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CHAPTER 2

VALUE PROPOSITION

This chapter discusses the market and industry analysis which includes; the

explanation of data collection for this business model development, the analysis of

external environment of Indonesia education industry, the analysis of external

environment of Indonesia online tutoring industry, the analysis of internal

environment of Lesqu, the startegic group mapping of Lesqu, the value proposition of

Lesqu, and SWOT analysis which leads to the business strategy of Lesqu.

2.1 Data Collection

Data are used to gain information for further analysis in this business model

development that the collected data are classified into two categories based on the

data collection method which are; primary data and secondary data.

2.1.1 Primary data

Primary data used for this business model development are collected by the

researches themselves for a specific purpose. The primary data collected by several

methods which are; interview, questionnaires, and observation which the purpose of

this data collection methods is the data collected are specific for the further analysis.

- Interview: interviews are conducted to gain several information related

to this business model development. the targets of interview are high

school students which focuses on junior and senior high school students,

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parents with children in junior and high school level, high school

teachers, tutors, final semester university students, tutoring institution, IT

technology solution companies, established and freelance web

developers.

- Questionnaires: questionnaires are spread to students, high school

teachers, and tutors to identify the preference of them in participating in

online tutoring.

- Observation: observation is conducted to gain information about the

process of conventional tutoring and online learning therefore

observation is conducted to examine the whole process of learning

process in tutoring institutions such as Primagama and Ganesha

Operation, and online learning provided by online learning providers

such as ruang guru, princeton online tutoring, and quipper.

2.1.2 Secondary Data

Secondary data used for this business model development are collected by

someone else for some other purpose and used in this business model development

for this researchers’ purpose. The source of secondary data are data that already exist

which are; previous research, official statistics, government reports, web information,

and mass media products.

- Previous Research: previous research are used in this business model

development are divided into two groups which are academic research

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and market research that both of them provide information that is needed

for the researchers to develop a business model.

- Official Statistics: official statistics provided by official statistics

institution like Badan Pusat Statistik Indonesia which provides

information related to demographic characteristics.

- Government Reports: government report from government institutions

such as Kementerian Pendidikan dan Kebudayaan Republik Indonesia,

and Kementerian Keuangan Republik Indonesia are used to gain

information about the implemented policy of the government which

includes the purpose, the implementation, the target audience, and the

impact of the policy that add information for further analysis.

- Web Information: web information mostly used to gain information

related to the competitors in the market which the web provides

information about pricing, products, and others statistic data.

- Mass Media Products: mass media products are used to gain

information about trends related to education and online learning. The

products of mass media used in this business model development are

newspaper and magazines.

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2.2 Market & Industry Analysis

The market and industry analysis focuses on the explanation of the education

and online learning situation in Indonesian in 2015. The analysis is used to examine

the market opportunity for an online learning business model. The analysis of market

and industry will be examined through external environment analysis and internal

environment analysis.

2.2.1 The External Environment Analysis

There are frameworks used to examine the external environment for this

business model development which are; PESTEL, Porter’s Five Forces, and Startegic

Group Mapping. The frameworks are used to examine the external environment of

Indonesia education industry and Indonesia online learning industry.

2.2.1.1 Macro-Environment of Indonesia Education Industry in 2015

The macro-environment of Indonesia education industry is examined using

PESTEL analysis by Michael Porter to provide the current external environment

information about education industry such as political, economic, social,

technological, environmental, and legal.

2.2.1.1.1 Political

Kementerian Pendidikan dan Kebudayaan Republik Indonesia (2015)

announced that Indonesia Government allocated 20% of its APBN which is Rp. 424,8

trillion for education in 2016 that was planned to improve the access, quality,

16

relevance, and the competence of education in Indonesia. The 2016’s budget

allocation for education is known as the largest budget allocation compared to any

previous years’ budget allocation for education such as Rp. 368 trillion in 2014 and

Rp. 404 trillion in 2015. Kementerian Pendidikan dan Kebudayaan Republik

Indonesia received Rp. 49,23 trillion will be allocated for;

- Contracted Budget Allocation that includes Kartu Indonesia Pintar, teachers’

salary and benefits, national examination, certification, and the improvement

of PTK, PHLN, and RMP PHLN.

- Uncontracted Bugdet Allocation that includes tthe compulsory 12 year

education program, cultural and language research, training and courses,

competition, scholarship for teachers, and the development of education

information system.

There is a reduction in amount of budget that Kementerian Pendidikan dan

Kebudayaan Indonesia received compared to the previous year by Rp. 4 trillion due

to the change of government’s priority policy. The Minister of Education and Culture

Mr. Anies Baswedan (2015) stated that the reduction is the result of government’s

decision to widen the access of education to smaller cities and rurals which the

previous years’ policy focused on improving the education in major cities in

Indonesia. Based on the 2016’s goal in improving the access of education to a wider

area, The President of Republic Indonesia Mr. Joko Widodo (2015) stated that the

government allocated the 2016’s budget to build and develop the infrastructure in

smaller cities and rural to ease the people’s effort in accessing education in their area.

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The policy government implements related to the requirement of public

university entrance benefits tutoring business. According to the Menteri Riset

Teknologi dan Pendidikan Tinggi (2015) the government has issued Peraturan

Menteri no.2 tahun 2015 that discuss the public university entrance and selection. The

policy has 8 assessment variables which in general it requires students to have a

constant above average grades for the last 3 years in high school to be qualified to

join public university therefore students not only focus on the 12th grades to pass

high school but also focus on having constant good grades for the last 3 grades in

high school to be qualified to join public university. The new regulation encourges

students to join tutoring not only started from the 12th grades but also from all grades

to maintain the consistancy of their school grades therefore this regulation is

beneficial for tutoring institution.

2.2.1.1.2 Economical

International Monetary Fund (2015) stated that the outlook of Indonesia’s

economy remains solid which the Government of Indonesia with its ongoing reforms

expects to help the growth of GDP to 5% in 2016. International Monetary Fund added

that marcoeconomic performance in 2015 has been a satisfactory therefore the

government expects to accelerate the economic growth to 5% in 2016 due to the the

increasing number of investment activity and streamline business.

Education has a strong relationship with the growth of Indonesia where a

skilled labour force is important to leverage opportunities especially during an

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opening up regional markets in southeast asia. According to World Bank (2014) the

effort of Indonesia government to focus on the improvement of education managed to

decrease the level of unemployement through years as in 2006 the number is 10,3%

and in 2014 the number is 5,9%. Besides increasing the level of employment,

education industry is considered as contributive sector in generating revenue and

employment which education industry as Badan Pusat Statistic (2014) stated

participate estimately 18,5% in generating employement. The raising awareness of

the importance of education among people of Indonesia puts education as an

important factor of economic growth.

2.2.1.1.3 Social

Education has been acknowledged for underfunded in Indonesia which

according to World Economic Forum’s Human Capital Report (2015) that ranks

Indonesia in the 69th position out of 124 in terms of human capital development

which far below its ASIAN neighbors such as Singapore in the 24th and Malaysia in

the 52nd. The low level of human capital development in Indonesia encouraged the

government of Indonesia to reform education and make it a greater investment that is

implemented in the increasing number of government’s spending in education

improvement.

The opening up of regional markets in Southeast Asia is considered as both new

challenges as well as new opportunities for the years ahead and especially for

Indonesia’s education system which will determine its human capital competence

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compared to foreigners. The people of Indonesia are awared that education will

improve their access to a higher level of education or skill that meets market

requirement which will influence the future of Indonesia’s growth. According to

World Bank (2015) the phenomenon ASEAN’s single market create notable trends on

how Indonesian people react to education which are;

- An increasing awareness of the relationship between education and better

employment opportunities,

- An increasing number of population with aim to get a higher education level,

- Increasing number of education institution and training institution.

The notable trends explained above open the door of opportunities for

education provider and education marketers including partnering with international

institution, foreign exchange program, and tutoring therefore education is no longer

just a necessity but also a lucrative commodity for education provider.

2.2.1.1.4 Technological

The presence of technology has changed the operation of many industries

which they are dependant on technology to improve their operation. According to The

International MultiConference of Engineers and Computer Scientist (2015)

technology has transformed the operation of many industries in a way that they have

transformed from conventional operation to technology and mechine based operation

where they need less human resource and rely more on machine and technology to

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complete the operation such as manufacturing, controling, and even forward supply

chain activities such as marketing and sales.

Education industry is one of the examples of industry that has transformed by

utilizing technology in its operation to promote efficiency and transfer quality. Bates

(2005) in “Technology, E-learning, and Distance Education” stated that technology is

now part of education business and learning process which teachers or lecturers

utilize technological device to support their teaching method. Education is now

combined with technology that is called as e-learning which many education

institutions have been providing to meet the needs of its segment who are dependant

on learning through online and technological device. According to Bates (2005)

technology will be integrated with education which in the beginning it will be a

competitive advantage but later on it will be common practice as the need of people

for efficiency and fast access becomes part of their daily life.

The adoption of technology in education has been implementing in many

education institution in Indonesia which internet, and information technology devices

and application are used during learning process to enhanced the learning process.

According to Kompas (2015) the examples of the adoption of technology in

education are the increasing number of online learning higher education programs

and the frequent use of computer, multimedia, and internet at school therefore

technology has become a part of learning process that is expected to be able to

improve the quality of education in Indonesia.

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2.2.1.1.5 Environmental

Mantaining the sustainability of the environment is part of education in

Indonesia which the awareness about the importance of maintaining the sustainability

of the environment is not only integrated to the learning material in curriculum but

also to the operation of education process and business. Kementerian Pendidikan dan

Kebudayaan Republik Indonesia (2016) has been implementing several programs that

focus on maintaining the cultural heritage and environment as their participation to

save the environment through educative programs such as Registrasi Lesquonal

Cagar Budaya and several social aids for areas where the environment starts to

damage.

The President of Republic Indonesia Mr. Joko Widodo (2015) stated that the

Government of Indonesia starts to focus on mantaining the environment by allocating

more budget to local government for the maintenance of local environment such as

natural environment and infrastructure known as Dana Transfer Daerah. The purpose

of this policy is to provide a safe, stable, and comfortable environment in terms of

infrastructure and environmental safety that will make the development of easy

access to education program possible in hopes for equal education for all Indonesian

people.

2.2.1.1.6 Legal

Education is one of many subjects of the law of Indonesia which its system and

operation is determined and controlled by the government through legal regulation.

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According to Undang Undang No.20/2003, education is used to develop the human

capital of Indonesia into qualified ones which are able to participate and compete in a

dynamic era. Since Education has a legal status means education and its providers

have rights and obligation to comply to.

The status of education provider is divided into state own and private which is

stated in Undang Undang Sisdiknas No. 20/2003. The law identifies the status of

education provider based on the otonom which the government gives to the private

institutions that the government gives the institution freedom on how they implement

its operation and process as long as they follow the rules that is protected by legal

regulation.

In terms of its formality, According to Prosser and Ahmed (1973) education is

divided into formal education and informal education. In Indonesia, Informal

education also has legal status which based on Direktur Jendral Pendidikan Luar

Sekolah, Pemuda, dan Olah Raga No: KEP-105/E/L/1990 informal education such as

registered tutoring and training institution that provide knowledge and skill that are

useful for self-development, revenue generation, or higher education preparation are

official institution that are acknowledged by law and mantained by Undang Undang

Republik Indonesia

2.2.1.2 Indonesia Online Tutoring Industry

Online learning has been growing for the last few years due to its ability to

generate revenue and to meet the need of today’s market. The emergence of online

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learning does not make conventional methods of training and education go away but

it encourages them to participate in using technology and internet in their products or

in their business operation. According to ADB Study (2012) the demand of tutoring

in Asia is exploding in global comparison which shows the extensiveness of

education in Asia due to the stratification of education system, cultural factors, and

growing wealth of asian people in recent years. The increasing demand of tutoring

makes education sector as a profitable industry that creates several products from

school to tutoring to serve different or similar type of market.

According to DOCEBO (2014) Asia has the world’s highest world rate regional

growth rate for E-learning with 17.3% and the revenue is expected to be $11,5 billion

by 2016. The fast growing of E-learning is accelerated by government funded

projects related to literacy development in rural areas which becomes the the major

driver to the introduction of E-learning. The governments of ASEAN countries try to

implement the technology adoption to drive future growth which is promoted by the

facts that the increasing numbers of government initatives to promote E-learning, the

growing adoption of technology in their daily life, the shortage of quality education,

and the convinience and affordibility factors of E-learning.

The are many education instutions and education providers in Indonesia that

provide E-learning service and products according to Jelassi and Enders (2010) in

strategies for e-business which are; 1.) E-learning Material and Application: an E-

learning product that provides learning material and practice through technology

device and internet, and 2.) Virtual Classroom: an E-learning product that provides a

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learning and teaching process through website and internet where the program in the

website substitutes the physical classroom.

According to Leber (2015) tutoring is divided into 2 categories based on its

process which are traditional tutoring and online tutoring. The division is based on

the delivery process which traditional tutoring is conducted face to face in the same

place and the same time that relies on physical class room while the online tutoring

relies on internet and computer to conduct the tutoring. In traditional tutoring there

are 3 types of tutoring which are;

1) Private tutoring which a private tutor is hired to teach a specific subject to an

individual or a small group of students that aims to create a more intensive

learning situation compared to the classroom during school, this kind of

tutoring has been implemented by several tutoring providers such as

Primagama, Bintang Pelajar, Ganesha Operation.

2.) Academic coaching which the students are expected to study the material by

themselves but the coaches are expected to teach them how to be succesful

and how to study effectively therefore the purpose of this coaching is to

motivate students.

3.) Student to student tutoring which fellow student with a better understanding

in certain subject plays a role as the tutor to other fellow students and the

cycle keep on going depends on which student has a better understanding

on the discusses subject.

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The second tutoring category based on Leber (2015) is online tutoring which is

a tutoring that is delivered online in virtual environment where the tutor and the

students are not in the same place and could be not at the same time at certain extent.

Tutoring session is conducted through an application or website where student and

tutor can communicate and whether the reply is direct or delayed depends on the type

of the online tutoring. The popularity of online tutoring has increased worldwide

since the frequent use of computer and internet in people everyday life which online

tutoring is expected to be as effective as traditional tutoring.

According to The University of Bristol (2015) an online tutoring is a study

activity that is designed to teach a specific learning result which is normally presented

using virtual blackboard or DVD. Based on the types, there are two types of online

tutoring which are regular online tutoring and interactive live online tutoring. Both of

the online tutoring types require internet and virtual communication, however the

difference lies on the interaction whether it is direct, delayed, text and replayed video

only, or face to face. Traditional online tutoring offers one way and two way

communication between tutor and students which learning material is transfer using

learning video, text, chat, or uploaded material or quiz on the website where the

student can communicate or not that is implemented by several leading online

tutoring providers such as Edmodo, Ini Budi, and Raja Bimbel.

The second type of online tutoring is interactive live online tutoring which is an

online tutoring where the students and the tutor interact in real time without being in

the same place as it mimics the traditional classroom tutoring with the advantages of

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having to spend no effort as it is needed to attend traditional tutoring by using

information technology. Live online tutoring is a tutoring which the tutor and the

students utilize computer, internet connection, audio and visual equipment, electronic

whiteboard and chat technology to conduct the live online tutoring.

Using internet connection and equipped computer makes interactive live online

tutoring possible to be conducted between tutors and students which tutor is able to

present teaching material through internet that is similar to physical classroom

tutoring. In presenting the material, the website of interactive live online tutoring

provides a website whiteboard that appears on the website whose function is similar

to physical whiteboard only operated using mouse and keyboard. Communication

between tutor and student can be conducted using headphone, microphone, and

keyboard therefore the direct communication during online tutoring manages to

substitute the interaction that normally occurs during traditional tutoring. The live

interaction onlien tutoring includes video and audio interaction, text chat, and

interactive virtual whiteboard where the student and tutor are able to perform

document sharing, verbal interaction, and chat editing.

Online learning system has been implemented by two types of education

institutions which are formal education institution and informal education institution.

The formal education institution includes public and private elementary, secondary,

and higher education level such as SD, SMP, SMA, and University. According to

Direktorat Pembinaan Kursus dan Pelatihan (2010) institutions that are considered as

informal education are tutoring and training.

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The definition of tutoring institution according to Jones (2011) is an informal

education institution that provides help to those who need assistance in determining

options and problem solving by through the assistance of tutors. Jones (2011) stated

that the factors that support the fast growing tutoring institution are; there is a policy

given by the governement that regulates school passing requirement, the limited

school hour, the rapid changing school curriculum, the high competition in getting

good grades for higher education purpose.

The emergence of technology and the adoption of technology in education

promotes the development of online tutoring that offers variety of products with the

same purpose that is assisting the students’ academic needs. There several online

based informal education institution that offer online tutoring in Indonesia such as

quipper.com, bimbelkita.com and smartpro education.com therefore it can be

concluded that online tutoring business is implementable business.

There are differences between traditional tutoring and online tutoring which

with the use of technology, online tutoring is now able to mimic the traditional

tutoring. Online tutoring is now able to provide verbal communication through audio,

visual communication through video, written communication through text chat and

whiteboard, quality controlled by record, and now online tutoring is able to to provide

advantages which are safety and effeciency concerns related to the schedule, required

traveling, and physical interaction before, during, and after the tutoring that online

tutoring manages to cut to give the student more benefits.

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One of the elements that is crucial to the online tutoring industry is the

participant whose attitude towards technology and its use in learning detemines the

effectiveness of the learning process. Positive attitude that must be possessed by the

participants is expected to produce the confidence, innovation, experience that are

beneficial to the online learning process. According to Downing & Dyment (2013)

the vital quality that participants must possessed to produce positive attitude are; 1)

the ability to progress conversation to a more profound discussion, 2) the ability to

keep up with the progress of the students and recognize their level of understanding,

3) the skill to encourage and support the students, 4) the skill in managing the online

learning administration and technical issues, 4) the ability to identify and solve

problem, and assist student to a more critical thinking, 5) the ability how to maintain

a cooperative and collaborative discussion to avoid one way communication or

domination, and 6) the ability to recognize the social aspect during the learning

process to build sense of belonging and community.

The analysis of Indonesia online tutoring industry is examined by using Porter’s

5 Forces by Michael Porter to identify the external environment of Indonesia online

tutoring industry to determine the attractiveness of online tutoring industry in

Indonesia. The elements that are examined through Porter’s 5 Forces framework in

determining the attractiveness of online tutoring industry in Indonesia are; Barriers to

entry, threat of susbtitute products and service, bargaining power of customers,

bargaining power of suppliers, and intensity of competitive rivalry.

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2.2.1.2.1 Barriers to Entry

The barriers to entry Indonesia’s online tutoring industry is high because of

high degree of customer loyalty for existing tutoring institution, high capital required

to enter this industry, the difficulty of building a network of distributor market from

the existing tutoring institution. According to According to Direktorat Pembinaan

Kursus dan Pelatihan (2016) there are registered 1779 school subjects related

tutoring in Indonesia which there are many players that have seized loyal target

audience therefore based on that fact it is unattractive for new entrant to enter the

industry and create an effort to seize the loyal customers of others tutoring institution.

Companies that want to enter this industry has to anticipate the barrier which is the

possibility of the existing conventional tutoring institutions will provide online

learning service because according to Gamble, Peteraf, and Thompson (2015) the

existing industry members are the strong candidate to enter market segment where

they currently do not possess a market presence and they already have one advantage

which is brand preference.

Besides the existing tutoring institutions that come from domestic companies,

according to Market Research (2014) there are many existing tutoring institutions that

come from or collaborate with foreign education providers such as from the U.S,

Australia, England, and Singapore that has been trying to penetrate Indonesia online

learning market due to the the adoption of technology in many education institutions

is a common practice.

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The capital required to enter this industry is high due to the infrastructure it

needs to support the online tutoring business. According to Bank Indonesia (2010) it

takes more than Rp. 300 million to start a tutoring institution which the number will

add if the operation and the process of tutoring is online due to the high price of IT

hardware and development.

The cohesiveness of joint venture done between the existing tutoring institution

and schools tend to be challenge to join the online tutoring industry. According to

Market Research (2014) The most effective methods of gaining tutoring students is

by doing joint venture to school which tutoring institution offers benefit to schools

that manage to provide them students. The domination of market distribution by the

existing industry member turns to be the challenging factor to be considered by

companies that want to enter this industry.

2.2.1.2.2 Threats of Substitute Products and Service

The threats of substitute products and service in Indonesia online tutoring

industry is low due to the unavailability of online tutoring providers that deliver the

same performance as Lesqu, the uncomparable feature from similar tutoring

providers, and buyers spend high costs in switching to substitute products or service.

According to Direktorat Pembinaan Kursus dan Pelatihan (2016) there are

registered 1779 school subjects related tutoring in Indonesia which are divided into 2

categories; traditonal face-to-face tutoring, and online based tutoring. Despite the

tutoring type division, there is no tutoring institution in Indonesia that offers service

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that is similar to Lesqu which it offers interactive online tutoring program that mimics

conventional classroom which is only conducted through personal computer equipped

with internet and front camera. the purpose of the interactive online tutoring is to

offer cost and time efficiency for the customers and the company. The unavailibity of

similar product that Lesqu offers give the customers no option for substitute products

therefore the customers are unable to get substitute products that can deliver the same

performance as the product of Lesqu which is interactive online tutoring

Conventional tutoring delivers the same purpose with Lesqu in terms of

transfering knowledge to the student however the feature that Lesqu has can not be

compared to the product of conventional tutoring. The feature of Lesqu aims to

provide efficiency in the process of tutoring which the conventional tutoring fails to

deliver due to their required face-to-face meeting in a physical class room therefore

the the feature offered by Lesqu can not be compared to the product of conventional

tutoring.

The threats of substitute products is low due to the high cost that customers

have to spend to switch to competing products. The conventional tutoring fails to

deliver the purpose of online tutoring however conventional tutoring still can deliver

the same purpose of providing education however the process of gaining education is

costly considering the cost it takes for transportation and food consumption.

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2.2.1.2.3 Bargaining Power of Customers

The bargaining power of customers in Indonesia online tutoring industry is low

due to the low number of online tutoring providers, the superior product of Lesqu

compared to the existing market, and high cost of switching to substitute products.

In online tutoring industry, the bargaining power of customers is low because

According to Direktorat Pembinaan Kursus dan Pelatihan (2016) there are a few

number of tutoring institutions that provide online programs such as quipper and

bimbelku therefore the customers only have the a few options to choose the online

tutoring products. The bargaining power of customers for tutoring institution like

Lesqu is low at the moment due to the low number of online learning providers. The

challenge that the informal online learning education providers have is the possibility

of having potential customers stay loyal and choose the conventional tutoring such as

Primagama and Ganesha due to innovation resistance and other factors therefore the

informal online learning education providers must rely on innovation to increase its

attractiveness.

Lesqu offers a superior products not only to compete with similar online

tutoring institution but also to anticipate the degree of loyalty of potential customers

to the existing conventional tutoring. Lesqu offers a product that other both online

and conventional tutoring institutions do not offer which is interactive online tutoring

that offers time and cost efficiency for the customers with the value proposition that

is explained later in this value propotion section. The superiority that only Lesqu can

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offer through its primary product that is beneficial to the customers lowers the

bargaining power of the customers.

The value proposition that Lesqu offers through its primary product is to offer

safety, and time and cost efficiency which the customers are able to eliminate the

spending that they must spend on joining the conventional tutoring such as

transportation cost, traffic, dinning out, self-preparation time, the potential of crime,

and the potential of accident manages to make Lesqu to be less costly compared to

conventional tutoring. The cost and time efficient that Lesqu offers to the customers

makes the switching to substitute products is costly for the customers.

2.2.1.2.4 Bargaining Power of Suppliers

The bargaining power of suppliers for Indonesia online tutoring industry is low

due to the large number of suppliers availability and good substitutes, the low cost of

switching to another supplier, and the potential of industry member to integrate

backward. The suppliers in online learning industry are involved in areas such as

manufacturing, supplying human assets, and forward supply chain such as marketing

and sales. According to McIntosh (2015) in the online learning industry the suppliers

are Information Technology Solution that provides hardware, Information

Technology Developer that develops website and application, and human resources or

talent management providers that supply human assets such as teachers, HR, and

technicians.

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There are large number of available suppliers and good substitute for online

tutoring business. There are many information technology solution companies and

web developers such as IMAJIKU, Yopdesign, Avnet, and Telkom Solution that offer

efficiency through their products and pricing strategy. The large numbers of available

suppliers and the supply chain management that is formulated by Lesqu make the

switching to other supplier is not costly which selling the existing IT infrastructure

are useful in providing fund to do the switching therefore Lesqu does not have to

provide extra fund to implement supplier switching due to the additional fund

provided by the existing IT infrastructure sales.

According to Gamble, Peteraf, and Thompson (2015) the potential of

increasing number of online learning providers in the future will impact the

bargaining power of suppliers therefore the online learning providers should consider

the backward and forward intergration in their operations and supply chain to

minimize their dependancy to the suppliers. There are several operations that can be

learned by Lesqu and later be provided by Lesqu itself therefore it no longer needs

several supplier due to the ability of Lesqu to integrate backward and forward to

simplify the operation of the company let alone to reduce cost and dependancy on the

suppliers.

2.2.1.2.5 Intensity of Competitive Rivalry

The intensity of competitive rivalry in online learning industry is low due to the

competitiors’ satisfaction with their market position, the low number of online

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tutoring providers, and the cost spent for customer to switch brands is high. The

existing tutoring institutions both conventional and online are satisfied with their

market position at the moment which they do not implement strategy to widen its

target audience through aggresive moves such as acquisition or products

differentiation to dominate both conventional and online tutoring industry. According

Direktorat Pembinaan Kursus dan Pelatihan (2016) there are registered 1779 school

subjects related tutoring however only few of them offers full online tutoring services

to the customer and the limited online service provided by most conventional tutoring

makes the competitiveness of rivalry in online tutoring industry is low at the moment.

The competition between rivals intensifies when the cost of switching to

substitute product is low but in this online tutoring industry is different. According to

Kapuler (2011) in Tech and Learning, the cost that the customers have to spend to

switch to both conventional and online tutoring service is high due to the absence of

product that provides time and cost efficiency for the customer therefore for Lesqu

the competition between rivals is low.

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2.2.1.2.6 The Attractiveness of Online Tutoring Industry In Indonesia

Based on the Porter’s Five Forces framework to determine the attractiveness of

online tutoring industry in Indonesia, the researchers are able to determine that the

online tutoring industry in Indonesia is attractive because the barrier to entry is high,

the threats of substitute products or service is low, bargaining power of customers is

low, bargaining power of suppliers is low, the intensity of competitive rivalry is low.

below is the figure of Indonesia online tutoring industry that is analysed using

Porter’s Five Forces to determine the attractiveness of the industry.

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Table 2.1

The Illustration of Indonesia Online Tutoring Industry Analysis Using Porter’s

Five Forces

Online Tutoring Industry Analysis Using Porter’s Five Forces

Barrier To Entry Bargaining Power of Supplier Bargaining power of

Buyer

High Low Low

- High degree of

customer loyalty

- High required

capital

- The dominated

network of

distribution

channels

- Large number of available

IT supplier

- Low switching cost

- Potential of backward

integration

- Low number of

online tutoring

provider that is

similar to Lesqu

- Superior product of

Lesqu

- High switching cost

Online Tutoring Industry Analysis Using Porter’s Five Forces

Threat of Substitute Product and Service

Intensity of Competitive Rivalry

Low Low

- The absence of product that delivers

the same value

- Uncomparable features

- High switching cost

- Competitors’ satisfaction with their

market position

- Low number of online tutoring provider

- High switching cost

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2.2.1.3 Strategic Group Mapping of Lesqu

Strategic group mapping is used to identify the position of Lesqu in the industry

where a cluster of industry rivals that have similar competitive apporaches and

market position including Lesqu is mapped to identify which rivals are similarly

positioned and which rivals are distant rivals as shown below;

One way

online

communication

(Passive)

Two way

online

communication

(Active)

Interactive live

online

communication

(Active)

Face to face

in a classroom

(Active)

(Type of Tutoring)

Conventional Online

Figure 2.1

Strategic Group Mapping of Tutoring in Indonesia 2015

Primagama Nurul Fikri

Ganesha Operation Bintang Pelajar

Quipper Ini Budi Zenius

Edmodo Brainly

Ruang Guru

LESQU

39

In this strategic group mapping approach, the competitior analysis is based on

type of tutoring operation and tutoring delivery process method. According to Leber

(2015) in Tutor Types: Cognitive Tutoring Authoring, there are two types of tutoring

operation which is conventional tutoring and online tutoring. Conventional tutoring is

the most common kind of tutoring in Indonesia which means that the tutoring is held

in an actual class room with teacher, students, and teaching material and equipment.

Conventinal tutoring is simply mimicing the class room that exists at school.

According to Direktorat Pembinaan Kursus dan Pelatihan (2015) there are more than

1800 tutoring in indonesia which more than 90% is dominated with conventional

tutoring, and the major players in this market are; Primagama, Nurul Fikri, Bintang

Pelajar, and Ganesha Operation.

The second type is online tutoring that means all learning process is conducted

online through computer or smart phone, and due to its online nature the service of

this kind of tutoring is limited because it is dependant to the information technology

capacity owned by the tutoring holder.

The online tutoring is relatively new in Indonesian tutoring industry however

this online tutoring is a growing potency that is indicated by the increasing number of

online tutoring in Indonesia. The major players in this online tutoring industry are;

Quipper, Inibudi, Zenius, Ruang Guru, and Edmodo that is not originated from

Indonesia.

40

According to Scandura (2012) in The Role of Automation in Instruction:

Technology, Instruction, Cognition, and Learning, there are 4 methods of the tutoring

delivery process or teaching process of tutoring which are; physical face to face that

is conducted by conventional tutoring, one way communication that is conducted by

inibudi and quipper which they only provide video and exercise, two way

communication that is conducted by edmodo which they provide video and exercise

where the customers are able to ask and be given answer in a short period of time.

The last method is interactive online tutoring that is conducted by Lesqu which

the company is able to mimic conventional tutoring that can be conducted online so

the customer will have a teacher teaching subject directly to them and can

communicate instantly using chat or mic that similar to the traditional tutoring.

2.2.1.4 Competitor Pricing Analysis

Competitors play an important role in determining the position of Lesqu in the

market which the price offered by competitors is used by this business model to

determine their price offering, company pricing policy, and promotional pricing. This

section is divided into 2 groups which are major traditional tutoring providers such as

Primagama, Ganesha Operation, and Bintang Pelajar, and major online tutoring

providers such as Ini Budi, Raja Bimbel, and Edmodo that according to the Direktorat

Pembinaan Kursus in 2015 report are the major players in the tutoring Industry.

41

Table 2.2

The Price Offering of Major Conventional Tutoring Institutions in

Indonesia

Tutoring Institution 1 Year Fee for SMP 1 Year Fee for SMA

Primagama Rp. 6,298,000 Rp. 7,498,000

Ganesha Operation Rp. 12,250,000 Rp. 15,250,000

Bintang Pelajar Rp. 5,800,000 Rp. 7,000,000

Based on the data above it can be concluded that each tutoring institution offers

different price to their customer which depends on their pricing strategy in building

their branding and gaining their target market. According to Direktorat Pembinaan

Kursus (2015) Primagama is the top tutoring based on the number of their customer

and their branch followed by Ganesha Operation and Bintang Pelajar which all of

them focus on 3 major cities which are Jakarta, Tangerang, and Bandung. In terms of

promotional pricing strategy, all of the tutoring institution above use the same

techniques which are; 1.) special customer pricing; the promotional pricing strategy

where the institutions give several indivual or group special discounted price which in

this case the tutoring institutions give a bigger discount to former students or students

from the selection high schools, and 2.) functional discount; the pricing strategy that

is implemented by the tutoring institution where they give additional discount to the

customer who is able to gain the institution new customer.

42

The different price offered by each tutoring institution is based on their target

audience which is implemented through location pricing strategy. Based on the price

offered by the tutoring institutions, Ganesha Operation offers the highest price which

is related to their target market that is upper class student from prestigious high

schools therefore according to the their website their office or tutoring mostly located

in upper class residential area such as Kelapa Gading and Puri Indah. As for

Primagama and Bintang, their target market includes middle to upper class market

therefore their price is more affordable for parents with minimun Rp. 10,000,000

income per month and their are located in suburbs or middle class residential area in

Tangerang and Jakarta Barat.

Table 2.3

The Price Offering of Major Online Tutoring Institutions in Indonesia

Online Tutoring

Institution

1 Year Fee for SMP 1 Year Fee for SMA

Quipper Rp. 500,000 Rp.500,000

Brainly Free Free

Ini Budi Free Free

Based on the data above it can be concluded that only a few online tutoring

institutions that offer price for the customer while most of other onlie tutoring

institutions charge no cost to the customer. Based on this business model’s startegic

group mapping, there are seveal online tutoring institutions that charge cost to the

43

customer which are; Quipper, Zenius, and Ruang Guru. Those 3 online tutoring

institutions charge cost to the customers due to the absence of financial sponsors to

support their business except Ruang Guru which offers 2 way communication

tutoring thought chat application and Ruang Guru’s primary product is their online

website to meet students and tutors so that they can arrange meeting in real place.

As for Brainly and Ini Budi, they charge no cost because they have financial

sponsors that support their business however none of them provides interactive live

online tutoring so the absence of value that Lesqu has which is interactive live online

tutoring makes Ini Budi or Brainly as no head to head competitors eventhough they

charge no cost to the customers.

2.2.1.5 The Benchmarking Analysis of Lesqu’s Competitors

Benchmarking is one of the most important techniques to start a business where

the start up company compares its business to the best practice ones in the industry

which the focus is on time, quality, and cost. As for Lesqu, this business model tries

to identify the best companies in the industry that perform similar process and

achieve similar target to Lesqu.

This business model conduct benchmarking through several activities such as;

comparing previous researches and government reports related, in-depth survey to

identify the opinion of the competitor’s customers, paying a visit to several online

tutoring institutions, and comparing data from their websites. The benchmarking that

is conducted for this business model is divided into 3 types which are; process

44

benchmarking, performance benchmarking, and strategic benchmarking. Below are

the explanation;

1.) Process Benchmarking: the process benchmarking focuses on the

competitor’s efficiency and cost where this business model tries to identify

the process of competitors in running the business process for maximum

result. As in traditional tutoring, Primagama and Ganesha Operation

performs the best process where the efficiency and cost come from its

efficient tutor schedule and their constant effort in securing distribution

channels which is schools to be asked to be their partner. As for online

tutoring, efficiency mostly comes from their cost which they keep it simple

through the simplicity of their product offering and the fact they are

supported by sponsors to run their business. Outsourcing plays important

part in keeping their process efficient which they join partner with several

sponsor’s partners such as Indosat or they participate in the agenda of

education government plan in gaining information related to the national’s

education curriculum and development.

2.) Performance Benchmarking: the performance benchmarking focuses on

the product or service offered by competitior. For Lesqu, the best

performance practice is performed by Primagama and Edmodo where both

of the tutoring institutions offer exquisite products. Primagama is known as

the leader of traditional tutoring which the tutoring recieves recognition for

improving the students grades and high percentage of the student accepted

45

by national universities. The performance of Primagama is supported by

their advance knowledge of understanding the pattern of selection test of

National Text (Ujian Nasional) and Public University therefore their

teaching materials and teaching methods focus on those 2 goals through the

well trained tutors in delivering material and tips in answering questions

during test. In Primagama benchmarking, Lesqu is hoped to achieve similar

achievement through well trained tutors and focuses material in maximizing

the value of Lesqu’s product. As in online tutoring, Quipper, Ini Budi, and

Edmodo offers excellent products which is useful and easy to access by the

customers. As one way communication online tutoring, Quipper and Ini

Budi provides a cohesive product through its learning video that is

systematically made to be easy to understand by the students where clarity

of the vocal and the visual presentation support the learning process online.

Edmodo offers both learning video and chat application so that the student

is able to communicate with the tutors where the student can ask question

and the tutors later will answer or help them solve the problem and makes

Edmodo as 2 way communication online tutoring.

3.) Strategic Benchmarking: the strategic benchmarking focuses on how

competitors compete and other businesses from different industry. The

tutoring institutions have implemented startegic approach in running their

business which is mostly related to efficiency and customer gaining for

future development of the business. For traditional tutoring, Primagama and

Ganesha Operation focus on positioning as their strategy in winning the

46

target audience. Primagama’s strategy is to win the middle class market

which is implemented with their pricing offering and their office or tutoring

locations which are located in middle class residential area. As for Ganesha

Operation, their target market is middle – up class therefore their price

offering is higher than primagama and their tutoring locations mostly in

middle – up class residential area or business district to serve the target

market there. As for online tutoring, Ini Budi implements a startegy in order

to gain more customers through their community approach which they

conduct several events with community to socialize the brand and increase

the number of customer or subscribers. Quipper and Ruang Guru that

charge the customer with cost, focus on their product to differentiate their

brand from free online tutoring as their main strategy where they constantly

add value to the product so that their product is always above the average of

online tutoring especially the free ones.

2.2.2 The Internal Environment Analysis

The framework of VRIN tests for sustainable competitive advantage by Jay

Barney is used to determine the competitive power of Lesqu’s resources and

capabilite to see whether the company has the resource that creates competitive

advantage and how it mantains the sustainability of its competitive advantage.

47

2.2.2.1 The VRIN Tests of Lesqu

The VRIN test for sustainable competitive advantage is an acronym for Value,

Rare, Inimitable, Nonsubstitutable which the test of value and rare determine whether

the resource contributes to a competitive advantage, and the test of inimitable and

nonsubstitutable determine to what extend that the competitive advantage can be

sustained. The methods that this business model uses in determining the tangible and

intagible resources that Lesqu needs to have a sustainable competitive advantages to

mantain its existance and to be a leader in the market are startegic group mapping and

benchmarking from both traditional tutoring such as Primagama, Bintang Pelajar, and

online tutoring such as Ruang Guru, Ini Budi, and Edmodo where Lesqu determines

which asset to have and to improve based on the information from the existing

players in the market.

Table 2.4

The Tangible and Intangible Resources of Lesqu

The Resources of Lesqu

Tangible Resources Intangible Resources

Physical Resources: ownership of

valuable equipment, facilities, and

device.

Human Assets & Intellectual Capital:

an experienced and capabale workforce.

Financial Resources: cash and cash

equivalent.

Brand, Image, & Reputation Assets:

superior service.

48

Technological Assets: technologies that

enable activities.

Relationships: partnership with several

companies that provide access to

potential customers.

Organizational Resources: information

and communication system, strong

network of distributors.

Company Culture: the norms of

business principles and behavior that are

integrated in the company culture.

Based on the benchmarking and competitive group mapping, it is possible to

determine what resources that this business model needs to have to be able to

compete and also to be the leader in online tutoring industry. The resources are

divided into 2 categories which are tangible resources and intangible resources. It is

important for this business model to possess facilities and devices as their base

operation device to decrease dependency, cash to perform payroll and purchases,

technology due to the nature of this business, and strong network of distribution that

enable the business process and operation. Besides tangible resources, trained human

capital becomes valuable and rare, and brand image and relationship are important to

build satisfaction and loyalty which all of them are written in company culture.

49

Table 2.5

The Illustration of Lesqu’s VRIN Test

Competency Valueable Rare Inimitable Nonsubstitutable Conclusion

Innovative

product

Yes Yes No Yes Temporary

competitive

advantage

Integrated

Website

Yes Yes No Yes Temporary

competitive

advantage

Customer

Service

Yes Yes Yes Yes Sustainable

Competitive

advantage

Human

Resources

Yes Yes No Yes Temporary

competitive

advantage

Company

Culture

Yes Yes Yes Yes Sustainable

competitive

advantage

This business model conducts strategic group mapping and benchmarking not

only to identify what assets are needed to create this online tutoring business but also

to determine the sustainability of the company compared to the existing players in the

market. This business model uses VRIN test to determine the value, rarity,

inimitability, and nonsubstitutable of the business model compared to the existing

players to identify which assest is sustainable competitive advantage and which one is

temporary competitive advantage.

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There are assets that are important for this business model to compete in

tutoring industry which are related to product, website service, customer service,

human resources, and company culture. The assest above selected because of their

importance to the business which are; 1.) the innovative products offered by Lesqu

determine the sustainability of the company as it is the primary source of income, 2.)

the website service is important considering Lesqu is an online and website based

tutoring therefore the service and the features provided on the website is important,

3.) customer service is important way to maintain relationship with the customer in

order to gain trust, service satisfaction, and brand loyalty considering the weakness of

online business is the lack of human interaction, 4.) human resouces are important

due to the nature of this business model which is online business that is dynamic

therefore there is characteristic needed by this company’s human resources which is

they are adaptable to change, and 5.) company culture play significant role in the

future of Lesqu knowing this is a start up business therefore the start up company

culture must be embraced by its human resources to maintain the quality of the

company’s product and build loyalty among the employees.

Lesqu offers several products which are one way communication that is

provided through learning video, and two way communication which is provided

through interactive live online tutoring. Based on the package offered by Lesqu, the

company offers all products a two way communication because all package will

include community chat where all members are provided platform to have a

discussion however only the interactive live online tutoring that provides face to face

51

interaction through webcam. Based on the description above and based on the report

of Direktorat Pembinaan Kursus dan Pelatihan (2015) the existing products in the

market, the product of Lesqu is considered valuable and rare because both existing

traditional and online tutoring do not have the live online tutoring that Lesqu has. The

product of Lesqu, however, is imitable but it is not substitutable which both

traditional tutoring and online tutoring’ products fail to deliver the same value as the

primary product of Lesqu.

Lesqu as a website based service provider relies on the website to deliver its

value to the customers. The website of Lesqu is expected to be easy to access and has

complete feature for all consumer segments which are students, parents, employees,

and partners. Most tutor providers both traditonal and online have website to promote

their products to the consumers however based on the survey conducted for this

business model, it can be concluded that the website of traditional tutor providers

such as primagama, nurul fikri, and ganesha operation fail to raise interest of the

visitor as the participants think it is more informative to visit the tutor building than to

gain information from its website. Based on the survey by visiting the website

provided by online tutoring providers is interesting and informative, hoewever, the

website does not serve as one stop service as service delivered by texting or email

address to contact and communicate with the tutors based on the find-tutor tutoring

service. Based on the description above, it can be concluded that the website service

of Lesqu is valuable, rare, difficult and costly to substitute, but can be imitated.

52

Lesqu not only relies on the technological aspect to deliver its value but also on

its customer service to make sure the satisfaction of the customer that lead to brand

loyalty and positive mouth to mouth marketing. Lesqu focuses on each stage of

customer service which are before, during, and after sales service to make sure the

customers are well served during all those stages. According to survey conducted by

visiting the website and the physical location of traditional tutoring providers such as

primagama, bintang pelajar, and nurul fikri, the website provides online interaction

through website where the visitor asks question and leave their email adress to reply

to. Most service is delivered on site location where information could be gained by

the marketing staff and the after sales includes text sending to the parents related to

the payment schedule. Based on the website of several online tutoring providers such

as edmodo, ini budi, and raja bimbel most of their service rely on the website. The

advantage of Lesqu customer service is the company combines both traditional

tutoring customer service that relies on site location service and online service that

relies on the website customer service therefore all type of customer can enjoy the

company’s service in two ways that makes the company’s customer service is

valuable, rare, inimitable and nonsubstituable.

Human resources play important part in Lesqu which its human resources must

be adaptable to relatively new business that based on information technology that is

relatively dynamic. Human resources of Lesqu range from owner, tutors,

management staffs, technicians, and operation staffs. Lesqu makes sure that the

human resources are valuable by training them to get them ready for this business and

53

operation which makes the company relies on them in running the operation. The

absence of several human resources in both traditional and online tutoring providers

such as IT technician that provides Lesqu more way to communicate with customer

and the absence of live tutor in other online tutoring makes the human resources of

Lesqu are valuable, rare, and nonsubstitutable but can be imitated with similar

training and business operation.

Company culture determines the business ethics and value of the company

which to Lesqu as a start up company has to formulate and implement culture, ethics,

and value that focus on qualified service, ethical business process, and positive

working environment. Several online tutoring providers company culture are able to

access on their website which mostly focus on delivering the consistant quality,

family value as their culture, and constant improvement as their routine such as

written on the website of Primagama, Bintang Pelajar, and Ganesha Operation. As for

Lesqu which is a start up company with company culture is formulated by 3 Chiefs

that come from different backgrounds which are education, marketing, and IT

therefore by integrating these various perspectives to produce company culture that

nurtures all human resources from tutors, marketing staffs, technicians and operation

staffs. Based on the company background history, the company culture is valuable,

rare, inimitable due to the company history, and nonsubstitutable.

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2.3 Value Proposition of Lesqu

According to Gamble, Peteraf, and Thompson (2015) having sustainanable

competitive advantages is the key success factor that a company must have in order to

be a sustainable company where the company can be the leader by giving superior

performance to the consumers. To be able to differentiate the position of Lesqu in the

tutoring market, there are qualities that Lesqu expects to emphasize in increasing its

attractiveness and uniqness in the market, and the qualities are;

- Interactive: Lesqu differentiates its products from the products of other

online learning providers, Lesqu offers interactive live online learning as its

primary product. When most online learning providers in Jakarta only offer

one way communication learning product, Lesqu offers interactive online

learning that allows interactive two way communication that will increase the

intensiveness of the learning process.

- Efficient: The efficiency that Lesqu offers to its consumers are cost efficiency

and time efficiency. The time efficiency means that the process of learning in

Lesqu is done through internet at anytime from anywhere which offer time

efficiency for the students who normally has to prepare themselves to go to

the conventional tutoring place and traffic jam in consideration therefore the

process of Lesqu tutoring will give extra time for students to do other

activities like taking a rest. The cost efficiency means that by joining Lesqu,

students will be able to save cost for transportation and meals which the

55

learning process of Lesqu is online and the pricing of Lesqu is competitive

enough in the tutoring market.

- Safe: Lesqu offers safety to the consumer which is based on the increasing

number of crime in major cities such as Jakarta and Tangerang. By Joining

Lesqu means the students are able to avoid any potential of encountering with

potential crime and accident therefore Lesqu recommends its students to

participate the leraning session in a safe and condusive places such as at home

and other condusive places.

- Parents’ Participation: The website of Lesqu has a option which allows

parents to be able to supervise the development of their children during their

learning process. The parents’ participation extends to the ability to supervise

the attendance, the grades, and also to give recommendation to Lesqu.

- Integrated Service: Lesqu offers parents and students an integrated service

which means Lesqu offers products that are able to fulfill the need of the

customers from an online based tutoring that is unable to get from similar

tutoring. Lesqu offers several best features that already exist in similar online

based study service providers such as learning video, quiz and exercise,

monthly ranking, and user community platform so that the product offering of

Lesqu is value added to make Lesqu more complete and integrated.

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2.4 S W O T Analyis of Lesqu

Lesqu internal and external capabilities and challenge are analysed using

SWOT Matrix where this matrix focuses on the internal factors such as the internal

strengths and weaknesses of Lesqu, and the external factors such as the threats and

the opportunity that are faced by Lesqu. The information that this business project

uses to determine the strengths, weakness, opportunity, and threats are taken from

several sources such as goverment report, benchmarking and strategic group mapping

of the existing players in the market, and other reports that focus on the industry from

external and internal perspective.

The strength of Lesqu relies on its innovative products which most of online

tutoring providers do not provide that is interactive live online tutoring therefore

constant improvement in technology is needed due to the dynamic nature of

technology. The weakness of Lesqu is mostly on its start up business conditions

which Lesqu has to compete with the existing players in tutoring industry in gaining

partnership with distribution channels in order to gain customers for the company

therefore Lesqu has to come up with interesting partnership deal.

The threat for Lesqu is the possibility of other online tutoring and traditional

tutoring providers to replicate the product of Lesqu therefore pricing strategy is

important to control the switching cost from Lesqu to other competitors. The

opportunities for Lesqu is the wider use of technology and internet in Indonesia and

57

the trend of education awareness and city’s condition encourage people to have

access on online service like Lesqu.

Table 2.6

The SWOT Matrix of Lesqu

Internal Factors

Strengths Weaknesses

- 24/7 access service in requested

tutoring, video learning, and

exercise

- Fast access service due to the use

of internet

- Innovative products with added

value

- The limited number of similar

product

- Wider range of target

- Offer direct customer-seller

interaction

- Trained human resources

- Strategic office location

- Competitive pricing strategy

- Start up business with limited

resources

- Start up business with little

recognition

- Several business operations of

LESQU are imitable

- The absence of patents to protect

the design of Lesqu

External Factors

Threats Opportunities

- The possibility of conventional

tutoring institutions to enter the

- Market trends related to the

awareness of the importance of

58

online tutoring industry

- The possibility of online tutoring

institutions to mimic and offer the

similar product of Lesqu

- Foreign online tutoring institution

that offer more innovative products

education, and the use of IT and

internet in daily life

- The development IT and

internet infrastructure in other

areas in Indonesia that makes it

possible to access Lesqu.

- Wide category of formal

education promotes the possible

product expansion of Lesqu.

2.5 Business Strategy of Lesqu

Based on the external and internal analysis of education industry, online

tutoring industry, and the attractiveness of Lesqu that leads to the value proposition of

Lesqu that positions the company in the market and also the internal and external

factors of the company, it is possible to choose the appropriate the business strategy

for Lesqu which the researchers believe that Broad Differentiation Strategy is the

right strategy for Lesqu.

According to Gamble, Peteraf, and Thompson (2015) broad differentiation

startegy is used when a company offers unique product and service attributes that a

wide range of customers find the product is appealing and worth buying.

Differentiation can be pursued from many angles and for Lesqu the differentiation

includes; multiple innovative features and performance, and full range of services.

According to this theory, the key to have long lasting competitive advantages, a

company like Lesqu should rely on product innovation, technical superirority,

59

product quality and reliability, unique competitive capabilities, and excellent

customer service.

In implementing differentiation business strategy, Lesqu has to focus on

building its core concept of uniqueness drivers in its company’s value chain which

are;

- Innovative Product: interactive online tutoring that offers cost and time

efficiency.

- Product design: interactive online tutoring that mimics real class teaching

process, and other products such as video learning and exercise that can be

accessed 24/7

- Employees skill training: the tutors of Lesqu are obliged to join the training

that will optimize their skill on how to conduct a learning process online to

reduce the potential of error during tutoring process and to mantain the quality

of Lesqu’s tutors

- Marketing and Brand Building: Lesqu will joint venture with school and

involved in many free-trial promotion to build the brand and to extend the

marketing chain.

- Customer service: unlike most online businesses, Lesqu has 2 division of

customer service that focus on servicing customers online and in person

during before/during/after sales to maintain brand loyalty and brand trust.

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2.6 Market Survey Analysis

This business model conducts survey through questionnaire that is distributed to

Lesqu’s target audiences which are high school students and their parents. The

purpose of this survey is to identify the target audience’s preference in tutoring

service, and what value is appreciated the most for online tutoring. The participants

for this survey are junior and senior high school students, and their parents from

several schools such as Budi Mulia, Yadika 5, Pembangunan Jaya, and SMA 6

Jakarta. Below are the selected major data that is used for further analysis;

Table 2.7

The Effectiveness of Tutoring According to Target Audience

The effectiveness of Tutoring Students Parents

Strongly Agree 27% 49%

Agree 53% 41%

Neutral 3% 0%

Disagree 15% 7%

Strongly Disagree 2% 3%

According to the participants’ answers, most participants agree that tutoring is

effective in improving their academic performance therefore tutoring is still

considered by students and parents as an effective way to improve academic

performance, and as a lucrative business.

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Table 2.7

The Convenience of The Existing Tutoring

The Conveniene of The Existing

Tutoring

Students Parents

Strongly Agree 25% 36%

Agree 41% 46%

Neutral 10% 0%

Disagree 13% 12%

Strongly Disagree 11% 6%

Based on the data above, it can be concluded that the number of satisfaction of

the participants for their tutoring institution is relatively low therefore this business

model sees that there is a room for improvement that can be used to add value to this

business model’s products to attract the customers.

As for online tutoring, Lesqu offers some value proposition to the customer and

this survey is used to determine whether the potential customer appreciate those

proposed value or not. The values of Lesqu are the innovative product which is live

interactive online tutoring, the added value of Lesqu’s product, and customer service.

The live interactive online tutoring is considered important which the 51% of students

and 42% of parents see the importance of this product therefore this product is a

primary product of Lesqu. The added value of Lesqu including efficiency, safety, and

various is highly value by 58% of students and 31% of parents. As a website based

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service provider, Lesqu aims to differentiate the brand by offering 2 types of

customer service which is direct and online and based on the data shows that 40% of

students and 59% of parents value this brand’s customer service. Below are the result;

Table 2.8

The Value Proposition of Lesqu

Scale

Live Interactive

Online Tutoring

The Added Value of

Lesqu

Customer Service

Students Parents Students Parents Students Parents

Strongly

Agree

51% 42% 58% 31% 40% 59%

Agree 34% 29% 29% 42% 33% 33%

Neutral 4% 5% 2% 4% 2% 2%

Disagree 11% 16% 11% 13% 18% 6%

Strongly

Disagree

0% 8% 0% 10% 7% 0%