marketing plan for a new venture

7/29/2019 Marketing Plan for a New Venture

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Business Plan

Group No. 9

PeerFund: Bridging the gap to Higher Education

ByGroup No. 9


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Table of Contents

Executive Summary ......................................................................................................................... 3

Research Methods ........................................................................................................................... 4

Stakeholders .................................................................................................................................... 4

Proposed Venture ........................................................................................................................... 7

PeerFund strategy ........................................................................................................................... 8

Business Model ................................................................................................................................ 8

Market Size ...................................................................................................................................... 9

Marketing Plan ................................................................................................................................ 9

Risk Factors .................................................................................................................................... 12

Funding requests and next steps ................................................................................................... 12

Conclusion ..................................................................................................................................... 12

Breakeven ...................................................................................................................................... 14

Financials ....................................................................................................................................... 14

Breakeven Calculation ................................................................................................................... 17

References ..................................................................................................................................... 17


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Executive Summary

PeerFund is a way to help top performing college applicants at the bottom of the

pyramid raise financial aid in order to attend and succeed at an accredited public

university or vocational training institute in India. We aim to make this happen through

an online crowd-funding platform. An estimated 80% of students drop out of school is

due to financial constraints in India. There are various education loans available in India

but what makes PeerFund different is that firstly it is given at a much lower interest rate

compared to the market. Secondly, PeerFund does not demand any collaterals for

providing loans which are a major hindrance in application of loan by the bottom of

pyramid.

Introduction

India has a population of 100 million students out of which only about 12% go for higher

education leaving 90 million students deprived of higher education. The present grossenrolment ratio of students to higher education is about 12%.In 2010, World Bank

statistics estimate that 32.7% of the Indian population lives on less than US $1.25 per day

(purchasing power parity) while 68.7% lives on less than US $2 per day; college

expenses are a minimum of $40 per month. The value proposition of attending college is

greatly outweighed by having to contribute to the family as soon as possible. Poverty is

persistent in India and the only way out of it is through education and literacy. The

government has taken the proper steps to encourage education. The most prominent

examples are governmental scholarship programs, bank loans available, and a mandatory

space requirement for BOP enrollment. However, most of these schemes still require the

student to pay expenses to attend the schools. In addition, they need documents

verification, have high interest rates ranging from 11-14% and approval rates being as

low as 10% for below the poverty line applicants. We identified this need and worked to

form a solution that address this need, create awareness and generates revenues for all the

stakeholders involved.


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Research Methods

Our research methods included meetings with our India colleagues at the SIMSR institute

and an interview with a funding education start-up in India, creating a prototype and

stakeholder map. Our SIMSR colleagues completed a formal interview with the principal

of the VTI institute in Somaiya, shadowing of 30 VTI students, 10 contextual student

interviews, and a. This deep dive research was conducted to understand 3 touch points of

financing education: (1) The students background, (2) how students currently finance

their education (3) the feasibility of implementing our solution. Observing customer

behaviors was most valuable because it enabled us to pick-up on their reactions to taking

part in the program and iterate our solutions based on the students and principals

inputs.. Our goal is to create a service experience that is supportive and efficient for

paying for college for students with no other option. (Appendix 1: Research Summary).

A college degree would lead to better jobs and higher salaries, which is more beneficial

for supporting a family.

The location chosen for primary research is VTI Somaiya College, Mumbai and a total of

130 students were interviewed. The outcome of the research:

Students do not have collaterals to offer to banks for loan grant. Families cannot afford to provide higher education to their children as their

average salary per day is close to INR 300.

Education loans are available at interest rates as high as 14%. Grant of loan requires collaterals, which they do not have.

Stakeholders

VOCATION

AL


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Students are the primary stakeholders for peer fund program as it would get them loan to

continue with their higher education. Benefiting from the internship made available they

can even earn while studying.

NGOs are the partners for getting the needed students. NGOs working already with some

underprivileged students on other verticals can get us in contact with these students. This

would get them to trust on us since they are already in terms with the NGO. It would

eliminate the effort of convincing students of genuine of our program.Vocational Institute would be provided with students by peer fund program. On account

of providing with students, they will provide us with some commission which would be

an added revenue source for Peer Fund.

Lenders will provide funds for students. These lenders would help the society by children

upliftment and in return would get their money back with a higher interest of what is

provided by banks.

Families would be benefited by their children studying which would get an upliftment to

their current state. Families with educated and employed children would get more

financially stable as well as would realize the value of education which is in it a help to

the society.

LENDER

SSTUDEN

T

NGOFAMILIE

S

PEER

FUND


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Figure --- PeerFund believes this is an important problem. We hope to empower our

applicants with the tools necessary to break the viscous cycle of students trading in

education for low income jobs to support their families.


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Proposed Venture

From the students side:

Our marketing/ground team will work

directly with the target high schools to

gain applications from the students in

senior standing (12th standard). We will

analyze and decide the most qualified

applicant to proceed on to the next

phase. Their stories and a video will be

placed on our website. Students will

specify their need and the amount they

need to be raised. It is then up to the

lenders worldwide to support the

students and the students to perform at

their institution so they can repay the

lender and become financially

independent. Students have two years

after graduation to repay the loan.

From the lenders side:

Lenders will find a student by picking

the one story that inspires them the most

on our online website. They will make a

loan with 100% of the funds going

directly to the university in the students

name. peerFund will then update them

once a semester on the students

progress as they move toward the

degree. Once the student graduates with

a steady flow of income, the lender will

be paid pack. This will happen within

two years of them graduating


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PeerFund strategyIt is our responsibility to choose the candidates with the greatest potential and link them

with a lender. PeerFund is an easier process and 35% cheaper than traditional bank loans

for higher education. There will be no requirements for students to offer collateral

security to obtain a loan. We will be in direct contact with all stakeholders (university,

high school, students, lenders, and the peerFund ground and online representatives. As

mentioned above that peer pressure will be applied to assure payback, we decided to

apply this through a system called Peer rank. If a student doesnt repay his/her loan, the

high school he/she attended will be rated lower in our online ranking systems having a

negative impact on future applicants from that specific community. This will make it

more difficult for other students to get funding if they come from such high school

making the high school responsible for the students they output into the peerFund

program. This is to reduce the risk of defaults.

Business Model

Loan repayment will be in the form of 12-24 monthly installments starting immediately

after the student graduates from college. Students will pay 9% interest on loans, which

will then be split between the lenders &peerFund. The lenders will get paid 5% and

peerFund will earn 4%.


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Revenue would be the 9% of interest. Of this, 5% will be paid back to lenders (along

with the principal amount) and peerFund will earn 4%.

Market Size

Expected average loans will be significantly smaller i.e. approximately $500, targeted at

students applying for undergraduate programs at qualifying Indian colleges and

universities. This being said, larger amounts will be available for professional programs.

The total market for this is $12 Billion5. There are currently 1.2 Million schools out of

which 80% are public schools and 20% are private schools5. On average, there are 30

students graduating per school. The average loans required for college are $3005. Our

addressable market is over one billion dollars. This will cover sub-urban school districts

with public school students.

Marketing Plan

Our target is segment is students living in the rural-suburban belt that go to high-school


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but cannot pay for college. Given that these students rarely have access to computers, the

internet as a marketing medium (although we will be a web-based company) will be

ineffective.

We will reach our target customers through affiliated channels partnerships with

schools, colleges and NGOs that will help us spread quick awareness at extremely low

costs. Further, we will create awareness by running information sessions at rural schools.

By educating students about career options available to them and the benefits of going to

college with an easy repayment plan, we expect to generate greater trust among the rural

student community. We will also register our startup with government loan-assistance

programs in order to provide tax rebates to companies and individual lenders.


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Figure--- peerFund is the most applicable solution for helping high school seniors

succeed and graduate from college due to our lowered interest rate and a market-leading

payback period.


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Risk Factors

There is a possibility that some students may not pay back the loans since we will not

demand security at the time of disbursement. We will mitigate this risk greatly by

disbursing loans directly to colleges to ensure they are not misused. Second, we will

request partner colleges to withhold issuing the diploma until after the full loan amount

has been repaid. Lack of awareness is a real problem. One of the greatest challenges to

our success would be our ability to execute rapidly and building partnerships with

institutions that will help us access students in need of aid. Since we are a relatively new

concept, students may be apprehensive in signing up.

Funding requests and next steps

We estimate that we would need US $50,000 to start up. PeerFund will be rolled as a pilot

project in the areas around Mumbai. We aim to target schools in a ten-mile radius in the

sub-urban districts of Mumbai. If the project works well we will roll it out on a national

basis around the major metropolitan cities such as Chennai, New Delhi, Kolkata and

Hyderabad. As of now, Mr. Matthew, the Principal of VTI Somaiya has agreed to partner

with us as an institute. As per the groundwork done by our Indian team, there has been

positive feedback from the students of VTI, Somaiya. The teachers at VTI have also

shown an interest to register and take loans for training courses. We believe that more

schools will come forward with shared interest in our program.

Detailed financials, including 5-year projections of our pro-forma income statement,

balance sheet and cash flow have been included in the appendices.

Conclusion

PeerFund is a way out of poverty. It has a bright future because it serves one of the

biggest needs in India i.e. education. We see a huge potential for scalability. After our

pilot project, we will identify other similar communities that can benefit from peerFund.

The problem of lack of funding for education is a massive socio-economic problem in


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India and we believe that we can make a real difference through peerFund.


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Breakeven

Financials

Year-1

Assumption: No of students

month wise would be ( 10,

12 ,25, 30, 40, 45, 55, 60,

65, 68, 75, 80), average per

month = 47.08333333

Costs Amount

Incorporation expense 7200

Making and publishing of

Website, purchase of

domain etc. 5000


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Website and Data

Maintainence 6000

Promotional activities will

be done through concurrent

project to MBA students,2

teams of three students,

initially in Mumbai as

majorly online marketing

will be done. 32000

Background check on

receipt of application 23500

Administrative cost, pitching

in with corporates, travel,

telephone cost. 10000

Staff cost to contact with

corporates and maintaindatabase. 168000

Total Cost 251700

Revenue Amount

From stipend 20000

Other revenue, commission

or bulk admission ofstudents 9400

4% interest 0

Total Revenue 29400

Profit/ Loss -222300

Year-2

Variable cost remaining same

Costs Amount

No of Students 150

Website and Data

Maintainence 6000


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Promotional activities will

be done through

concurrent project to MBA

students,2 teams of three

students, initially in

Mumbai as majorly online

marketing will be done. 32000

Background check on

receipt of application 75000

Administrative cost,

pitching in with corporates,

travel, telephone cost. 10000

Staff cost to contact with

corporates and maintain

database. 178080

Bad Debts 81000

Total Cost 382080

Revenue Amount

From stipend 100000

Other revenue, commission

or bulk admission of

students 30000

4% interest 540000

Total Revenue 670000Profit/ Loss 287920

Cost of the previous year -222300

Profit this year 65620


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Breakeven Calculation

Breakeven

monthly costs on average in second year will be

Total cost/12 31840

Revenue/ month 55833.33333

Breakeven is say after n months

n*31840 + 222300(last year cost)=

n *55883.33(revenue per month)

n*19933.3= 222300

n= 11.15 ~ 11 months

Break even = 12(prev year)+11 23 months

References

1. Government of India ministry of human resource development, bureau of planning, monitostatistics. (2009). Statistics of higher & technical education. Retrieved from w

http://mhrd.gov.in/sites/upload_files/mhrd/files/Abstract2009-10_0.pdf

2. The World Bank Group. (2012). India poverty & equity data. Retrieved fromhttp://povertydata.worldbank.org/poverty/country/IND

3. State Bank of India. (2012). Education loan scheme. Retrieved fromhttps://www.sbi.co.in/user.htm?action=viewsection&lang=0&id=0,16,393,397

4. Population Reference Bureau, (2012). Data profile india. Retrieved from websitehttp://www.prb.org/DataFinder/Geography/Data.aspx?loc=380

5. http://www.thehindu.com/multimedia/dynamic/01142/12isbs_opinion-tim_1142103e.jpg

6. https://reader009.{domain}/reader009/html5/0408/5ac982fd02143/5ac98305c3d35.jpg

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