Kaplan and The Princeton Review recently posted 3Q Financials. Both companies report declines in their YTD Test Prep business segments (-4% and -15% respectively).
While these declines may seem disconcerting to independent tutors and boutique tutoring firms, there are some important considerations to, well, consider:
But let’s be clear, the test prep & tutoring space has shifted in a profound way and it is only a matter of time before many, not all, but many independent firms will be impacted. The fact that Kaplan has partnered with ACT Inc. to offer low cost remote ACT tutoring was presumably in response to the relationship between The College Board & Khan Academy (which is offering free web based SAT prep). This integrationis a signal to the rest of the market. Without going into significant detail, here is what you should be asking yourself:
“When a market leader in an oligopoly vertically integrates with a supplier, what does it mean?”
and
“If the integration reduces the expenses related to their mode of delivery or/and the average price for a product, what does it mean for the rest of space?”
…And here is where you might want to dust off your copy of Who moved my cheese? There is no simple solution but there is one trap to avoid: inaction. If these market shifts can be considered the proverbial “writing on the wall” then broad stroke strategic thinking should be happening. Think about pricing, positioning, rebranding, niche strategy or diversification as potential paths worth exploring during that broad stroke thinking.
Thankfully, there has always been a bit of a built-in break during the latter half of December. As you’ve heard us say before: “dig the well before you are thirsty.”
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