revenue management in coaching or training institutes

R e v e n u e M a n a g e m e n t P r o j e c t

Revenue Management in Career Launcher

Under the Guidance Of

Prof T J Harikrishnan,Head Rev Mgmt,Emirate Airline,Dubai.

And

Mr.C.Krishna,Sr,Manager,CL,Hyderabad. By

MD Sandeep, 28106.

BHARATHIDASAN INSTITUTE OF MANAGEMENT

(School of Excellence of Bharathidasan University)

TIRUCHIRAPPALLI 620 014


Overview

This project is aimed at revenue maximization of Career launcher, Hyderabad

through differential pricing of CAT Course Fee.

Current Pricing, Forecasting methods of CL,Hyderabad are studied and differential

pricing strategy is obtained based on Class Timings, Discounts and various

rewards and sacrifices that the consumer is ready to undertake. Project also aims to

find out the no of seats that can be protected i.e. Discounts given.

Differential pricing is obtained by creating a revenue class and developing reward

sacrifice matrix.


Background of the company

CL Educate Ltd is one of Asia's leading edu-corporates, with focus on diverse segments of education, and across learners of multiple age-groups. Led by a team of IIT-IIM alumni, with a passion for excellence in

education, CL Educate Ltd has shaped the lives and careers of lakhs of students in the seventeen years of

its existence.

At CL Educate we 'enable individuals to realize their potential and achieve their dreams'. This is CL core

ideology and is firmly grounded on its focus on academic excellence, technological innovation, and deep

rooted domain expertise built over close to two decades. In the past 17 years, the CL brand has diversified

and effectively established itself as a household name in India. CL operates across a broad spectrum of

segments in the education industry, including test preparation, K-12 education, higher education and

vocational training.

CL Hyderabad has six branches in Himayatnagar, Ammerpet, Dilshuknagar,Mehidipatnam, which are

company owned and three other center which are franchises.The Current project is dealing with only one

center which is in Himayatnagar which offers training in GRE,MAT,ICET,GMAT,GATE CRT and CAT,

but in this project only CAT Course is considered.

CL has the following CAT Modules in Class room and Online.

CLASS ROOM MODE DURATION

MBA EXTENDED 1 YEAR

MBA INTEGRATED 6-10 Months

MBA GALLUP 3-4 MONTHS

NOTE:Only MBA INTEGRATED IS BEING CONSIDERED FOR THE

PROJECT

In online mode CL offers, MOD-MBA on Demand which is fully online course

containing recorded videos and Practice questions.

Apart from these courses CL also offers Test Series, Study Material and Test

Gyn which contains the entire practice test including topic wise tests.


Revenue Objective

Eventhough CL Himaythnagar offers coaching in couple of Courses CAT is their

Flagship course which Contributes maximum to CL Revenue. Because other

major Courses like GATE,GMAT by CL are facing tough competition from Local

Market Leaders like ACE,…Etc.

Revenue Objective of CL is to maximize revenue by differential pricing,

increasing demand, and allocating maximum seats to premium customers.

The other objective for CL is to secure TOP ranks in CAT Tests this can be

achieved by allocating seats to meritorious students at a discounted price. However

care must be taken in giving discounted seats otherwise it would eat into overall

revenues.

Factors Contributing to revenue:

The major factors contributing to revenue are

Revenue

Demand

Discounts

Faculty

PriceCommissions

Competition

Marketing


Revenue Variable and capacity constraints

Revenue Variable Identified in this project is no. of seats available in CL

Himayatnagar Center.

Capacity constraints:

1) The total no of seats for

MBA EXTENDED: 60 (Current Capacity: 54 only)

MBA INTEGRATED: 140 (Optimum capacity should be achieved by May but

currently they are running at 117 capacities)

2) No of Seats for each batch are 30.

However in a practical situation if the bookings /forecasting is in correct are more

but less than 10 (Min. Ten students are required per batch) then there is a chance of

students being accommodated in any of the other current batches.

Note:MBA INTEGRATED IS ONLY CONSIDERED FOR PROJECT


Auxiliaries Career Launcher because of its technical expertise and being a technology enabled

company its revenue comes from by selling various online packages and other

materials.All of them are noted below

MOD-MBA On Demand (Online Course)

PrepStandard , PrepClassic and PrepElite are other modules which has physical Materials and books and online audio video sessions by CL's top faculty

Test Series,

Study Material

and Test Gyn

Personality Development Programs (PDP) for non CL and CL students.


Forecasting

The need to forecast and the level to

forecast:

As CL handles plethora of courses it is necessary for CL to depend on forecast for

the no of students who are willing to take a particular course. Forecasting is needed

for reasons like

Economic conditions would affect the no of working professionals attempting

CAT and so the change in demand.

Marketing by prominent B Schools and set up of new prestigious B Schools and

so the change in demand.

Forecasting would help in the Scheduling of the course with respect to the

timing, no. of faculties needed.

The level of forecasting is mostly restricted up to the no of students being

registered at a particular center. However forecasting about the no of cancellations

/drop outs/no shows would help in combining sessions if there are fewer students

in some batches and hence maximize revenue.

Seasonality and other factors that influence forecast:

The following are the seasonality/other factors that affect the forecasting are:

Academic Schedule: Schedule of JNTU Hyderabad affiliated colleges affect

the

Registration pattern. i.e. More registrations in December/January and

May/June/July.

Recruitment Plans of Top MNC’s: Any sudden change in Recruitment

Plans of top MNC’s would affect forecasting.

Bandhs/Strikes: In Hyderabad last academic year was a full chaos because

of telangana protests because of this colleges conducted extra sessions in the


evenings and in weekends too which led little scope to students in joining

extra courses like GRE/CAT/GMAT..etc.

Forecasting Methods:

CL does not employ any forecasting methods currently. But In this project we

proposed Trend and seasonality corrected Winter Model because of the observed

trend in the registrations and t seasonal demand along the line because of the

factors discussed earlier. Here demand is mostly represented by recent year’s data

rather than past year’s data.

Forecast error is difference between the expected students in the 2013 and current

students in 2012.

Pricing

The current pricing of various courses are given below

MBA EXTENDED Rs19,000/-

MBA INTEGRATED Rs1,5000/-

MBA GALLUP Rs9,000/-

Currently CL is giving discounts only based on t “30% Discounts to Alumni of

CL irrespective the course” and in a very rare situation CL give “up to 50%

Merit Discount based on UG Marks.”

Recommendation: CL should start giving discounts(In Basic Revenue Class)

based on CAT percentile therefore better utilization of CAPACITY can be done

and More Ranks can be obtained with students from high CAT percentile in the

past.

Prices are fixed are throughout the year.


Revenue Class

Revenue Class in CL refer to different classes with in the same course be it MBA

EXTENDED, MBA INTEGRATED, MBA GALLUP in which the class room delivery is

same but students pay Different prices based on the rewards and sacrifices which

they receive .

Thus revenue classes are based on rewards and sacrifices which the student

receives.This paper proposes three revenue classes Premium, High and Basic

based on the following Rewards and Sacrifices

Proposed Pricing for revenue classes:

Premium- Rs. 18,500/-

High - Rs.16, 700/-

Basic- Rs.15, 000/-


REWARDS:

Merit Scholarship :

Merit scholarship is for those candidates who secured better previous CAT

Scores(Percentiles should be subjective which should dependent upon the demand

and current registrations).

At present CL is not following this practice but most of their competitors are using

this technique and attracting top students so that it can be leavaraged because of

high probability of such studentds getting top ranks.

Merit Scholarship is only for Basic Class, any price above would prove fatal

because competitors are even ready to give 90% discount.

CAT SCAN

CAT SCAN is a huge data base of previous papers, models of CAT in CL .This

access is only for premium customers.

SPECIAL LECTURES:

With the strong network that CL has it arranges classes with some of the Industry

like Subject Experts, Entrepreneurs-For Motivation or Soft Skills session , and

Bussiness Leaders who help students in career guidance.

This is for both premium and high class.

EARLY BIRD OFFERS

Offer price for early enrollment this is applicable to all the revenue classes.

Week End Sessions

Weekend Session are in great demand because of its convenience and so this

demand

Can be capitalized by charging high and so is provided to High and Premium

revenue classes

EVE/DAY Sessions:

Even scheduling of classes even in the morning or evening is highly requested by

students so this chance is available High and Premium revenue classes.


SACRIFICES:

Refund :

Being CAT coaching a part time course and many wants to give it a try before they

actually try or students want to check their luck sometimes.There are students who

drop out after one month coaching .

Therefore is sacrifice is not needed for Premium and High Classes because there

would certain refund based on the no of classes completed.

No refund for Basic Class

Full Payment

The other sacrifice for Basic class is that they should pay the fee at a time before

joining course. Whereas Premium and High Class need not pay at once they can

pay in Installments.

Branch Shift:

Many working professionals may change the city/branch because of relocation or

transfer then for those students who wants to change to different branch/city it is

possible only if they are in Premium revenue Class.

Assumptions o Forecasting is done in January.

o Maximum capacity is achieved in April/may as per

Sr.Manager Mr.C.Krishna,CL,Hyderabad.

o CL won’t take any class rooms for rent if there is an excess demand.


Optimization

Protections:

For revenue maximization the above protections are necessary which are obtained

from EMSR (Appendix)

The current year revenue from 117 seats is

No of Seats Amount

91 1,365,000.00

15 157,500.00

11 107,250.00

Total Revenue 117 Rs.1,629,750.00

Maximum revenue is obtained by full occupation which happens by April/May so

proper segmentation and based needs of the customers and by adding values to the

product by CL technology (AV Sessions)it would generate maximum revenue .

Incremental Revenue

Premium 53 980,500.00

High 28 467,600.00

Basic 59 885,000.00

Total 140 Rs.2,333,100.00

Recommendations Proper Market segmentation would help in pricing. CL should implement discount offers currently the discount is very low

compared to competitors. Promotion expense should be increased.


Be flexible in giving discounts as per demand or current

registrations this would increase the no of seats.If no

discounts there are handful chances from competitors

especially in Hyderabad.

Effectiveness of the revenue management process

Effectiveness can be measured by yield/seat or

yield/student

revenue management in coaching or training institutes

Documents

revenue class

revenue objectiveeventhough

current project

maximum seats

overviewthis project

discounted seats

cat tests

current pricing