Price

destination the location strategy is developed differently. In addition to the previously discussed points a school must consider the multi-directional flow of traffic, congestion points, and whether or not the majority of parents will be dropping of children by foot or car.

A parent that drives will neither appreciate your school if it is on a heavily congested street that is backed up every day and adds time to their commute, nor will parents prefer a school located on a one-way street or small back alley that is difficult to navigate through, hard to find, or causes them to drive in circles. Good spots of interest for foot traffic will be the placement of a school near a major MRT station, bus loop or parking structure. A key point in deciding a high occupant work area school is that comfort is as important as convenience, if not more, but that inconvenience will cripple a school. A last option for a school location can be to suit/target a specific and large business that is out of the way or off the beaten path and to tailor the school's programs and times to those specific customers’ needs. One danger in doing this is the school's dependency on that particular business. In this situation some all-important questions have to be asked like, does that business have the supply of students or the demand for a school to house them. Examples of this would be like hospitals, banking sector, technology parks, universities and schools.

A last viable option for a school's location deals with establishment of a language/cram school near the public and private schools that your students attend or will attend in the case of kindergartens. A major concern for parents involves the logistics of getting their children from place to place. Schools located in the proximity of a school which offers these important services will ease parental concern.

4.8.3. Price

4.8.3.1. Price Strategy

Our pricing strategy is market oriented and based on packages that can be stripped down or built up, which allow consumers to get what they pay for. Abraham Academic Academy will match our major competitors programs and prices for our basic packages. However, prices will be marked-up through program differentiation and additional services allowing for development of more complete and intensive programs. The pricing section 6.4.1 in the

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financial section under revenue generation has more details on our pricing scheme.

Abraham Academic Academy realizes that the value of an educational product or service is highly subjective to a consumer. Pricing is considered to be delicate and fragile within the first few years of operation, because the perceived value is based on the image of the school and its reputation as much as the specific product and service itself. Therefore, extra attention should be paid to price consistency, monitoring and discounts.

4.8.3.2. Price Consistency

The enforcement of a rigid price policy or school-wide pricing scheme for our schools would be unrealistic, especially since costs can significantly vary between schools and our schools pride themselves as being affordable. Abraham Academic Academy believes that significant interference by head-office on the matter of pricing would jeopardize the competitiveness of our franchisees. However, Abraham Academic Academy does intend on trying to maintain a fairly consistent pricing policy in order to prohibit franchisee or consumer exploitation and to reduce price volatility that may offend consumers. Likewise, both of these can seriously hurt the brand's image with respect to our customers’ perception of quality and their expectations from the school.

The major factors that determine a school’s cost will be:

• Real estate value

Our customers are more sensitive to the price of a program than to its specific details, but a small decrease in price will not gain us extra market share do to retaliation measures from our competitors. However, we do believe that a small increase in price will be indiscernible for an important portion of our customer segment and it is from this segment that we intend to

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extract value through the use of our program's flexibility, specific program offerings and add-ons. Abraham Academic Academy plans to match our competitors’ prices to equivalent program offerings at bottom-end of the program spectrum, but plans to increase pricing through program differentiation at the top-end. Daycare Services and basic Chinese-Only classes represent the low end of the pricing strategy and will be fairly consistent throughout the chain; whereas the All-English and intensive programs can have pricing set according to their specific market and clientele needs.

On a final pricing note, Abraham Academic Academy realizes that the language/cram school industry is mature and there are established price points for products and services in this industry. Therefore, our schools and programs will be developed in relation to our competition in the same area and our litmus paper and gauge for pricing will be the other major chains in an area like Hess, Happy Marion, and Kojen. This way Abraham Academic Academy schools will remain competitive.

4.8.3.3. Price Monitoring

The pricing scheme of a school will be primarily left up to the discretion of the owner or management team of that particular school once that school has completed its trial run--been up, running and profitable for period of 2-3 years. Initially, head-office will work together with a new school to construct their first pricing scheme. Head-office will then provide a school with a pricing shell, standards and guidelines to operate within as well as provide additional support as needed. Head-office will continue to work closely with a school during its first few years of operation to ensure fair and consistent pricing. The purpose of scrutinizing a new school is due to the variability that can exist in a new school’s pricing scheme; quite often pricing abnormalities surface and raise parental concern that may tarnish brand image. Therefore, head-office has the right to investigate specific situations as deemed appropriate.

To control pricing, a school’s curriculum is bound by contract. This limited control prevents serious price fluctuations. Many minor details (price change due to inflation or a change in program elements) can be changed at the discretion of the branch, whereas more major

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4.8.3.4. Price Discount

Abraham Academic Academy will offer both location specific and chain wide pricing discounts. The chain wide discounts that we offer are:

• 30% discount to students who are citizens of another country or hold a different passport (promote multicultural environment, also citizen holding different passport represent affluence and status).

• 50% discount to foreigners from an English speaking nation (white, not ABC or other type of Chinese nationalized citizen)(we won't actually be teaching them as much as they would be promoting our program, fee charged represent daycare services rendered).

• 40% discount for an employee’s child, 60% for every other child.

• 10% discount to immediate family members of an employee and 20% for every other member from that family (proof required) (the intention is to attract and retain qualified personal within the chain).

• We will also help parents with their tuition through a referral system. Parents will receive a 10% referral system discount. A parent will receive a 10% discount for every successfully referred student to our program. Parents will retain that discount for as long as that referred child remains in the system.

• 10% student discount. Students can earn 10% off their tuition for the month they participate in an Abraham Academic Academy sanctioned event.

• 5-10% academic discounts. There will be a few year-end prizes for some outstanding students in a particular school.

Franchisees are allowed to offer location specific discounts to trade customers, to community establishments, in trade for advertising or to any other market segments for any reason they deem fit. Franchisees discounts can be greater than those offered by head-office, but not less than without securing proper authorization first. A franchisee that does not want to honor a specific company-wide discount needs to get proper authorization for the exclusion; primarily by explaining why.

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Abraham Academic Academy plans to get a majority of our marketing messages across to our target market and end users through hands on public relations, and grassroots marketing. We divide our promotional budget 3 ways: national corporate-wide schemes, community schemes and localized ad targeting. On the national scale, our intentions focus on public relation and our intentions are to attend fairs, conventions, exhibitions and shows. In addition, we will host events and set up stands at opportune moments around the country. At the school level, we teach our franchisees the importance of establishing their school as a member of the community and the benefits that can be received when the school is perceived as a pillar in the eyes of community members. Here, we focus on a schools involvement with the complimentary and supplementary services available in their area. In addition to this word of mouth, grassroots approach we intend to get out and make other friends and key partners within the local community. We want to learn about the local businesses and the influential and special people that exist in our school's community. We then will want to select a few noteworthy ones that represent some kind of value or interest that we would be proud to be associated with and then approach them to see if they would like us to speak highly of and endorse them. The purpose of this is to begin an exchange of services; the promotion of one another through the spreading of awareness and love. As for the localized ad targeting, a portion of our budget is set aside and is used to motivate local schools to work together for advertising purposes. In this scheme, we try to foster strong franchisee relations by partnering up local schools and working with them in hammering out a mutual advertising plan with mutual benefits. The idea is that corporate head-office will match each school’s investment in their proposed marketing plan. In times when schools are not willing to work together, we will focus efforts on bettering relations. However, when relations are abundant and we do not have the funds to finance all the proposals, then we will turn it into a competition and reward those with the best ideas. As for the utilization of these three promotional avenues there are good, better and best times to promote educational products and launch ideas. The best time would coincide with a seasonality that exists in the industry. It is during the school holidays and semester breaks that students’ and families’ have time to breathe and are able to think about their next educational steps.