Summit education services transition from niche market to mass market

In order to reach the aforementioned goal, different research ought to be carried out, since the pool of target customers as well as the way to conduct business of Summit, both need to b

Year 2016-2018 SUMMIT EDUCATION SERVICES TRANSITION FROM NICHE MARKET TO MASS MARKET.

Author : Le Ngoc Khanh Advisor : Dr Tran Thi Bich Hanh

Hanoi, June 2018

Contents

1 Introduction 4

2 Theoretical background 6

2.1 What is marketing 6

2.1.1 Product 6

2.1.2 Price 7

2.1.3 Place 9

2.1.4 Promotion 10

2.2 Marketing in Education service 11

2.2.1 Education and education service 11

3 Methodology 12

3.1 Interview 12

3.1.1 Interview method 12

3.1.2 Interview conclusion 13

3.2 Secondary research: 14

3.2.1 Secondary data research: English learning in Vietnam 14

3.3 Primary research: Survey on target customers 17

3.3.1 Overview 17

3.3.2 Primary data research method 17

3.3.3 Sampling and collecting data 18

3.3.4 Results 19

3.3.5 Conclusion on data 26

4 Marketing plan for Summit Education Services 27

4.1 Vision and mission 27

4.1.1 Vision 27

4.1.2 Mission: 27

4.2 SWOT analysis 27

4.2.1 Strengths 28

4.2.2 Weaknesses 28

4.2.3 Threats 29

4.2.4 Opportunities 29

Table 1 SWOT Matrix 29

5.1 Product 31

5.2 Price 32

5.3 Place 33

5.4 Promotion 33

REFERENCE 36

APPENDIX 37

Appendix 1 Interview with CEO (in Vietnamese) 37

Appendix 2 Questionnaire for primary research 40

1 Introduction

Summit Education Corporation was founded in 2010, first as an English and Consultancy centre by Mrs Tran Phuong Hoa and Mr Myo Min It is one of the first centres in Hanoi that provide detailed consultancy service to students who wish to continue their higher education in the USA, and also the most successful During its eight- year- operation, Summit has been extremely successful in helping Vietnamese students to apply for entrance and financial aids at top universities, with the highest rate of successful applications in comparison with its competitors Summit also provides preparation courses for IELTS, TOEFL, SAT, ACT… for students Initially, the courses were part of the preparation for college application However, over the years, as the demand of studying for standardized tests increases, the courses that Summit offers have yield considerable profit for the company In recent years, Summit is currently going through an aggressive expansion; it is no longer a simple Consultancy centre, but an ambitious business aiming at becoming the leading corporation operating in the field of English

education There are currently 4 different centres: two (02) in Hanoi and two (02)

in Ho Chi Minh City Due to the nature of the initial consultancy service, Summit was mostly popular among its target customers, who were talented students from middle class families in major cities It can be said that Summit has been operating

in a niche market, and in order to develop and expand, it needs to change its marketing strategy to grasp a bigger market share

In order to reach the aforementioned goal, different research ought to be carried out, since the pool of target customers as well as the way to conduct business of Summit, both need to be changed The research carried out in this report aims at exploring the market, the customers’ preference, as well as analysing the business of Summit education services Through a number of different research methods, the research’s ambition is to learn the difficulties of the management board, the trends of the market and customers’ expectations, along with the threats and opportunities it poses to businesses The research also learns the strengths and weaknesses of the business itself, and suggest the steps that the management board and marketing team can take to utilise the market opportunities and company’s strength to overcome the difficulties and problems

After going through the theoretical background of some concepts, the report will present the results of the interview with the business owner, the primary research

on the market of teaching and learning English, and finally, the primary research on the preference and expectations of the target customers of Summit when they want

to expand to a mass market The report then use the results of the research to give out some recommendations to the business, especially when it comes to marketing strategy

2 Theoretical background

2.1 What is marketing

Dr Phillip Kotler, one of the world’s leading authorities on marketing gives 3 definitions marketing below:

- “ Marketing is the process by which an organization relates creatively,

productively, and profitably to the marketplace” (Kotler, 1993)

- “Marketing is the art of creating and satisfying customers at a profit (Kotler,

elements, or marketing mix Traditionally, these elements are called the 4Ps:

Product, Price, Place and Promotion The four elements are unique, but interconnected and interdependent, and they help determine a clear and effective strategy to successfully bring a product to a market

2.1.1 Product

A product is an item provided by a business to satisfiy a need or a desire of the customers It can either be a physical, tangible item, or an intangible service The product is produced at a cost and therefore, made available to the customers at a price Depends on the nature of the product, it will follow a distinctive lifecycle,

and by analysing this lifecycle, a company can choose the right strategy to develop, launch and promote the product

A successful product has to fulfill a specific need of the market It must, as the minimum requirement, be able to perform its promised function The communication to users and potential customers regarding its benefits and features must be clear and honest Branding is another important feature for a product Developing a product into a brand helps increase customer loyalty and differentiate the product, making it a stand out

2.1.2 Price

There can be several strategies to determine the price of a product or service Good pricing strategy helps to determine the price point at which profits on sales of products or services can be maximized When setting prices, a business owner needs to consider a wide range of factors including production and distribution costs, competitor offerings, positioning strategies and the business’ target customer base Some of the pricing strategies include:

- Pricing at a Premium

In premium pricing, businesses set costs higher than their cometitors Premium pricing is often most effective in the early days of a product’s life cycle, and ideal for small businesses that sell unique goods

Because customers need to perceive products as being worth the higher price tag, a business must work hard to create a value perception Along with creating a high-quality product, owners should ensure their marketing efforts, the product’s packaging and the store’s décor all combine to support the premium price

- Market Penetration Pricing

Penetration strategies aim to attract buyers by offering lower prices on goods and services While many new companies use this technique to draw attention away from their competition, penetration pricing does tend to result in an initial loss of income for the business

Over time, however, the increase in awareness can drive profits and help small businesses to stand out from the crowd In the long run, after sufficiently penetrating a market, companies often wind up raising their prices to better reflect the state of their position within the market

- Economy Pricing

Used by a wide range of businesses including generic food suppliers and discount retailers, economy pricing aims to attract the most price-conscious of consumers With this strategy, businesses minimize the costs associated with marketing and production in order to keep product prices down As a result, customers can purchase the products they need without frills

However, the technique can be dangerous for small businesses Because small businesses lack the sales volume of larger companies, they may struggle to generate

a sufficient profit when prices are too low Still, selectively tailoring discounts to most loyal customers can be a great way to guarantee their patronage

- Market Skimming Pricing

Designed to help businesses maximize sales on new products and services, price skimming involves setting rates high during the introductory phase The company then lowers prices gradually as competitor goods appear on the market

One of the benefits of price skimming is that it allows businesses to maximize profits on early adopters before dropping prices to attract more price-sensitive consumers Not only does price skimming help a small business recoup its development costs, but it also creates an illusion of quality and exclusivity when your item is first introduced to the marketplace

- Psychology Pricing

Psychology pricing refers to techniques that marketers use to encourage customers to respond on emotional levels rather than logical ones Marketers using this practice set the price of the product slightly lower than rounded number, believing that the customers would perceived the price of the product lower than they really are This practice is most commonly seen in the sale of consumer goods

- Bundle Pricing

With bundle pricing, small businesses sell multiple products for a lower rate than consumers would face if they purchased each item individually Bundle pricing is more effective for companies that sell complimentary products

2.1.3 Place

Placement or distribution is a very important part of the product mix definition as the product or service must be in a place that is accessible to potential buyers

There are many distribution strategies, including:

● Intensive distribution

● Exclusive distribution

Public relations, are communications that are typically not paid for This includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events

Word of mouth is also a type of product promotion Word of mouth is an informal communication about the benefits of the product by satisfied customers and ordinary individuals The sales staff plays a very important role in public relations and word of mouth Word of mouth can also be information, feelings and ideas people publish on the internet, especially Social media

2.2 Marketing in Education service

2.2.1 Education and education service

Education is defined as “the wealth of knowledge acquired by an individual after studying particular subject matters or experiencing life lessons that provide an understanding of something Education requires instruction of some sort from an individual or composed literature The most common forms of education result from years of schooling that incorporates studies of a variety of subjects” (J.Keengwe, J.G Mbae, G Onchwari, 2016)

Education is a pure service sector, which is characterized by intangibility, inseparability, heterogeneity and perishability Education service is a growing industry, which comprises of establishments whose primary activity is education This consists of public, non- profit and for- profit establishments Including among them are primary schools, elementary schools, high schools, colleagues and universities, business schools, language schools, and vocational training centres

2.2.2 Marketing in Education service industry

Marketing is the art of creating a demand and the process of pursuing customers – existing as well as potential All marketing strategies have to find a way to overcome the growing competition and fast changing trends, and educational service sector is not an exception In the past, the need to do marketing was not felt by many businesses in the educational factor, as there always seem to

be a demand for the service However, in recent years, with a large number of institutions in specialised fields has led to a strong increase in competition and the need to change the mindset about marketing in Education service

The education service can be described as a high contact, consumer and people based service (Gibbs and Maringe, 2008) However, innovative methods like using multi-media while providing education service are making interaction between and instructor and student less significant, and the market for unconventional courses (e- learning) is increasing As a pure service industry implications exist for marketing And service quality is not consistent for all customers, or even a single customer at all times The marketers are required to ensure that these features of the education service are better utilized to meet the varying needs of customers

3 Methodology

3.1 Interview

As a qualitative research technique, interview involves “conducting intensive individual interviews with a small number of respondents to explore their perspectives on a particular idea, program or situation.” (Boyce, C & Neale, P (2006) In order to understand the business as well as the vision of the owner, an interview with the CEO of the company was conducted and recorded

3.1.1 Interview method

There are three different formats of interviewing:

- Structured interviews consist of a series of pre-determined questions that all

interviewees answer in the same order

- Unstructured interviews: no questions are prepared prior to the interview

and data collection is conducted in an informal manner

- Semi-structured interviews: In semi-structured interviews, interviewer

prepares a set of same questions to be answered by all interviewees At the same time, additional questions might be asked during interviews to clarify and/or further expand certain issues

This research uses the Semi- structured interview method The researcher prepared a series of questions about the current marketing strategy of Summit, the CEO’s view about the current marketplace, current trends and plans for development The interview also looks at the problems that the company has to face and attempts to fix them

3.1.2 Interview conclusion

From the interview, the following conclusions are learnt:

- From the viewpoint of the CEO/owner of Summit, the company is quite successful in the business it is operating in However, since the company was founded, it has mainly targeted a niche market of high school students in Hanoi, who come from upper- middle class families, and whose English level are quite advanced

- Due to the niche market that Summit is operating in, its courses are also quite limited Summit mostly provides courses to prepare for Standard Tests like SAT, TOEFL, IELTS… The courses are designed for small classes, even one- to- one classes, and often for very good students The current price is also pretty high in comparison to classes of other English centres

- The market for English teaching has changed significantly over the past years People taking standard tests such as SAT and TOEFL are no longer limited in high school students who wish to study abroad These test results are

now used widely as assessment criteria in various institutions and universities

in Vietnam They are also used to apply for Post- graduate programs and expand job opportunities for young people

- There is also an increasing demand to learn English from a much younger age (primary and secondary) The students from these age group are not old enough for Standard test preparation courses, but their English is already very good, and they would soon take the tests to prepare for higher education, either

in Vietnam or abroad

- Due to the aforementioned shifts in market trends and market demand, there is a need for Summit to change their marketing strategy, from focusing from a niche market to targeting a larger pool of English learner

Having learnt the vision of the company owner, this paper will focus on researching the market, the target customers’ needs and demands as well as crafting the new marketing strategy for Summit

3.2 Secondary research:

3.2.1 Secondary data research: English learning in Vietnam

A secondary research on the topic of Language education in Vietnam was conducted in order to gain some insight about the current market

According to a survey conducted by Qandme.net in November, 2016, English is dominantly popular, followed by Japanese, Korean and Chinese More than 60% of the Vietnamese people asked study English for a better career, and 57% hope to find a good job with a higher level of English

Figure 1 What language are you studying now?

Figure 2 Why are you studying English?

It can be seen that of all the languages being educated in Vietnam, English is still preferred among learners, and it is interesting to note that the demand to study

for a better career and job opportunities is the highest People who has this need are either adult learners or students who are about to graduate from university Therefore, Summit definitely should focus on these customers in order to expand their business

Another interesting information that the research pointed out was the level of English of the people According to the research, the number of people who have English level of Intermediate and above only makes up about ¼ of the total people Half of the people are complete beginners, and 21% of the people do not speak any English at all This is interesting because it further indicates that Summit is currently operating in a very small market, and in order to expand the market share,

it needs to target other groups of English learners as well

Figure 3 What is your current level of English?

3.3 Primary research: Survey on target customers

3.3.1 Overview

The research was carried out to study the purchase intention, learning motivation, overall level of English as well as the preference of Summit’s target customers when it comes to choosing an appropriate English course

Based on the concept of marketing mix 4Ps, the questionnaire was created to learn about the preferred place that the classes should be held, the kind products (courses) that learners would like to have, the price range of the products and the promotion programmes that can be applied to reach the new target customers of Summit

3.3.2 Primary data research method

The research was divided into 2 parts, using 2 research methods: qualitative and quantitative Therefore, there were two questionnaires in used: qualitative questionnaire and quantitative questionnaire

The qualitative research method is non-statistical Data collection in qualitative research can either based on unstructured or semi-structured interviews,

or methodologically flexible techniques, e.g individual depth interviews or group discussions that are suited to elicit great detail and a comprehensive view Qualitative research typically is exploratory and/or investigative in nature Its findings are usually inconclusive and cannot automatically be used to make generalizations However, it is indispensable in developing a deep understanding of

a given thematic complex and sound rationale for further decision making

The qualitative questionnaire is used with the CEO of the company to learn about the vision, mission, current strategies, the needs and problems that the

management board is facing The interview is conducted in Vietnamese in a semi structured format The questionnaire was hence designed in Vietnamese

Quantitative Research is used to quantify the problem by generating numerical data or data that can be transformed into analytical statistics It can be used to quantify attitudes, opinions, behaviors, preference and other variables The result can be used to generalize trends from the target population of the research Quantitative research uses measurable data to formulate facts and uncover patterns

in research The collection methods are more structured than Qualitative data collection methods

In this research, the quantitative questionnaire was designed in English and target people who has the intention to study English, with the age ranges from 12 to

40 The questionnaire was divided into 3 main parts:

- Part 1: Determine participants’ intention and motivation when it comes to study English purchasing the courses

- Part 2: Determine the preferred Price, place, product and promotion that participants preferred

- Part 3: questions about customers’ demographic information and their level

of English

The quantitative questionnaire consists of 23 multiple choice questions to evaluate the preference of customers about different business aspects The findings can be found in section 2.3.4 Conclusion on data of this report

3.3.3 Sampling and collecting data

For exploratory studies, the number of the respondents should be at least four times the number of measuring items (Malhotra, N K., Kim, S S., & Patil, A

(2006)) The survey carried out has a total of 23 questions, and therefore, there should be at least 92 eligible respondents This criterion is met in this research The researcher handed out 270 questionnaires in total and collected 265 ones back to analyse

The method used to collect data was to conduct the surveys among Summit’s target customers, who are people interested in English courses provide by English centres in Hanoi The age was between 12 and 40 years old It took about 5 minutes

to answer the questionnaire

The questionnaire was tested among a small pool of participants (30 people)

to ensure the quality of the questionnaire and that there are no mistake or unclear wordings Then the questionnaires are distributed to the target customers

3.3.4 Results

- When asked the purpose of studying English, 21.51% of the asked participants answered that they need to study English for their career or jobs The number of people who wishes to study English for their higher education makes up only 16.23% This category also has the smallest number of people

Figure 4 Why are you studying English?

- As of the English level, the majority of the participants either belong to the beginner of intermediate level (27.17%) The number of people who are at advanced level is the smallest among all level (21.89%) This is consistent with the result of the secondary research

Figure 5 What is your English level?

- The next part of the questionnaire asked about the courses (product) that learners are interested in as well as how they wish the courses to be conducted The most popular courses, or the courses that has most people interested in are Basic Academic English courses with nearly ¼ of the number of people expressed their interest This is followed by IELTS courses with 20.75% of the people Other courses, which are not listed takes up 20%, which is quite considerable It can also be seen that the majority of learners want the lessons to last from 2.30 to 3 hours or shorter, and the courses to be longer rather than shorter

- Students also highly value ‘Teacher’ (20.75%) and ‘Facilities’ (20.38%), as opposed to other factors, like classmates, or materials when asked about the factors that they consider most important in an English class They also expressed the need to have qualified teachers with good qualifications (28.68%) and experience (20.75%) to be in charged of the class

- The ideal class size, according to the majority of participants would range from 10 to 20 students, with 26.04% want to study in a class with 10-15 students and 28.68% want to study in a class with 15 to 20 students

- When asked about the factors that are considered when choosing an English schools, 13.96% of the people chose “variety of program” Whether the school used native or Vietnamese teachers has no significant impact on the preference of students, as shown in the data School reputation and accessibility was also highly valued when choosing an English school

- The next part of the questionnaire explores the effectiveness of Summit’s current marketing strategies Although the difference is not significant, the number of people who do not know or never heard about the brand Summit

outnumbers the number of people who do by more than 3% Social media proves to be the most effective channel for Summit to reach out to its target customers, with 26.04% of people who knew about the brand Summit answered having learnt of it from social media like Facebook or Instagram Word of mouth is another important way to promote the brand awareness, with 25.28% of the people knew Summit from a friend of family member The majority of people who knew about Summit (52.45%) has interacted with Summit’s sale team, mostly via email or Social media This is a good sign, meaning that the marketing team is doing a good job reaching out for their target customers However, 30.57% of the customers described the interaction with the sales team as ‘very unpleasant’ Summit may have to find out the reason behind this so that they can improve the experience that their target customers have with the sale team

- The research also pointed out that 75% of the people stated that they do not wish to travel further than 15km to attend and English class, however good the class is Since the target customers of Summit are people who live in bigger cities, it probably would be a good idea for Summit to set up their centres in populated areas

- Regarding the price of the course, most people would be comfortable paying less than VND 100,000 per hour 1 in 4 people said that they are willing to pay up to VND 200,000 per hour for their English course