Organised players go aggressive on branding, market segmentation and price differentiation
When Australia-returned Lina Asher came to Mumbai to volunteer as a teacher, she saw a terrific opportunity in the absence of an organised pre-school player in the market.
Asher then borrowed Rs 30 lakh from her dad to float her own chain of pre-schools— Kangaroo Kids Education (KKEL). “I promised my dad a good investment and today we are a chain of 60 schools in 17 cities across India, with centres in Dubai and Maldives,” says Asher.
While the segment is still dominated (95 per cent) by the aunty-next-door-model kind of pre-schools, organised players are focusing on branding themselves better to reach the target segment. At present, India has around 11 major chains and approximately 10 smaller players active in the space.
And most of them operate just like an FMCG or consumer durables firm would do in marketing themselves – be it in branding, product differentiation and market segmentation according to the specific profile of customers within a locality.
“Branding is vital for us as we aspire to be a national player. We market ourselves with women magazines, newspapers and television channels to increase the enrolment focus,” says Prajodh Rajan, Vice President and Project Head, EuroKids.
EuroKids, present in 258 towns with 650 pre-schools, will spend Rs 4.5 crore on branding and marketing compared to Rs 3 crore last year. Educomp Solutions has also launched a brand ‘Roots to Wings’ with 60 pre-schools at present. Educomp acquired a 50 per cent stake in Euro Kids in 2008 for Rs 39 crore.
These schools have evolved their own pricing model. So while a market like Mumbai may see four-five different pricing strategies, other towns may see uniform pricing. “We have divided our pricing model into four—A B C and D. While for A model pre-schools (upmarket locations) have a standardized fee structure between Rs 30,000 to 40,000 per annum, we charge Rs 20,000 to 30,000 in suburban Mumbai markets. For other locations our charges vary between Rs 12,000 to 20,000 per annum,” says Rajan.
While Kangaroo Kids is primarily a premium brand at an average annual fee of Rs 35,000-45,000, Kid Zee charges anywhere between Rs 100,000 and 500,000 per year for its schools in upmarket metro locations. However, in suburban Mumbai or Delhi or Bangalore, the school's charges could vary between Rs 10,000 and 20,000.
Pre-schools do not follow any structured curriculum. As pre-schools are neither a state or centre subject, the regulatory mechanism does not come in play. That is probably the reason why the sector has been receiving a flurry of investments from the private equity players.
According to a recent report on education by Kaizen Management Advisors, a private equity fund, pre-schools are estimated to be a Rs 2,300 crore segment, and the market is expected to grow to Rs 4,600 crore market by 2012 (35 per cent CAGR).
The growth is due to low penetration (one out of 100 children enrolled), of the 119 million children between the ages of one to four.
“The market is expected to expand by more than two times in size by 2012,” the study reports.
This is evident from the fact that Zee Learn, which runs the pre-school chain — Kid Zee — plans to expand from its 600 odd pre-schools at present, to 2,000 schools in the next three years.
“It’s a service market. If you focus on doing the right thing on child development, an image is being created automatically,” says Sumeet Mehta, CEO - Zee Learn.
Pre-schools require a low upfront investment. Rentals form the major expense along with staff cost.
Organized players have largely scaled up using the franchisee route — 1,700 schools catering to 200,000 students at present.
While these chains also formulate their own curriculum and train their own teachers, infrastructure offerings at the schools vary in accordance with the fee. So while the schools in upmarket areas might have an additional frill of an air conditioned class room and outdoor toys, the ones priced less would do sans these facilities. Teaching methodology and curriculum however, remains the same.
“The sector appears attractive due to its non-regulatory framework. With the kind of aggressive growth plans the organised players have in place, there is a lot of money chasing very few opportunities. It’s only going to get bigger and bigger,” said a senior executive from a private equity firm.
Tags:Franchise Marketing, Franchise Branding, Preschool Marketing, Franchise Advertisements, Lina Asher, Kangaroo Kids, Eurokids, Prajodh Rajan, Zee Learn,sumeet mehta,
Source:Pre-schools learn the ABC of promotions/Business Standard/Kalpana Pathak / Mumbai July 29, 2010, 0:54 IST
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Showing posts with label Eurokids. Show all posts
Showing posts with label Eurokids. Show all posts
Thursday, July 29, 2010
Thursday, January 28, 2010
Franchise is the best way to BE YOUR OWN BOSS
“Franchise Opportunities – Be your own Boss”
FRANCHISE: A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee. A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. Some examples of today's popular franchises are McDonald's, Nakshatra, Subway, Domino's Pizza, and the UPS Store. An individual who purchases and runs a franchise is called a "franchisee." The franchisee purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and the franchisee has to pay an ongoing franchise royalty fee, as well as an up-front, one-time security fee to the franchisor. Franchising has become one of the most popular ways of doing business in today's marketplace.
History: Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country. In 1955 Ray Kroc took over a small chain of food franchises and built it into today's most successful fast food franchise in the world, now known as McDonald's. McDonald's currently has the most franchise units worldwide of any franchise system. Today, franchising is helping thousands of individuals be their own boss and own and operate their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves. There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business, since a proven business formula is in place. The products, services, and business operations have already been established.
Advantages: Corporate image, brand name recognition, established market, set standards of operations & training, set instructed infrastructure, off course a better chance of success and immensely profitable venture.
Disadvantages: limited ownership, ongoing cost franchise fees & percentage of your franchise’s business revenue, additional charge such as cost of advertising, besides most well known franchises are too expensive.
Different types of Franchising: There are many different types of franchise ownership opportunities. You may choose to become a multi-unit franchise owner, an area developer or you may decide to buy an existing franchise. Each ownership opportunity has its own unique responsibilities. The following is a list of the many different ownership opportunities franchising offers. 1) Single Unit Franchise: It is the most likely place a brand new entrepreneur would begin, as the franchisee would be responsible only for running one unit, although he or she would extremely involved with all the daily operations of the business. 2) Multi-Unit Franchise: multiple units are sold at a reduced rate per unit by the franchisor. 3) Area Developer: area development is similar to multi-unit franchising; the only difference is that it typically involves greater number of outlets encompassing a larger geographic territory. 4) Master Franchise: allows people or corporations to purchase the rights to sub-franchise within a certain territory. A master franchisee helps the overall franchise company by recruiting franchisees to open units within a specific territory. One master franchise is for one state only. 5) Buying an Existing Franchise: many franchise owners decide to sell their franchises after they have opened.
Approach: One need not to surprise if the franchisor questions include detail information about the proposer and his spouse financial position, experience, background, and even aspirations, questions designed to help the franchisor determine whether or not the kind of person he or she feels will be able to run the business successfully and fit into the franchise model. The franchisor will continue to explore interest, commitment and suitability of the proposer. If the franchisor decides a suitable franchisee, he will be offered a franchise contract that lays out the obligations of both parties. Like any other contract, some aspects of it may be open to negotiation. And like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, get them written in. One must consult an advocate before signing the contract. Buying a franchise is like buying any other kind of business. An entrepreneur has an opportunity to startup from Rs.10, 000/- in education to Rs 01 crore in jewellery as an initial investment in India. Naming few companies extending franchise opportunities; Levi's, Peter England, Belmonte, D'damas, Nakshatra, Kidzee, Eurokids,Amson, BodySpa, MovieMart, Silversand etc
Source:http://thirdeye-raghvendra.blogspot.com/2010/01/franchise-be-your-own-boss.html
Raghvendra, Jodhpur, Rajasthan
FRANCHISE: A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee. A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. Some examples of today's popular franchises are McDonald's, Nakshatra, Subway, Domino's Pizza, and the UPS Store. An individual who purchases and runs a franchise is called a "franchisee." The franchisee purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and the franchisee has to pay an ongoing franchise royalty fee, as well as an up-front, one-time security fee to the franchisor. Franchising has become one of the most popular ways of doing business in today's marketplace.
History: Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country. In 1955 Ray Kroc took over a small chain of food franchises and built it into today's most successful fast food franchise in the world, now known as McDonald's. McDonald's currently has the most franchise units worldwide of any franchise system. Today, franchising is helping thousands of individuals be their own boss and own and operate their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves. There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business, since a proven business formula is in place. The products, services, and business operations have already been established.
Advantages: Corporate image, brand name recognition, established market, set standards of operations & training, set instructed infrastructure, off course a better chance of success and immensely profitable venture.
Disadvantages: limited ownership, ongoing cost franchise fees & percentage of your franchise’s business revenue, additional charge such as cost of advertising, besides most well known franchises are too expensive.
Different types of Franchising: There are many different types of franchise ownership opportunities. You may choose to become a multi-unit franchise owner, an area developer or you may decide to buy an existing franchise. Each ownership opportunity has its own unique responsibilities. The following is a list of the many different ownership opportunities franchising offers. 1) Single Unit Franchise: It is the most likely place a brand new entrepreneur would begin, as the franchisee would be responsible only for running one unit, although he or she would extremely involved with all the daily operations of the business. 2) Multi-Unit Franchise: multiple units are sold at a reduced rate per unit by the franchisor. 3) Area Developer: area development is similar to multi-unit franchising; the only difference is that it typically involves greater number of outlets encompassing a larger geographic territory. 4) Master Franchise: allows people or corporations to purchase the rights to sub-franchise within a certain territory. A master franchisee helps the overall franchise company by recruiting franchisees to open units within a specific territory. One master franchise is for one state only. 5) Buying an Existing Franchise: many franchise owners decide to sell their franchises after they have opened.
Approach: One need not to surprise if the franchisor questions include detail information about the proposer and his spouse financial position, experience, background, and even aspirations, questions designed to help the franchisor determine whether or not the kind of person he or she feels will be able to run the business successfully and fit into the franchise model. The franchisor will continue to explore interest, commitment and suitability of the proposer. If the franchisor decides a suitable franchisee, he will be offered a franchise contract that lays out the obligations of both parties. Like any other contract, some aspects of it may be open to negotiation. And like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, get them written in. One must consult an advocate before signing the contract. Buying a franchise is like buying any other kind of business. An entrepreneur has an opportunity to startup from Rs.10, 000/- in education to Rs 01 crore in jewellery as an initial investment in India. Naming few companies extending franchise opportunities; Levi's, Peter England, Belmonte, D'damas, Nakshatra, Kidzee, Eurokids,Amson, BodySpa, MovieMart, Silversand etc
Source:http://thirdeye-raghvendra.blogspot.com/2010/01/franchise-be-your-own-boss.html
Raghvendra, Jodhpur, Rajasthan
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