Prepared by Akshay GandhiStrength/Opportunity:The duo Javier Arroyo and Daniel Gonzalez de Vega

who met atAccenture founded Smartick. They both were aware of Spain’s children’s poor
performance inthe PISA. To solve this problem, they tried to apply the latest artificial intelligence into
the mathlearning tool, Smartick. Their plan was to boost student’s individual capabilities and
behaviorsby providing personalized learning experiences. Their approach was to provide the content
basedon the adaptation and to match the individual’s learning style and preference. They both
werenative to Spain and most familiar with their education system. That gives them the benefit
oflaunching the appropriate solution for Spanish students.Weakness:For the eLearning industry, the
original eLearning methods were offline such asJapanese Kumon method which was developed in
1956. The self-paced eLearning market grewvery fast in Western Europe, North America and Latin
America and the revenues were expectedto be huge. The industry was divided into two main modes:
the school-oriented market (B2B)9

Problem StatementLooking at the case, it seems like the overall results of mathematics in the PISA
(Programme forInternational Student Assessment) test in Spain, the US and countries in Latin
America isrelatively low. Since the Math as a key factor for the generation’s future, it brings concern
togovernments, educators, and the public in general. Smartick is trying to improve the
mathematiceducation level up in these countries. After two years of development and testing of
artificialintelligence web-based technologies, Smartick was ready to start a big push into the
afterschoolmath learning area in Spain. However, Smartick still had several challenges to
overcome.The Problem here is,New Concept:The online learning market area was still fresh for
Spain parents, and itneeded time to be more familiar and accept this new concept.Rivalry:The big
rival for Smartick, Khan Academy, provided free of charge learningmaterials online. The bigger
challenge with them is, Khan Academy started earlier thanSmartick and had already received backup
from government and huge foundations.Gain Market share with Profit:Smartick had to tread
carefully as charging for onlineresources could be perceived as politically incorrect.Smartick needs to
plan carefully to target specific segments of the market and avoid directcompetition from free
content. Also, the pricing, communication and distribution strategies needto be comprehensively
analyzed.Situational AnalysisTo understand the Smartick’s market concerns, we can perform SWOT
analysis. This analysiswill provide the Strengths, Weakness, Opportunities & Threats that Smartick
will face. Here arethe findings based on the SWOT analysis:

Strength/Opportunity:The duo Javier Arroyo and Daniel Gonzalez de Vega who met atAccenture
founded Smartick. They both were aware of Spain’s children’s poor performance inthe PISA. To solve
this problem, they tried to apply the latest artificial intelligence into the mathlearning tool, Smartick.
Their plan was to boost student’s individual capabilities and behaviorsby providing personalized
learning experiences. Their approach was to provide the content basedon the adaptation and to
match the individual’s learning style and preference. They both werenative to Spain and most
familiar with their education system. That gives them the benefit oflaunching the appropriate
solution for Spanish students.Weakness:For the eLearning industry, the original eLearning methods
were offline such asJapanese Kumon method which was developed in 1956. The self-paced eLearning
market grewvery fast in Western Europe, North America and Latin America and the revenues were
expectedto be huge. The industry was divided into two main modes: the school-oriented market
(B2B)
3.2.5. Competitive Rivalry among Existing Firms.

3.2.5.1. Nature of fragmentation

 The market is highly fragmented, which makes it more competitive.

 The market is never too concentrated, and as a result, it has players of varying size of
operation – from very small to big players.

3.2.5.2. Brand management

 Producers have begun to make use of brand management techniques and contemporary
merchandising by launching bold brands, label designs and marketing campaigns to become
more identifiable to the public.

3.2.5.3. Diversification

 Purchasers and buyers have a wide range of products to choose from, with relatively low
switching costs. These factors tend to intensify rivalry.

 Though players in the industry may off niche or premium products, they also continue to
operate in the mass markets at large, which again leads to high competition.

3.2.5.4. High business costs

 The high fixed cost and the high bargaining power of the buyers, which can lead to the
lowering of the prices from manufacturers add to the highly competitive nature of the
industry.

 The overall rivalry is assessed to be high.

3.2.5.5. How can Smartick vs Khan Academy A Marketing Strategy for Moving Free Users to a Paying
Model combat rivalry and competitive forces of the industry?

 Focus on research and development to identify market niche as well as to be able to add
differentiating factors t its products. This will increase its shield against influence from
competitive forces and their actions.

 Build a strong and loyal consumer base by focusing on quality and marketing strategies.

 Focus on capturing new markets – in the same region as well as new regions to avoid
saturation of resources in one market only.
 2. Define in more detail the three options for implementation. Which one would
you recommend to maximize profits for Smartick? And to maximize impact on
society in Spain?

1. Direct Sales Approach

2. Two-fold Business Offering

3. Product as a Service
- The third option was to sell Smartick as a service by contacting consumers
directly (B2C) through a strong online presence and the creation of a
customer support department, ignoring the B2B market. Besides the five
experts I mentioned , the staff hired would be qualified university graduate
educational specialists.

We recommend the first approach, the Direct Sales Approach with intention of
expanding to B2C on a later date. The main competitor Khan Academy is not in B2B
market.

1. CUSTOMER ANALYSIS FROM THE EXTERNAL ANALYSIS

→National rankings are important metric amongst which countries rank each other and mathematics
is one of the more popular and important KPI’s that is measured due to its general applicability and
wide use. As visible on the graphs Spain ranks consistently below other European countries. The
inefficacy of the Spanish educational system is reinforced by the fact that on average Spanish
students are expected to spend over 1000 hours in school studies a year, compared to the average
European rate of just under 900. This really sheds an initial light on the educational system of Spain
and on the teaching methods practiced in schools there

A teammate of ours shared first-hand experience what the educational system is in Spain and I
believe it can be summarized very neatly with the following: systematic, un-intuitive and antiquated.
Smartick was faced with a customer who was practically crying out for a new learning model. Spanish children
were tired of the same old boring and linear learning method. Smartick realized this and offered new formulas
motivated by the academic growth in Spanish classrooms as well as in the homes of Spanish families.
When you have a better understanding of your customers’ preferences , you can better tailor your
content to meet their needs. This is important, because 59% of customers reported that
personalization influences their decision to buy. And in SMartick case , it offers personalized
learning experiences.
2. SWOT analysis
 Half SLOT analysis, here we can see the strengths and weaknesses that Smartik's
competitors offer. Most of them don’t provide :
- Cognitive Training content
- Gamified
- Competition Math Games

And most of the provided services, Smartick also provides them. But something on
the strengths side : Worldwide reach is not something that Smartick can consider as
reached at this time. But the main competitor can.

3. USP
The USPs of Khan are also the differentiating factors that distinguish it from Smartick

►We recommend the first approach, the Direct Sales Approach with intention of
expanding to B2C on a later date. And something important- The main competitor
Khan Academy is not in B2B market.

4. Should the firm focus uniquely on Spain or immediately expand internationally? If the
firm decides to expand internationally, how and to which countries?

We consider that it shouldn’t expanded to many and different countries immediately, but step by
step. First in the countries of Latin America, since there will be no need to invest in the introduction
of new languages and to hire foreign teachers, at the beginning of starting a company the costs are
many and different, therefore this can be avoided and happen at a later stage.

If the firm decides to expand internationally, how and to which countries? As I said, Spanish is
spoken there and the language barrier does not exist, Spain is in 33rd place in the the survey, but as
we can see, the results of these countries are worse than Spain and the way we are going to target
the Latin market it will be identical as with the Spanish one.