5.1 Marketing Strategy
5.1.2 Promotion Strategy
This systematic on-line learning system is a revolution to the market. Whether this new learning system will succeed or not, promotion plays an important role.
The company plans to have following promotions for the first year, the following years will depends on the revenue and the cost effective of the first year. . 1. Free trial
Conduct a survey on target parents, who have children between ages 3 to 8.
Provide one month free trial to those parents who are interested in this system base on the result of the survey.
The goal is 300 free trials out of 1,000 survey result.
Cost: NTD 50 per complete survey - Total NTD 50,000
Support the objective of 5,000 members by first year of the operation.
2. EDM advertisement
Cooperate with EmailCash. They will help to send out the EDM to those target parents. When parents click on the EDM and go to www.abcmouse.tw, they get a special prize from EmailCash.
The goal is to send 10,000 emails and the click rate is 50%.
Cost: NTD 3 per Email - Total NTD 120,000 (4 times/year)
Support the objective of 5,000 members by first year of the operation.
3. LG project
Cooperate with LG TV for the last quarter promotion. The new model of LG TV will have a build in APP store. ABCmouse.tw will provide some songs and books as APP to put in the App Store, the company will also give one month membership to those buyers.
The average buying power of LG TV is 4,000~5,000 people per month.
Cost: the cost for system modification - Total NTD 120,000 Support the objective of 10% brand awareness of ABCmouse.tw
In order for this learning system to be exposure and discussed among the right target parents, the company will ask a famous blogger who also is the target parents, to write a paragraph about this learning system. The blogger need to have over 200 thousand fans in order to be qualified.
Cost: the cost for blogger - Total NTD 50,000
Support the objective of 10% brand awareness of ABCmouse.tw 5. TV program
Make the on-line material come to live. A serial of short TV episodes focus on ABC teaching. The episodes will be designed base on the online materials, so the children will get familiar with the learning system. Once children are attracting by the TV program, they will want to visit the online curriculums.
Cost: NTD 5,000,000
Support the objective of 10% brand awareness of ABCmouse.tw Support the objective of 5000 members by first year of the operation.
6. Kindergartens advertisement
Cooperate with YoYo Kindergartens. ABCmouse.tw will provide 12,000 user accounts and DMs to YoYo kindergartens and teachers will give them to the parents. Parents will have the chance to know ABCmouse.tw.
Cost: NTD 5 per DM - Total NTD 60,000
Support the objective of 10% brand awareness of ABCmouse.tw 5.2 Sales Strategy
The company’s sales strategy will follow from its overall concept and marketing approach. Mass marketing, also spread words using blogs aim to steer as many people as possible. For the first two years, the company will generate as much members as possible through TV program. The company plans to have TV show with Eastern Broadcasting Company, YoYo channel, which has the most children audience (APPENDIX 10 YoYo TV Program ratings). The program will have 26 episodes, the alphabets will be the main learning topic of the episodes and each alphabet will have its own series. Some of the contents in the episodes will come from the on-line material. So the audience will know better about this learning system. It will give them an idea about what is in the online learning system. The performer in the TV will also get reward tickets and she will show the children how they can use those tickets. Children like to do the same thing with their friends, when they see how others decorate their avatars, rooms or hamsters, they will want to do the same thing. This TV show will help with the brand awareness and help parents to know more about this on-line learning system.
5.2.1 Sales Forecast
For the first year of operation, the company project a conservative sales target, which is 5,000 subscription memberships. It is expect that the first two month will not have any income, due to the one month free trial. The monthly net profit will be positive start from the seventh month of operation. The business will turn to be profitable at the second year of operation. Chart 2 highlights the monthly sales, gross margin and net profit of the first year of operation.
Chart 2 Highlights
The expected sales revenue for the first year of operation is approximately 15 million. Chart 3 shows the sales number by each month.
Chart 3 Sales by Month
The company expects to have steady growing sales every year, the target growth rate is 25% each year. The company will have positive net profit at the second year, which will be about 6 million. Chart 4 Sales by Year shows the projected sales for the first three years of operation.
Chart 4 Sales by Year
5.3 Value Proposition
It is the most amazing website that makes it easy and fun for children to learn English at home while developing excellent pronunciation and speaking skills. The purpose of ABCmouse.tw English Learning Academy is to help children learn to understand, read, and speak English naturally with excellent comprehension and pronunciation, by immersing them in an all-English environment of engaging, entertaining, and effective learning activities that include animations, books, games, puzzles, songs, art activities, and more.
ABCmouse.tw makes learning English natural and enjoyable. After children experienced this website, not only they can speak with excellent pronunciation they will begin love learning and reading.
Key brand values for ABCmouse.tw are fun, natural and enjoyable. When parents are looking for English learning curriculum, ABCmouse.tw will be the first brand in their list.
The curriculum at ABCmouse.tw provides everything that is needed for children to learn to speak, listen to, and read English with excellent understanding and pronunciation. Children will learn the alphabet, phonics, vocabulary, conversational skills, and common English sentence patterns through more than 3,000 learning activities that include songs, games, puzzles, animations, books, and art activities.
5.4 Sales and Distribution
Most of the subscription will come from online direct sale. The membership from kindergartens and cram schools will be approached by the distributors.
Abcmouse.tw expects 30% of the sales come from distributors. The commission will be 30% of the revenue they generate.
5.5 Milestones
The accompanying chart 5 Milestones, gives some notional milestones for setting up the online learning system, beginning recruitment, system localization, and
operations, and also reaching profitability on a month-to-month basis. The timetable is ambitious, and it is meant to be. The time for action is now, and once a decision is made to go forward there will be no time, or resources, to waste. Of course, once a final plan, team, organization, and financing is in place, a more refined timetable will be established and specific duties delegated to responsible team members.
Table 5 Milestones
6 Financial Plan
This section of the plan offers the core elements for evaluating the financial viability of the proposed new online learning system. Both in text and in charts and tables, all the key elements are presented to offer a frank appraisal of the venture and the opportunity it presents.
Among the assumptions made were that the Online learning system will begin operating with no income for the first two months and will target 5,000 members at the first year of operation and the growth rate is 25% every year. As for the employees, the company will only has 4 employees at the first year and recruits two more in the following year. Future head counts will depends on the business. These assumptions were taken to ensure a conservative approach to the financial planning, and to demonstrate that even with these constraints the proposed learning system can be profitable as early as the second year of operations.
6.1 Capital Requirements
Headquarter will be providing NTD 10 million as the investment for Taiwan branch. The company will give the headquarter 50% of the overall sales every year as the royalty payment.
6.2 Key Financial Indicators
The accompanying chart 5 Benchmarks, which is based on the actual financial projections for the proposed learning system, clearly shows a pattern of solid growth over the first three years of the operation (and which would continue into the future), which the financials consider in depth. There is a good balance between revenues and costs, yielding healthy gross margins, and in a predictable, steady pattern of growth. Financial turn-over also is in good balance and, as other tables and charts show, with careful planning of expenditures cash flow is maintained in good balance throughout the life of the plan.
Chart 5 Benchmarks
6.3 Break-even point
As the accompanying chart 6 Break-even Analysis demonstrates, the break-even point comes at relatively modest monthly 1,348 members. It is anticipated that this number of members will be reached fairly early in the first year of operation, around the sixth month of operation. Much higher memberships – the target is NTD 5,000 in the first year of operation - can be anticipated based on the overall business and marketing plans for the English learning system.
Chart 6 Break-even Analysis
Table 6 Break-even Analysis lists the monthly break-even point and the assumptions for Average precent variable cost. The royalty fee is 50% of the revenue which is a big portion for the variable cost.
Table 6 Break-even Analysis
6.4 Projected Profit and Loss
As the accompanying Chart 7 Profit Monthly shows, the proposed on-line system has the potential to achieve profitability, on a month-by-month basis, by the seventh month of operations. The company will have positive net income at the end of the second year of operation as Chart 8 Profit Yearly demonstrate, given the conservative nature with which the numbers were calculated.
Chart 7 Profit Monthly
Chart 8 Profit Yearly
All cost items are covered in in Table 7 Profit and Loss, while the organization and salary and cost items presented are not lavish, they both cover the needed functions adequately and also allow some margin for movement. It is worth noting that a net operating profit of more than 6 million NTD is projected for the second year, with a net profit of more than 10 precents. Profits in the third years show substantial growth, with net profit in excess of 14 million NTD projected.
Table 7 Profit and lost
6.5 Cash-flow Projection
Cash flow is probably the factor that makes or breaks more businesses than any other, and it is critical to consider in this English online learning system, since most of the deals are based on cash. The company did not have much long term or short term liabilities, due to the business model. Customers can only start the memberships once they finished the payments online.
As the accompanying chart 9 Monthly Cash Flow and Table 8 Cash Flow for Three years show, with careful planning and control of resources and expenses, cash flow crises should not pose a threat to the new English learning system. Even allowing for a 0.5 million USD for the TVC project at the beginning of the operation year and other significant up-front promotion costs, as shown in the accompanying illustrations, at no time does cash on-hand become a major issue during the first year, and even less so in the follow-on years.
Chart 9 Monthly Cash Flow
Table 8 Cash Flow for Three years
6.6 Projected Balance Sheet
As the accompanying Table 9 Balance Sheet indicates, the proposed venture will maintain a healthy position, even with limited hard assets other than cash, and the company's net worth is projected to grow beginning from the end of the first year from about 6 million NTD to 15 million NTD by the end of the third year, with continued
APPENDIX 11 Financial Statement shows the profit and loss statement, cash flow and balance sheet in monthly base.
Table 9 Balance Sheet
7.0 STRUCTURE AND MANAGEMENT
7.1 Organizational StructureABCmouse.tw will be managed by Jerry Chen, who is one of the founders. Initially the business will employ four full time staff members at the first year, as shown in the organizational chart below. The company plan to add two more headcounts at the second year.
7.1.1 Job Description Country manager
Since this is a new learning method in Taiwan’s markets. The country manager should be a person who knows this learning system very well, and familiar with Taiwan’s market. The person should also have the ability to manage and grow the
strategies are relative important, this person should have strong background on these aspects in order to lead the team toward company goal. Another important requirement is the candidate should be able to coordinate communication between headquarter in US and Asia Pacific countries.
Jerry Chen will be the country manager of ABCmouse.tw. He is from Taiwan, and went to USA 10 years ago. During these years, he travels back and forth between Taiwan and USA for business purpose. He is familiar with this product and also familiar with Asia market. At the same time, he has the experience of established a brand new company.
Business Development
As for this position, the candidate should have the ability to interact with customers to understand customer needs and project opportunities and formulate solutions for potential projects. One of the most important responsibilities in this role is to identify new business ideas and opportunities. Whether the company can meet the sales target, this person plays an important role.
Grace Tung will be responsible for the business development. She has7 years of experience on children education field, before this job she worked for an agent for children’s English learning materials. She has the network and knows what parents are looking for; she has the ability on sourcing and creating new business
opportunities, to maintain competitive advantage which is important for the company.
Marketing
The person in this position will implement the marketing strategies, tactics, and
plans according to the business development team. The candidate will be responsible for assessment of potential markets, product life cycle planning, definition of marketing requirements, and collaborate with business development and account owners to deliver relevant information about the value proposition and competitive positioning.
The company mainly focuses on on-line marketing. The candidate should have on-line marketing experience and knows in which social or network media will be the best place to attract potential customers.
Sales
The most important job of the position is to increase the revenue, turning all the potential customers into loyal customers. Not only create new customers, but also know how to retain customers. Business development and marketing team will help to create the opportunities and the candidate should be able to turn each
Jenny Tsen will be responsible for this role. She has five years of sales and distributor managing experience. Her sales experience is with DELL computer and a consultant service on information security. Both products need strong persuasion in order for customers to purchase. She also has the experience on managing the business’ brands, large customer accounts, distributors and finding new customers.
Customer Service
This position represents ABCmouse.tw and should achieve high customer satisfaction. At the beginning, customer service will via emails only, it will not have any telephone service. The candidate will be able to work closely with headquarter and required to be able to identify the root cause and provide customers with the solution in a timely manner for mission critical issues of ABCmouse.tw products. The other important work for this position is to collect, summarize and analyze all customer voices, provide suggestion to relater departments for further reference/improvement, at the same time drive the communication with the customer to ensure the customer has confidence on problem resolution provided. The candidate will need to work with sales to contact members and ensure they are satisfying with the learning system, especially those who file complains.
The candidate also needs to do Chinese translation of the web, so he/she need to have good English and Chinese skills.
8.0 Risk
Major risks to ABCmouse will be lacks of the support from headquarter, members share accounts and competitors imitate the product.
Risk Likelihood Impact Mitigation lacks of the
support from headquarter
Low High Will sign a contract with headquarter.
Headquarter needs to support the learning system at least one year after it decide to terminate this business line.
Headquarter will authorize ABCmouse.tw have the right to maintain this website, but will not be able to expand the contents.
members share accounts
Medium Medium The subscription fee will be acceptable to every family, which will encourage them to give each user an independent account.
Since each child will have his or her own avatar and room, this will lower the willingness of sharing the account.
competitors imitate the product
High Low The website will constantly update the content. It takes a lot of time and money to create a similar website. By the time competitor creates the learning system, ABCmouse.tw already has its member base.
APPENDIX 1 Perceive Importance of English ability
(Source: From survey result at May 2012 sample size：1000)
APPENDIX 2 Learning Activities A. Reading
B. Songs
C. Puzzles
a. Puzzle with circles
b. Puzzle with numbers
D. Games
a. Games about Reading
b. Games about Social Science
E. Art & Colors
a. ABC Dot-to-Dot: F to J
b. Paint by Numbers and Letters
APPENDIX 3 Learning Themes A. Zoo
B. Farm
C. Vocabulary
APPENDIX 4 Shopping Mall
APPENDIX 5 Elements which Parents are Looking for in the Learning Material
(S ource: From survey result at May 2012 sample size：1000)
APPENDIX 6 Various World Locations
Besides Classroom activities, ABCmouse.tw provides various world locations.
Children will also gain the knowledge of the world environment.
APPENDIX 7 Learning Activities in the Lesson
For each lesson it has a learning topic and there are several activities which are related to this learning topic. Activities include songs, books, art, puzzles and games. In this example, the learning topic is letter R.
APPENDIX 8 Population of Taiwan at Year 2012 Table A Population for Age 3 to 8
Population by Single Year of Age End of 1974-2011
Unit : Persons
Table B Population for Age 0 to 2
Population by Single Year of Age End of 1974-2011 2010 T. 551,334 157,282 194,878 199,174 M. 287,658 82,126 101,439 104,093 F. 263,676 75,156 93,439 95,081 2011 T. 551,707 187,442 168,973 195,292 M. 286,963 97,271 88,055 101,637 F. 264,744 90,171 80,918 93,655
End of Year Sex Grand Total 3 4 5 6 7 8 2009 T. 1,364,780 206,680 208,261 218,735 227,730 246,345 257,029 M. 713,097 108,014 108,505 114,760 119,284 128,792 133,742 F. 651,683 98,666 99,756 103,975 108,446 117,553 123,287 2010 T. 1,314,010 205,877 206,882 208,559 218,802 227,587 246,303 M. 687,213 107,613 108,129 108,672 114,809 119,218 128,772 F. 626,797 98,264 98,753 99,887 103,993 108,369 117,531 2011 T. 1,267,324 199,181 206,102 207,160 208,625 218,674 227,582 M. 662,778 104,072 107,711 108,288 108,715 114,749 119,243 F. 604,546 95,109 98,391 98,872 99,910 103,925 108,339
APPENDIX 9 Competitors Comparison Disney’s world English (Price：NTD 200,000)
Main Characters：
ENGLISH TIMES (Price：NTD 36,000)
Content:
10 DVD： 35 min DVD has a main story and divided into 4 sections.
10 books：books go with the DVD, Children can read the book while look at DVDs.
40 interactive CD：330 games, includes songs、cross-word puzzle and puzzles.
10 drawing books：Interactive drawing books, emphasis on what they have learned.
Main Characters:
The Dinoops (Price：NTD 18,000)
The Dinoops (Price：NTD 18,000)