar to the American type of university, where different departments are perceived primarily as part of the university, while public universities are more “umbrellas” for different schools (faculties) that are more independent and develop their own brands. The authors have tried to minimize this difference by choosing HEIs in the field of business and economics education. Thirdly, the sample used in this study is one of convenience, which might cause some measurement problems. Furthermore, the study took only students’ perspectives of the HEI brand value. It can be expected that inclusion of other stakeholders into the study can change the overall HEI brand perception. Finally, since there are, to the best of our knowledge, no other studies on HEI brand value that fully implement Aaker’s model of brand equity, it was not possible to fully compare the research results.

This study can be further developed in terms of more robust statistics to analyze the effects of sample characteristics and their possible impact of brand value perception, to include other stakeholders in the study and to compare results in the contexts of different countries (transitional, developed and underdeveloped).