M V Sainath

Date: July 8th, 2020 Submitted by: M V Sainath,-- Market Entry Study • Introduction Edu-tech based learning market has expanded and evolved at a rate that was unprecedented before. The market has seen explosive use of the internet that is now widespread and easily available to most of the population of earth as a means to impart knowledge and essential information to the posterity. Thus, this sector has become a hotcake for new and budding companies to venture into and do their part as the current residents of the planet. This sector of market, similar to others is a challenge to enter into and succeed. This requires proper planning, collection and compilation of data, analysing and finally working it out physically. This research report will deal with entry into Edu-tech based learning market. There are many challenges, pre-set variables and assessments available to analyse some of the factors concerning Edu-tech platforms. The following few pages of the document will delve into some of these assessments. 1. PESTEL analysis PESTEL analysis of a form of analysing a product that is to enter into the market. This analysis deals with major grooves, which every product has to go through for it to be feasible. PESTEL is an abbreviation for Political, Economic, Social, Technological, Environment and Legal, which are the branches that will greatly sway the say of the market. Understanding and concluding from this analysis can improve a product’s marketability. ➢ Political: Though internet is widespread and easily available to most of the countries, a country might not want the internet provided to its citizens be unregulated. Notorious for this is China, the country has restricted internet distribution and working a way around the country’s political internet regulations might prove to be difficult and strenuous for many Edu-tech platforms. ➢ Economic: The internet, which is the basis for online learning, is a paid service. Its price and availability depends on various criterions and varies from country to country and even within a country from state to state. Along with the issue with internet, there is a high initial cost. This initial cost includes the electronic gadgets that are required to consume the content in the way it is meant to be by the creator. ➢ Social: This affects the younger generation of today. A learning that teaches only about subject and education, and which inhibits children form social interaction, will not work out for the better in long run. Also with the lack of human interaction, the lack of physical monitoring is also a serious issue. Minors who are unfettered due to the absence of their parents from home can cause damage to themselves and the property without proper knowledge and monitoring. ➢ Technological: Since e-learning has everything to do with technology, major problems might arise when considering technological aspect of things. Most basic is the lack of availability of electrical devices. Mobile devices are not available to every student, especially in underdeveloped and developing countries. Even though there is availability of mobile device, there might be a problem with internet connectivity. ➢ Environmental: There are a few issues related to e-learning which indirectly affect the environment as a whole. The mobile devices and electronic devices that are used for online learning need to run or charge via electricity. This is a consequence that has to be faced either way. Teaching in traditional ways also consumes electricity, so this can be can be a conditional issue. There is another aspect of online learning that is reduction of paper and waste it eventually generates. Cutting of trees will be drastically decreased and it will help environment get back its green cover eventually. ➢ Legal: Education that is obtained online has to happen via a company that is partaking in a deal with an educational publisher. The references that are provided while teaching has to be easily accessible to the student which will improve students involvement and understanding of the subject in depth. The educational publisher should be in compliance with the company to allow publishing of learning materials via the company’s channel. 2. Market Sizing Market Sizing can be understood as the total number of potential customers for a product or service. It also includes estimation of the potential of a market, and the revenue that it will generate. It is a very important factor while considering launching an online education platform. Many factors will determine the market sizing of an e-learning sector. Some of the factors are given below. ➢ Estimating the potential size of the market ➢ Details of the targeted customers ➢ Significant and current trends of the market space ➢ Major competitors in the market ➢ Availability and accessibility of a product While the theory of market sizing is pretty intuitive and straightforward, it can be backed by with solid numbers that are the current trends in India, when it comes to online learning. Quoting from an article from “BusinessWire”, the online education market in India will be worth INR 360 Billion by 2024, with an impressive Compound Annual Growth Rate (CAGR) of about 43%. In 2018, it was valued at INR 39 Billion, and with a CAGR of around 43% will reach to the estimated value of INR 360 Billion in the year 2024. 3. Sector-specific and general regulations Technology and ease of access has made it possible for online learning to happen and spread throughout the country. Due to the reason that online education was gaining pace and many universities and colleges started adapting it, the University Grants Commission (UGC) has passed out some regulations, under which diplomas, certificates and validity of degree are now recognized that are offered through online teaching since 2018. Though degrees and certificates can be awarded, only non-technical courses can be taken up online. The courses which involve laboratory or practical learning under its curriculum, shall not be offered via online mode of education. Colleges and universities can apply for obtaining recognition for offering online education. There are certain criteria which have to be met in order for UGC to grant permission. Online programs for education can also be pursued via online education portal named SWAYAM. This has a significant role in the current system, where when an already employed person wants to undergo a course or learn a new skill, it is almost impossible to do so without having an effect on the profession. But now with the online education program, anyone can learn a new course and do so in their convenient time and place. There are certain aspects in the regulation that allows and helps software companies, EdTech models, and curriculum development start-ups to develop new ways to impart knowledge and the can now collaborate with Higher Education Institutes to provide for students with new and innovative courses. Approval from the UGC regarding this will help boost the platforms, which will grow and develop in their own way with the research and scrutiny in educating children. 4. Market Entry Barriers Market entry barriers as the name suggests, are the possible “barriers” or difficulties that one may encounter while entering into a market that is new in kind or location. Market entry barriers for an EdTech company can vary from each other largely. Some of the entry barriers are listed below. ➢ Brand Recognition Challenges: A parent trusts their child’s future through education to a completely unknown stranger from a company who has just words to back his promises of teaching their child. As such, the sector of online teaching depends largely on mutual trust between parents and the company. This trust has to be earned via forming bonds with teachers, coaching classes, even bookstalls which are well known and trusted by people to support their claims. ➢ Disrupted Delivery of information: The accessibility of internet is a completely different issue when speed of the internet connection is taken into picture. A internet connection with a low bandwidth will not be able to stream high quality good videos that are viewable or readable. This will hinder the learning and make a student lose interest in the lesson. This problem can in a way be tackled by using pseudo- online learning by providing lectures via CD-ROMS. ➢ Lack of trust in Digital Payments: Parents in countries like India are very defensive when it comes to payment which are done online. They would like to avoid it at all costs in case of a fraud or theft. The unease and unreliability of digital payments exists and working around that and persuading parents to trust a company will generally take a lot of time. The most comprehensible answer for this issue is to take alternate methods of payments for fees and try to work for offline payment tie-ups with banks. ➢ Language barriers: Anyone will prefer to learn and talk in a language that is familiar to them and they can relate to what is being told. Students when in school might be learning from a teacher who occasionally uses native language to explain a concept. This can help a student understand and grasp a topic fairly properly, but this method of teaching cannot be used in an online lecture that is intended to be consumed by students throughout the country. Always speaking in English and trying to explain concepts like that would most likely make students forget or not understand a topic or two. This can be solved by carrying out doubt clearing sessions which will be less formal and more friendly conversation between students and the teacher. Market Feasibility Study • Introduction Feasibility report or study is a comprehensive method of knowing about the condition of market for a particular product before it enters the market. It also looks at a company’s ability to support and produce a particular product. In short, market feasibility report is used to determine the sustainability of a product in a particular market, along with its capabilities of accumulating financial profit for the company. This sketch of the feasibility report can be drawn by taking into account some factors that determine the current state of market as well as the said product’s analysis. The analysis in this feasibility report will consist of SWOT and PEST analyses. ➢ Strengths: Identifying strengths is always the first step in understanding our position in a situation, in this the understanding of a product’s position in a market. The strengths of EdTech based companies lies majorly in its novelty, reach and independence. Strengths of an EdTech platform are o flexibility in learning o diversity in subjects o interactive learning process o focus on learner. ➢ Weaknesses: Weaknesses similar to strengths are essential for gauging the position in a situation. Knowing and understanding all the weakness will in turn make us more powerful. Some of the weaknesses that are prevalent in EdTech industries are o Lack of flexibility while teaching in a larger group o Loss of direct communication between student and teacher o Mismatch of technological equipment at the receiving end ➢ Opportunities: The opportunities that lie with the EdTech industry is directly related to the developments in internet connectivity. And along with the proper utilization of the connectivity internet provides, an online teaching platform can flourish with the opportunities presented to it. Some of the opportunities are o With the current rate of development of internet and connectivity infrastructure, the EdTech industry will be directly affected in positive way. o Relatively lower costs of online learning compared to traditional methods. o Growth in people’s intellect to learn and understand different things, that along with ease of access of e-learning will improve the market demand even more. ➢ Threats: The most important aspect of introspection is threats. Exploring different areas or fields always leads us to the threats that are imminent, and we can prepare ourselves for the problems to come. Some of the threats that EdTech companies might face are o The motivation for online studying when there are many things present online for fun is a threat to the teacher and the student alike. o Expenditure on the e-learning platform is not a small amount; there is a huge upfront cost because of which many people will tend to avoid online learning altogether. o High dropout rate of students is a reason for concern. It doesn’t matter how good the company is or the teacher is, e-learning cannot be responsible for insufficient responsibility, and management. ➢ Business obstacles: Learning online comes with its fair share of difficulties, which have to be planned for. Some of the obstacles that every e-learning company faces are o There is a steep learning curve when it comes to learning online. The students have to get adjusted to the new ways of teaching which is unidirectional in nature, which is new to them. Viewing and learning experience will be different compared to the conventional methods. o The lack of motivation from either side will also pose a serious issue to the business. o There is always a risk of isolation when the need to meet and greet physically is taken away. o There is a plethora of knowledge available online. This vast amount of information can cause confusion about which subject to focus on. Not having a proper idea as to which content to consume can be an obstacle. o Since, all the companies are trying to do something which has never been done before, to appeal to the novelty side of education from the customers, this has a downside, where repeated and common content is generally ignored and in these quickly changing times becomes outdated very fast and can be a source of misinformation to someone who happens to come across it while looking up. ➢ Legal challenges: The Company that produces the content will have to undergo a lot of legal paperwork to save its product from being misused or plagiarised by others. This venture definitely comes with its fair share of legal work, and some of the common legal challenges are listed below: o Intellectual property rights: The company has to go through certain measures to ensure that the intellectual property owned by the company is safe with the company and not being shared illegally. o Copyright Law: It is done to protect the original work of an author which has been physically set in a tangible form, such as pages of book, a canvas or a computer storage device. o Fair use: Even though the copyright law protects the works of writers, there are certain considerations where using a piece of work can be considered fair use. This depends on a various conditions, such as purpose of use, nature of copyrighted work, amount of content used and effect of value on market due to the copyrighted work. o Academic Integrity: The plagiarism of works of authors can be more common than we would want to believe. It can be done knowingly or unknowingly unaware of the legal charges that follow. This has become a challenge to the elearning platforms and plagiarism detector programs are widely used before submission of a piece of assignment to ensure the student has not used simple cut-and-paste option instead of actually working on the given assignment. ➢ Competitors: There are several start ups dealing with the market sector of online education. Some of the most prominent ones have major sponsor money backing them in their ventures. Some of the popular EdTech Start-ups are listed below. o BYJU’S o Doubtnut o Gradeup o TestBook o Toppr o Unacademy o Vedantu Graph taken form google images The above graph shows the amount of capital that is collected by the major EdTech companies through sponsors. These companies with their huge capital are definitely our competitors in the market. Market Trend Report • Introduction Market Trend Report is an analysis that is conducted to study the past and the current trends and behaviours of the market and consumers. There are multiple ways to gather information for a trend report, which comes directly under the market research division, such as conducting surveys, interviews, observing consumer behaviour and feedback forms. This report and gathering of information is purely technical and are merely attempts to predict the future of that product. The trend analysis is divided into three types based on the time for which the research has taken place. The three types are Short, Intermediate, and long-term. This report again depends on several smaller analyses. These smaller analyses are discussed below pertaining to EdTech based start-ups. ➢ Regulatory changes: Online teaching and learning seems to be a common way now-a-days to learn any course or subject easily without much constraints. But this brings about a problem when awarding someone with a certificate or a degree, due to lack of authority and credibility. The University Grants Commission, which looks over many universities and presides the decision making, has now recognized the validity of degree, diplomas and certificates under its University Grands Commission Regulations, 2018 (“Online Education Regulations”). There are three key aspects to the online education regulations passed out by the UGC, dealing from eligibility criteria for obtaining recognition for offering online education to application and approval to operation of online programmes and courses. ➢ Product Trends: in a period from January 2014 to September 2019, the students have preferred Skill-development based start-ups. But, a lot more number of students come to online learning for competitive exams, and hence they have a higher capital inflow in contrast to others. The skill-based development learning and the competitive exams subsector, collectively make up for almost 91% of all the capital input to the EdTech industry. There is definitely an imbalance in the market. Some of the product trends which will be seen in 2020 and the coming years are listed below. o Skilling Start-ups: world is changing at a faster rate today than it did ever before. This has compelled people to learn and study new skills irrespective of their age and profession. Due to this reason, Skilling startups are expected to improve in the coming years. o AI transformation: AI helps customizing the learning based on student’s performance and interests. This will be more effective than any kind of learning given commonly to everyone. This increase in customer satisfaction and personalized learning will definitely be an attractive trend for a company to adopt and make use of. o Parents to invest more: Parents are now more aware of the EdTech platforms and more willing to spend more money when it comes to imparting knowledge to their children when they are safely tucked away in the cosiness of the house. This will bring in more income to the company, in turn helping the company to improve. o Learning for yearning: Learning a subject which is unrelated to a professional for holistic individual skill development has seen a rise in the current trend of EdTech market. This sub-sector, though not very large will definitely help grow a company when taken seriously. ➢ Consumer Behaviour Developments: American Marketing Association defines Consumer behaviour as, “The dynamic interaction of affect and cognition, behaviour, and the environment by which human beings conduct the exchange aspects of their lives.” Simply, it means the study of human behaviour that include the actions and decisions taken by people who consume goods and services for personal usage. Education itself is a difficult, strenuous and messy market for investors. o Lack of communication: EdTech business has to have an active and important communication between the provider and the consumer. Consumer has been more inclined to choosing a platform instead of any other when there is a proper channel and ways to communicate with the company. o Lack of professional Integrity: teaching in India, is considered to be a holy profession, and the consumer wishes that the person teaching their child be morally and ethically correct at all times. o Lack of proper company culture: the disorientation of a company, however properly hidden will show to the customers. Consumers tend to trust a company with proper company culture and hierarchy. o Too many choices: As of 2018, there are more than 3,500 EdTech start-ups in India. This creates a lot of confusion in the minds of parents who just want their kid to get a better education. This confusion of mind will deprive some of the companies their funding. To clear and pave a proper path for the parents to enrol their child and get educated, proper advertising and market trust is essential. ➢ Economic Forecasts: Current Education sector in India is valued at around US$ 91.7 billion in the financial year 2018. This is expected to grow and reach US$101.1 billion in the financial year 2019. With research and advancement in technology and connectivity, it is expected to reach at a whopping US$247 Billion by the year 2022. The approximate number of EdTech start-ups is around 4,031 in 2020. ➢ Technology trends: There is no strict regulation that will check and guide a company in India to provide good and quality education online. Then this responsibility of providing students with the best quality education using the currently available and developing technology lies with the company itself. Some of the technological trends based on the quality and type of education are listed below: o Digital online assessments: The technology has now advanced to a level where it can easily store and manage the assessment and markings of a large number of students. Evaluation is one of the most important aspect of learning and with the current available technology will be improved and developed to provide personalized scores and results. o AI driven teaching: AI is now in its development stage, even though it has been used to do a lot of complicated studies and research that was not possible before. But the current level of AI knowledge is more than enough for companies to provide personalized learning based on individual student’s interest and timings. o Block-chain Technology: Block-chain technology is essential when there is a need for collective and distributed information. This technology is essential for many areas of education including examination handling, credential verification, and other verifications. Market Segmentation • Introduction India’s education industry is growing very fast as the need to educate oneself is becoming more dire in these difficult times of low-employment and poverty. The growth will be driven by various factors; of which on top is the extensive reach of internet and increase in number of internet connections in India. There is also a factor that involves the cheap availability of mobile devices which are reasonably good in quality. These are the various factors that will affect the industry indirectly. However, the direct involvement of parents who are ready to pay more to educate children is also increasing. The customers of EdTech companies can be segmented based on various factors. The factors can be their age, their skill-requirement, their capabilities, etc. The segmentation that will be discussed in this research article will be mainly pertaining to age and skill-requirement. 1. Age-based segmentation: The most basic way to segregate a group of customers who come to learn is to separate them based on the age. Generally, same age group children like and tend to study similar subjects, whether it is due to the subject being a basic and building one for future subjects, or because those are the subjects taught in school. For whatever reason, the segmentation based on age of the consumer is the most used form to differentiate between the customers. ▪ The pricing of the products changes rapidly due to various reasons. But the general trend of the e-learning platforms is around INR10,000 to INR25,000 for a course in basic sciences for high school students. ▪ The students in middle and high school prefer to take subjects that are conventionally considered difficult, such as maths, English and physics. ▪ Though the students of a high school also need skills like technical learning, programming, etc. but they tend to prioritize the subjects which are taught in school for scoring good in the quizzes. ▪ Interests of high-school students is generally towards subjects dealing with computers, or learning new skill such as content writing. These skills, even though they entice the students, parents are not willing to purchase such courses and they consider learning skill like these a waste of time. ▪ Even when there is a segmentation based on the age or class they are studying in, there are vastly different needs for different segments of students. The students in their 12th standard tend to focus more on online classes which will guide them in the preparation for competitive exams such as IIT-JEE, NEET and other examinations. Whereas, the students who are not about finish school tend to find courses which will help them score better in their school tests and board exams. 2. Skill-requirement based segmentation: As discussed above, the segmentation of the consumers of the EdTech market can be more precisely monitored and arranged when divided based on their requirements. The student who wants to learn a certain skill will be placed with other people who want to learn the same skills as the person in question. This will improve the rapport between the students, and will develop collective learning which will improve the learning experience all of the students, instead of just focusing on only one student. This improvement will be brought about by students themselves, which is more effective in nature than improvement by a teacher. There are many partitions based on the skill-requirement of the student. A student wanting to learn more about programming will be diverted to a class on programming with students of other background who come together to learn a common subject. This form of segmentation has nothing to do with age-group of a particular consumer. ▪ A major share of student coming to online platform to learn, are the group of students who want to clear competitive exams to bag a place in prestigious universities. The price range for that is high considering it is a year-long process. The price for JEE coaching online for BYJU’s learning is from INR60,000 to INR72,000. The price for coaching for UPSE held IAS examinations is INR75,000 to INR82,500. ▪ A segmentation of this kind, the preference for students is job-oriented. They tend to select courses which will give them an edge compared to others when landing a job offer. ▪ Interests is a commodity to those who have the option for learning for knowledge. The segmentation based on skill-requirement will always see students who want to be coached for various competitive exams, and students will prioritize these coaching courses to their interests. ▪ This segmentation also sees a lot of diversity in students when compared from one section to another. There are students who come to get coaching for exams, there are students who come to learn a new skill for their already existing jobs or to get a new job, and there are students who want to learn a new skill for their intellectual development. Therefore, there are a lot of needs for consumers from different backgrounds, each of which has to be catered to separately.