Market Strategy for new product line for Classplus

Product Brief - coaching institutes can create their content packages (consisting of notes, online tests, and videos)
and host it on their mobile app. Any student who comes to their app can potentially come on the app, pay for
the course and get all the course content on the app as soon as they pay for the course. This can be useful for
people who sell their videos in alternate ways right now or for people who want to conduct their online test
series for students outside their coaching institutes also.

Problem Statements –

 You identify tutors from across the country for whom this can be useful. (Strategy and Marketing)
 How will you reach out to them and what can be your 2-3 lines of pitch (make 2-3 pitches) (3-5 lines
each)
 What will the hurdles for you if you want to sell this platform to 500 coaching institutes in the next 3
months? (Resource estimation) (Market Strategies)
 What support, or specific features, or resources (Imagine that you will lead the team) would you
critically need for the success of this product
 How should the company best derive monetization out of it and how big can that be from let's say 500
coaching institutes? (Market size estimation)

Background and Assumptions

A. Customer Segmentation –

1. Institutes which want to increase their offering from classroom to digital platform.
2. Institutes running correspondence courses and/or offsite test series and want to digitize the distribution
process.
3. Institutes which want to launch offsite test series.
4. Institutes which already sell their content through web interface and want to migrate to native apps.
5. Independent creators on udemy, unacademy, youtube, itunes etc. wanting to launch their own digital
platform.
6. Institutes already using competitor products.
7. Companies who want to train their offsite employees.

For the purposes of this case study we will only consider first 5 segments since 6 and 7 quite possibly will have
long sales cycles and would consume important resource in the launch and expansion period.

B. Product Complexity –

The product is a new concept and will have mid to high complexity due to various factors to be considered –
hosting space, bandwidth, number of users, number of admins, number of courses, number and frequency of
tests, security, analytics, payment gateways, subtitle, branding and customization to name a few. Add on services
such as content dripping, live streaming, security, marketing, offline viewing, push notifications, verification,
certification, HD/UHD, number of screens etc., would again increase the complexity of the product.

C. Competitive Landscape –

Currently there are three options for content creators on the market –

1. Using 3rd party market places for videos such as – Youtube, Vimeo, Itunes, Udemy etc. These platforms
generally charge on per transaction basis. e.g. Vimeo takes 10% of the sales, Udemy takes the lowest –
3% share for instructor coupon sales, 50% for organic sales and 50% to 75% on sales though Udemy
marketing program. These platforms are good for people starting out and building their brand.
2. Using the web based products such as shopify, thinkific, teachify etc. These platforms charge in a
combination of subscription plans and transaction %.
 3. Using native app builders such as appypie, mobikul etc. These platforms generally have subscription
plans and might need some coding experience for customization.
4. Getting their apps created from 3rd party vendors. This would entail a large one time fixed cost and a
smaller ongoing support cost either monthly or yearly.
5. The most relevant competition LMS such as Learnwords, Learnyst, Ofabee etc. They provide app based
systems with subscription packages and enterprise models.

Go To Market Strategy
Pricing Strategy –

Most of the direct competition offers a subscription service segmented on various different factors such as
number of users, bandwidth, storage etc. There are also add on services that they can upsell. This strategy has
its benefit such as-

1. The product is less complex and therefore easier to sell.

2. There are opportunities to upsell and potentially increase LTV.
3. Guaranteed upfront revenue.
4. Shorter sales cycle due to less complex product.
5. Targeted plans for all sizes of businesses.

However a transaction based pricing strategy also offers a lot of benefits –

1. Potentially more revenue than subscription based models.

2. Can provide full suite of products to the customers and they are free to charge according to their
business model to their students.
3. No restrictions and an easier pricing plan that is universal and would not confuse the customer.
4. The customers can try other services without the need to upsell and decide for themselves if it works
for them or not.
5. Less touchpoints and can work better for a touchless model in the future than confusing subscription
plans.
6. No upfront commitment would really entice 50%-50% clients.
7. Potentially reduces sales cycle due to elimination of trial period.
8. Future plans would not be needed to be customized for geography/currencies and also scales easily.

Taking 3% Udemy as benchmark we should be able to price the product at 15% and position ourselves in the
premium segment.

Ofcourse there would be challenges too by using this pricing strategy.

1. The product becomes complex and harder to pitch. We can overcome this problem by only pitching the
solution to the problem faced by the customer and not upselling. The customer can and probably will
try other services and decide if he wants to use it or not.
2. Misuse by institutes of no restriction policy. We can overcome this problem by doing what every
unlimited service provider does, by having a fair usage policy.
3. This would end up costlier for larger institutes (say more than 3000 students) but then we can very well
offer competitive enterprise plans to them, if required.
4. Not getting paid and losing resources on zero earning accounts. We could close these accounts after say
three months as inactive accounts to control the COGS losses.

Let us take a 2 cases and compare prices with Learnyst and ofabee (sources – respective websites).

(i) 100 students

Learnyst cost per year for courses and tests – 1.8L without any addons
 Ofabee – 1.32L
(ii) 2000 students
Learnyst cost per year for courses and tests – 16.8L without any add-ons
Ofabee – enterprise plan

Baijus has an average plan of 40,000 per year

FITJEE correspondence course costs 12,000 and test series costs 8,500

Mypat.in offers test series beginning from 2,500 to 15,000

Using these as benchmarks, let us assume that on an average a video lecture series to cost 10,000 and a test
series to cost 5,000, thus total ticket size of 15,000 per year. Therefore earnings for 100 students – 2.25L and
2000 students – 45L

Market Size estimation –

Let us assume that for the 500 institutes the average number of students is 200, thus the total revenue would
come out to be 22.5Cr

Resource Estimation –

Sales Budget -

Target 500 customers in 3 months – Let us assume 33% conversion rate (for the sake of simplicity let us assume
500 new customers and not cross-sold ones from existing accounts)

Per month stats

500 Leads -> Responsibility – 3 Lead generation team + 5 BDs

400 MQL -> Responsibility – 5 BDs + 3 Inside Sales

300 SQL -> Responsibility – 3 Presales + 5 BDs

166 Conversions –> Responsibility – 5 BDs + 3 Inside Sales

Team Structure –

Lead Generation Team – 1 Lead generation manager – 8LPA + 2 interns – 3.6LPA

Inside Sales team – 3 inside sales reps – 18LPA

Presales Team – 3 presales reps – 24LPA

BD team – 5 outstation BDs – 40LPA (including traveling cost reimbursements etc)

Total team size - 13 members for 94LPA

Marketing budget –

SEO + Social Media Marketing – 8LPA

PPC/PPM budget – 50LPA

Content Budget – 30LPA

Offline Marketing – 12 LPA

Total Marketing Budget – 1Cr

Provisional Budget – 26 LPA

Total Budget – 2.2 Cr pa

Other overheads and requirements – CRM, project management tools, webinar/online demo tools, analytics
support, HR team support.

CAC and LTV calculations -

LTV = revenue – cogs

Assuming an higher than industry standard of 20% COGS (hosting, licenses etc)

LTV = 0.8 revenue

Let us assume for simplicity average yearly revenue of 4.5L, 30% churn rate and average frequency of 2 (once
per year for 2 years)

LTV = 0.8*4.5*2*0.7 = 5.04L

CAC = cost of sales and marketing/no of customers = 220L/200 = 44,000

LTV to CAC ratio = 11.5 which is a healthy ratio and more than the recommended ratio of 3, (can be a lot lower
for startups)

Hurdles –

1. Difficult concept to sell due to low customer pain, no sense of urgency, and comparatively higher cost.
However the product has great value and could be made easier to sell if the efforts are properly
targeted.
2. That is easier said than done and would require dedicated lead generation team to be able to provide
relevant leads.
3. Competition is already present, but then again the market is huge and largely untapped.
4. Hiring the right talent and would require support from the HR team which needs to be followed up with
proper training and onboarding.

Marketing and Messaging –

Let us revisit the 5 segments of clients, try to identify them and explore their pain points and pitch our product
to them.

1. Institutes which want to increase their offering from classroom to digital platform.
Identification – Challenging process and would want to try and identify 2 sets of customers (i)
established cash cows (ii) high growth rate stars

Pain points and Pitches –

(i) Want a trusted and reliable product

“Trusted by over 1000 institutes across India. Don’t let your growth stagnate. With digital
classrooms you can increase your revenues with marginal costs. Join the digital revolution with
Classplus and help more students succeed.”

(ii) Don’t have funds for more physical expansion

“Brick and mortar is not the only way to expand. Start your digital classrooms with no upfront costs
and continue your growth. With Classplus you become unstoppable!”
2. Institutes running correspondence courses and/or offsite test series and want to digitize the distribution
process.
Identification – Easily identifiable through the net.
Pain point– Looking for a convenient process.

Pitch-
“How much bandwidth do I need? How much storage do I need? Can I afford the add-ons?
Are these some of the questions troubling you? We don’t have any arbitrary restrictions.
You are good at creating courses and tests, we are good at their digital distribution.
So don’t wait and try the full suite of Classplus today!”

3. Institutes which want to launch offsite test series.

Identification, pain points and pitches– Similar to Customer segment 1

4. Institutes which already sell their content through web interface and want to migrate to native apps.
Identification – identifiable through the internet.
Pain point – Looking for better alternatives

Pitch –
“Looking to upgrade to Android or IOs? Try our complete offering with easy payment solutions, no
restriction and completely branded native apps. Join the mobile revolution, upgrade to mobile with
Classplus now!”

5. Independent creators on udemy, unacademy, youtube, itunes etc. wanting to launch their own digital
platform.
Identification – Identifying via these market places.
Pain point - Risk Aversion

Pitch –
“Ever dreamt of starting your own coaching institute?
Afraid to invest in a highly competitive market?
With Classplus pay only when you make money.
So stop thinking and try Classplus now!”