Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model

The case describes how Spanish entrepreneurs Daniel GonzA?lez de Vega and Javier Arroyo founded Smartick with the aim of tackling the poor level of math education in their native Spain. Smartick is a self-financed enterprise that combines social impact with profitability. The two entrepreneurs are up against stiff competition, notably from the education giant Khan Academy, who not only has major financial backing but also offers its service free of charge. After two years of developing and testing a mix of the leading offline methods and state-of-the-art web-based technologies, Smartick is ready to make a big push into the after-school math learning space. Javier and Daniel are mulling over three options for their long-term marketing strategy. They are looking to segment the market and find the right segment to implement the strong brand positioning necessary to impact Spain's math education culture and society. The three options are to focus on B2B through schools, a combination of B2B and B2C, and a B2C-only approach. They must also decide on a pricing model and a communication strategy.

Authors :: Paulo Albuquerque, Anne-Marie Carrick, Joerg Niessing

Topics :: Sales & Marketing

Tags :: Branding, Entrepreneurship, Internet, Pricing, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model" written by Paulo Albuquerque, Anne-Marie Carrick, Joerg Niessing includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Smartick Math facing as an external strategic factors. Some of the topics covered in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model case study are - Strategic Management Strategies, Branding, Entrepreneurship, Internet, Pricing and Sales & Marketing.

Some of the macro environment factors that can be used to understand the Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model casestudy better are - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing energy prices, there is backlash against globalization, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, wage bills are increasing, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc

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Introduction to SWOT Analysis of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Smartick Math, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Smartick Math operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model can be done for the following purposes –
1. Strategic planning using facts provided in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model case study
2. Improving business portfolio management of Smartick Math
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Smartick Math

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Strengths Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Smartick Math in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model Harvard Business Review case study are -

Analytics focus

– Smartick Math is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Paulo Albuquerque, Anne-Marie Carrick, Joerg Niessing can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Ability to lead change in Sales & Marketing field

– Smartick Math is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Smartick Math in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Organizational Resilience of Smartick Math

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Smartick Math does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Learning organization

- Smartick Math is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Smartick Math is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

High switching costs

– The high switching costs that Smartick Math has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Cross disciplinary teams

– Horizontal connected teams at the Smartick Math are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Operational resilience

– The operational resilience strategy in the Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

Strong track record of project management

– Smartick Math is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

High brand equity

– Smartick Math has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Smartick Math to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Successful track record of launching new products

– Smartick Math has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Smartick Math has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

Digital Transformation in Sales & Marketing segment

- digital transformation varies from industry to industry. For Smartick Math digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Smartick Math has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.

Training and development

– Smartick Math has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

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Weaknesses Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model are -

High operating costs

– Compare to the competitors, firm in the HBR case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Smartick Math 's lucrative customers.

High cash cycle compare to competitors

Smartick Math has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Need for greater diversity

– Smartick Math has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Increasing silos among functional specialists

– The organizational structure of Smartick Math is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Smartick Math needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Smartick Math to focus more on services rather than just following the product oriented approach.

Interest costs

– Compare to the competition, Smartick Math has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

High bargaining power of channel partners

– Because of the regulatory requirements, Paulo Albuquerque, Anne-Marie Carrick, Joerg Niessing suggests that, Smartick Math is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.

Slow to strategic competitive environment developments

– As Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model HBR case study mentions - Smartick Math takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Smartick Math supply chain. Even after few cautionary changes mentioned in the HBR case study - Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Smartick Math vulnerable to further global disruptions in South East Asia.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model, it seems that the employees of Smartick Math don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

Capital Spending Reduction

– Even during the low interest decade, Smartick Math has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

Products dominated business model

– Even though Smartick Math has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model should strive to include more intangible value offerings along with its core products and services.

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Opportunities Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model are -

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Smartick Math to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

Low interest rates

– Even though inflation is raising its head in most developed economies, Smartick Math can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.

Better consumer reach

– The expansion of the 5G network will help Smartick Math to increase its market reach. Smartick Math will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

Building a culture of innovation

– managers at Smartick Math can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Smartick Math can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Use of Bitcoin and other crypto currencies for transactions

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Smartick Math in the consumer business. Now Smartick Math can target international markets with far fewer capital restrictions requirements than the existing system.

Leveraging digital technologies

– Smartick Math can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Developing new processes and practices

– Smartick Math can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Loyalty marketing

– Smartick Math has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Smartick Math can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Smartick Math to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Smartick Math to hire the very best people irrespective of their geographical location.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Smartick Math can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Creating value in data economy

– The success of analytics program of Smartick Math has opened avenues for new revenue streams for the organization in the industry. This can help Smartick Math to build a more holistic ecosystem as suggested in the Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model case study. Smartick Math can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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Threats Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model are -

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Smartick Math with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Smartick Math in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

Shortening product life cycle

– it is one of the major threat that Smartick Math is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

High dependence on third party suppliers

– Smartick Math high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Smartick Math in the Sales & Marketing sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Smartick Math has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Smartick Math needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Smartick Math needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model, Smartick Math may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .

Stagnating economy with rate increase

– Smartick Math can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.

Easy access to finance

– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Smartick Math can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Smartick Math demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.

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Weighted SWOT Analysis of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Smartick vs. Khan Academy: A Marketing Strategy for Moving Free Users to a Paying Model is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Smartick Math needs to make to build a sustainable competitive advantage.

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