test preparation market in us 2015-2019

Test Preparation Market in US 2015-2019

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01. Executive Summary ........................................ 1

02. List of Abbreviations ........................................ 2

03. Scope of the Report ........................................ 5

03.1 Market Overview .................................................... 5

03.2 Product Offerings .................................................... 5

04. Market Research Methodology ..................... 6

04.1 Market Research Process ...................................... 6

04.2 Research Methodology ......................................... 6

05. Introduction ..................................................... 8

06. Market Landscape ....................................... 10

06.1 Digitization of Education in US: An Overview .... 10

06.2 E-learning Delivery Model ................................... 12

06.3 Market Size and Forecast .................................... 13

Market Size and Forecast......................................................... 13

06.4 Five Forces Analysis ............................................. 15

07. Market Segmentation by Product ............... 17

07.1 Test Preparation Market in US by Product .......... 17

07.2 Test Preparation Market in US by University Exam

Segment ................................................................ 20


07.3 Test Preparation Market in US by Certification

Exam Segment ..................................................... 21

Table of Contents



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07.4 Test Preparation Market in US by High School

Level Exam Segment ........................................... 23


07.5 Test Preparation Market in US by Other Exam

Segment ................................................................ 24


08. Buying Criteria ............................................... 25

09. Market Growth Drivers .................................. 26

10. Drivers and their Impact ............................... 28

11. Market Challenges ....................................... 29

12. Impact of Drivers and Challenges .............. 32

13. Market Trends ................................................ 33

14. Trends and their Impact ............................... 35

15. Vendor Landscape ....................................... 36

15.1 Competitive Scenario .......................................... 36

15.2 Market Share Analysis 2014 ................................ 36

15.3 Other Prominent Vendors .................................... 37

16. Key Vendor Analysis..................................... 38

16.1 ArborBridge ........................................................... 38

Key Facts ..................................................................................... 38

Business Overview...................................................................... 39

Service Segmentation .............................................................. 39

Recent Developments ............................................................. 39

SWOT Analysis ............................................................................. 40



technavio insights

16.2 ClubZ ..................................................................... 41

Key Facts ..................................................................................... 41




SWOT Analysis ............................................................................. 43

16.3 Pearson ................................................................. 44

Key Facts ..................................................................................... 44


Business Segmentation by Revenue 2013 ............................ 46

Business Segmentation by Revenue 2012 and 2013 .......... 47

Geographical Segmentation by Revenue 2013 ................. 47


SWOT Analysis ............................................................................. 48

16.4 The Princeton Review ........................................... 49

Key Facts ..................................................................................... 49



SWOT Analysis ............................................................................. 51

17. Other Prominent Vendors ............................. 52

17.1 Barron's Educational Series ................................. 52

17.2 Becker Professional Development ..................... 52

17.3 Huntington Learning Center ................................ 53

17.4 Kaplan ................................................................... 53

17.5 Knewton ................................................................ 54

17.6 Manhattan Review ............................................... 54



technavio insights

17.7 Peterson's Nelnet .................................................. 55

17.8 Revolution Prep .................................................... 55

18. Other Reports in this Series ........................... 56



technavio insights

Market Research Methodology.................................. 6

Key Developments in E-learning Market ................. 11

Key ICT Developments in Education Market 2012-

2022 ...................................................................................... 12

E-learning Delivery Model .......................................... 13

Segmentation of Test Preparation Market in US by

Product ................................................................................. 17


Product 2014 ........................................................................ 18


Product 2019 ........................................................................ 18


Product 2014-2019 ($ million) ............................................. 19


Product 2014-2019 ............................................................... 19

Test Preparation Market in US by University Exam

Segment 2014-2019 ($ million) ........................................... 20

Test Preparation Market in US by Certification Exam

Segment 2014-2019 ($ million) ........................................... 21

Test Preparation Market in US by High School Level

Exam Segment 2014-2019 ($ million) ................................ 23

Test Preparation Market in US by Other Exam

Segment 2014-2019 ($ million) ........................................... 24

ArborBridge: Service Segmentation ....................... 39

List of Exhibits



technavio insights

ClubZ: Service Segmentation.................................. 42

Pearson: Business Segmentation by Revenue 2013 .

..................................................................................... 46

Pearson: Business Segmentation by Revenue 2012

and 2013 ($ billion) .............................................................. 47

Pearson: Geographical Segmentation by

Revenue 2013 ...................................................................... 47

The Princeton Review : Service Segmentation ..... 50


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01. Executive Summary

Market Size 2014: $3,892.0 million

2019: $4,340.0 million

Market Growth Rate 2015: 1.53%

2019: 2.83%

CAGR 2.20%

Key Customer Segments Educational Institutions

Individual Customers

Key Market Drivers

Reliance on Standardized Testing

Government Initiatives

Changes in Standard Exam Structure

Rise in Employment Opportunities

Key Market Challenges

Credibility Issues

Advocacy against Standardized Test Culture

Threat from Open Sources

Sustainability Issues

Key Market Trends

Increased Focus on K-12 segment

Rigorous Marketing

Growing Online Distribution Channels

Investments in Test Preparation Start-ups

Key Buying Criteria

Brand

Coverage

Quality

Customer Service

Key Vendors

ArborBridge

Club Z! Inc.

Pearson

The Princeton Review Inc.


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02. List of Abbreviations

ACCA - Association of Chartered Certified Accountants

ACT - American College Testing

AP - Advanced Placement

AVSAB - Armed Services Vocational Aptitude Battery

BFSI - Banking Financial Services and Insurance

BYOA - Bring Your Own Access

BYOD - Bring Your Own Device

CAIA - Chartered Alternative Investment Analyst

CD - Compact Disc

CFP - Certified Financial Planner

CIMA - Chartered Institute of Management Accountants

CMS - Content Management System

COMLEX - Comprehensive Osteopathic Medical Licensing Examination

CPA - Certified Public Accountant

ESL - English as a Second Language

FRM - Financial Risk Manager

FT - Financial Times

GED - General Educational Development

GMAT - Graduate Management Admission Test

GRE - Graduate Record Examination

ICT - Information Communications Technology


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IELTS - International English Language Testing System

IoT - Internet of Things

ISEE - Independent School Entrance Examination

LMS - Learning Management System

LSAT - Law School Admission Test

MCAT - Medical College Admission Test

MNC - Multinational Company

MOOC - Massive Open Online Course

NAAC - National Assessment and Accreditation Council

NAPLEX - North American Pharmacist Licensure Examination

NCLB - No Child Left Behind

NMSQT - National Merit Scholarship Qualifying Test

PANCE - Physician Assistant National Certifying Examination

PSAT - Preliminary Scholastic Assessment Test

ROM - Read-only Memory

SAT - Scholastic Assessment Test

SHSAT - Specialized High Schools Admissions Test

SOOC - Short Open Online Course

SSAT - Secondary School Admission Test

SSATB - Secondary School Admission Test Board

TOEFL - Test of English as a Foreign Language

TOEIC - Test of English for International Communication


4



USMLE - United States Medical Licensing Examination

VCR - Video Cassette Recorder


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03. Scope of the Report

03.1 Market Overview

This report covers the present scenario and the growth prospects of the test preparation market

in the US for 2015-2019. To calculate the market size, the report considers revenue generated by

test preparation service providers with a workforce of more than 20 employees. The report does

not consider individual private tutors. The product segments considered to determine revenue

generated are:

University exam

Certification exam

High school level exam

Other exams

It also presents the vendor landscape and a corresponding detailed analysis of the top four

vendors in the market. In addition, it discusses the major drivers that influence the growth of the

market. It also outlines the challenges faced by vendors and the market at large, as well as the

key trends that are emerging in the market.

03.2 Product Offerings

Company Products Offered

ArborBridge Test Preparation Services

Counseling Services

Club Z! Test Preparation Services

Academic Tutoring

Pearson

Pre-K-12 Education

Higher Education

Professional

The Princeton Review Test Preparation Services


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04. Market Research Methodology

04.1 Market Research Process

Technavio has collected and analyzed key data related to the test preparation market in the US

using a variety of methods. The market dynamics have been ascertained following a detailed

study of the micro, meso, and macroeconomic indicators of the market.

04.2 Research Methodology

This report is based on in-depth quantitative and qualitative analyses of the test preparation

market in the US. The quantitative analysis involved the application of various projection and

sampling techniques. The qualitative analysis involved primary interviews, surveys, and vendor

briefings. The data gathered as a result of these processes were validated through experts'

opinions.

Market Research Methodology

Source: Technavio Research

Test Preparation

Market in US 2015-

2019


7



Based on the research results and technical insights thus gathered, Technavio analysts have

provided a comprehensive analysis of the varied aspects of the market. The impact of global

economic conditions and other macroeconomic indicators were also considered when assessing

the market.


8



05. Introduction

The increasing phenomenon of benchmarking in education is highly useful in measuring the

performance of students, teachers, and schools, and consequently evaluate and compare the

education system. The test preparation industry has emerged concomitantly with the extensive

standardization of the education sector in the US. This standardization essentially refers to the

provision of exam preparation services for students to help them score well in entrance tests. The

test preparation providers make available supplementary educational materials, mock tests, and

guides in classroom-based or online learning modes to help the students in their endeavors. Apart

from that, test preparation companies in the US help the students prepare for various university

and high school level exams such as SAT and ACT, as well as certification exams such as MCAT

and GMAT. The scope for such test preparation companies is high, driven by the rise in demand

from students seeking admission in better schools and colleges.

The test preparation market in the US is performing well and is growing steadily with a CAGR of

2.20%. It is expected to reach $4,340.0 million in terms of revenue by 2019. The market is

experiencing huge demand for preparatory courses for high school level exams, which is the

fastest growing segment. Further, as a result of the standardization of K-12, the market is gaining

considerable momentum. The portfolios of vendors present in the market range from large

vendors operating globally to small vendors offering specific services. The onset of online

preparation methods is also helping them create new markets to compete.

Reliance of the US education system on standardized testing has increased. In addition, the

announcement of NCLB, a government initiative, to make education more quantifiable in terms

of student performance, has boosted the adoption of a standardized testing regime. As a result,

several students have become dependent on these test preparation companies.

Notwithstanding the above, credibility issues pertaining to educational institutions have increased.

The influx of several players offering instructional materials to facilitate test preparation in the

market has resulted in increased resistance among customers. This hesitance stems from factors

such as poor quality of content, lack of good coverage and extensiveness of the study material,

and lack of comprehensiveness of the service. Apart from that, accreditation issues have seen a

rise, further leading to customers' shift to known brands. Not all people are convinced about a

standardized test culture, which remains a cause of concern for market growth.

The market offers promising growth options because its true growth potential is yet to be

unlocked. The emergence of many positive trends is expected to help the market grow and

circumvent the challenges. Focus on the K-12 market has increased in the US. Although, K-12 is


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considered to be a lucrative market, it is still decentralized and difficult to capture. Therefore,

vendors are interested to expand their businesses in the K-12 market by developing customized

products that suit the specific needs of customers. Apart from that, rigorous marketing campaigns

by educational institutions are expected to have a positive impact on overall market growth.


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06. Market Landscape

06.1 Digitization of Education in US: An Overview

The emergence of e-learning is one of the most powerful developments in the education market.

E-learning has improved access to educational opportunities for students who seek to pursue a

specific course but are restricted because of the lack of availability of such courses within their

reach or because of factors such as distance, time, and affordability. Online education, however,

has the potential to trigger a third wave of internationalization for educational institutions and

training institutes across all segments of the education market. In the corporate segment, demand

for e-learning has increased significantly, the economic scenario of many companies changed

considerably following the global financial crisis. As a result, to control training and travel budgets,

companies have begun to adopt e-learning in all feasible functionalities.

The adoption of e-learning courses is on the rise as it is less time-intensive, while the content

retention rate is much higher than classroom training. Also, the growth of mobile devices,

enhanced internet connectivity, and the incorporation of rich content have significantly

improved the method of learning delivery. All these factors have resulted in wide acceptance

and increased credibility of e-learning courses across all segments in the education market.

E-learning courses are broadly classified as follows:

Synchronous e-learning: virtual classroom with the capabilities found in real classrooms. The

trainer and trainee interact in a virtual meeting place. Various technologies used in this form

of learning include slide presentations, audio and video conferencing, application sharing,

and shared whiteboard

Asynchronous e-learning: provides students with the flexibility to study the course in their own

time and to their own schedule. It does not require live interaction with trainers. These courses

are largely delivered in two forms, which are self-paced learning and facilitated discussions


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Key Developments in E-learning Market


The exhibit below explains the key ICT trends that have played an important role in the

development of the e-learning courses market.


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Key ICT Developments in Education Market 2012-2022


06.2 E-learning Delivery Model

Content for e-learning can be generated through various sources such as libraries, journals,

publishing houses, content developers, and open-source models. The content is developed

according to the requirements of corporate and other e-learning consumers. The next step after

content generation involves the development of an e-learning module for its deployment on

software platforms. CMS and LMS are generally software or suites of applications and tools that

allow organizations to create, edit, review, and publish content. The published content is then

distributed to end-users through virtual classrooms, computers, tablets, and smartphones.


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E-learning Delivery Model


06.3 Market Size and Forecast

Market Size and Forecast

The test preparation market in the US was valued at $3,892 million in 2014 and is expected to reach

$4,340 million by 2019, growing at a CAGR of 2.20%.


ContentManagement

SystemsDistribution End-users


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Education is compulsory for all students in the US, until they are sixteen or eighteen, depending on

the regulatory requirements and structure of local school districts. The US education system is merit-

based with the student population having to write at least two competitive exams during their

education. The US has become a lucrative market for test preparation providers because of

favorable government policies, which play a pivotal role in developing the test preparation

market. As a result, the country represents a resilient and stable demand for test preparation

services. The highly fragmented market attracts many enterprises and individual vendors as the

demand for these services has gradually risen because of tough entrance exams.

Rising demand and the need to ensure equality in education has changed the market structure

to a large extent. Traditionally, this market was represented by a few large and reputed

enterprises, who charged exorbitant fees and provided a standard package of services, including

specific subject training, career counseling, and mock tests. These expensive courses were

unaffordable among a large section of students. However, the advent of online media in

receiving test preparation classes and materials, followed by a rise in independent private tutors,

and non-profit organizations, who customize courses as per students' educational requirements

and financial capacities began to attract a wider learner base. This resulted in large enterprises

tweaking their course offerings to remain competitive in the market. This has helped the students

preparing for professional exams significantly. Currently, most students preparing for entrance

exams use the blended learning approach. They enroll in schools and colleges, study in traditional

classroom-based teaching environments, and simultaneously access various MOOCs and

subscription-based online platforms.

Apart from traditional test preparation services, other niche segments have also significantly

benefited from advances in technology. Institutes have begun to create product and service

innovations for disabled students as well as students who need special care and attention as they

cannot be properly judged with the standard exams for other students. To ensure the right

assessment of these learners, institutes, in partnership with technology service providers such as

Intel and Apple, have begun to create new platforms to train such students to successfully

compete in respective entrance exams. Hence, the demand for new tools and technologies to

create content is expected to drive the market. All these factors would strongly contribute in the

test preparation services market, which is expected to maintain low but steady growth during the

forecast period.


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06.4 Five Forces Analysis

Threat of Rivalry

(High)

The competition level in test preparation

market is high as it is a niche market. This has also raised the industry

standards.

Bargaining Power of Suppliers

(Moderate)

The providers of test preparation materials and online classes develop the course content

themselves. However, they are dependent on the technology service providers for hardware

and software for online courses.

Bargaining Power of Buyers

(High)

The bargaining power of buyers is high with a plethora of options for the vendors to choose

from.

Threat of New Entrants

(High)

The lucrative market is attracting new players

to enter the market. Moreover, the market is not capital -intensive.

Threat of Substitutes

(Low)

The market is dependent on

mainstream education. Therefore,

strengthening of education system

poses a threat to the test preparation

market.


16



Key

The impact of the five forces is graded on the basis of the intensity and duration of their influence

on the current market landscape. The magnitude of the impact has been categorized as

described below:

Low - Negligible or no impact on the market landscape

Moderate - Medium-level impact on the market

Moderately High - Significant impact on the growth of the market

High - Very high impact, with radical influence on the growth of the market


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07. Market Segmentation by Product

07.1 Test Preparation Market in US by Product

The test preparation market in the US is categorized into the following segments based on

products:

Segmentation of Test Preparation Market in US by Product


Test Preparation Market in US

University exam

Certification exam

High School-level exam

Other exam


18



Segmentation of Test Preparation Market in US by Product 2014


Segmentation of Test Preparation Market in US by Product 2019



19



Segmentation of Test Preparation Market in US by Product 2014-2019 ($

million)


Segmentation of Test Preparation Market in US by Product 2014-2019



20



07.2 Test Preparation Market in US by University Exam Segment


The test preparation market in the US by the university exam segment was valued at $1,853.4

million in 2014 and is expected to reach $2,075.4 million by 2019, growing at a CAGR of 2.29%.

Test Preparation Market in US by University Exam Segment 2014-2019 ($

million)


One has to clear standardized tests such as SAT, ACT, GMAT, ASVAB, GRE, PSAT/NMSQT, MCAT,

LSAT, and AP exams to gain admission to colleges and universities in the US. These tests are either

generic in nature, such as ACT, or are domain specific, such as GMAT and MCAT, which are tests

that help gain admission to business colleges and medical colleges in the country. Most universities

and colleges admit students to undergraduate courses based on SAT and ACT scores. Students

take these exams mostly in their senior year of high school. As a result, being a mandatory

requirement, the potential for the SAT and/or ACT entrance exam preparation services market is

as high, driven by the widening high school learner base. Therefore, these courses represent the

biggest share of the market and this should continue even at the end of the forecast period. The

surge in demand observed for these tests is evident from the increase in SAT test centers in the US.

It increased from 11,000 in 1998 to more than 22,000 in 2012. With the rising student population,

and limited seats, universities and colleges will make the selection process more rigorous and


21



stringent. This could lead to an increase in the minimum SAT/ACT scores in institutes. To ensure

enrollment in the best colleges, students will enroll in institutes that provide the right training to

successfully crack such tests. However, this market should witness stable growth to an extent

because of some level of effect by open online courses.

07.3 Test Preparation Market in US by Certification Exam Segment


The test preparation market in the US by the certification exam segment was valued at $1,182.4

million in 2014 and is expected to reach $1,327.6 million by 2019, growing at a CAGR of 2.34%.

Test Preparation Market in US by Certification Exam Segment 2014-2019 ($

million)


The US economy has recovered to an extent from the financial crisis of 2008-2009. The government

has taken steps and kick-started adequate initiatives to ensure stability in the employment market.

Although the employment market is improving, it is yet to garner the confidence of students and

other learners. In such a scenario, to gain expertise in a particular field and remain competitive,

employees and students who have just passed out of colleges are taking certification exams. The

test preparation companies are offering preparatory courses and classes for exams such as FRM,

CPA, CFP, CAIA, NAPLEX, NCLEX, and PANCE. Most of these courses are technically complex,


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apart from being expensive. Apart from that, some of the courses have limited attempts and

negative markings, which could affect the students' education credentials. As a result, most

students opting for such courses enroll in centers that provide assistance in successfully clearing

these exams. The rising student populace across segments, including students, fresh graduates,

and employees showing keen interest in such courses, should strengthen the demand for test

preparation services. Chartered courses such as CFA, CPA, and CS will also enjoy strong demand,

owing to their high credibility in the job market.

Also, globalization and IoT has led to the emergence of various niche and parallel industries giving

rise to new knowledge requirements from the technology and concept perspective. For instance,

Big Data, which was almost non-existent a decade ago, is thriving in almost all large organizations.

Various companies are seeking professionals such as data scientists, who have in-depth

knowledge of Big Data tools such as Hadoop and NoSQL. Meanwhile, e-commerce has led to

substantial demand for social media analytics, digital marketing, SEO, website development, and

management to name a few. These are non-traditional courses, which students learn from

certified training institutes. Also, large universities have begun to offer certification programs in

such fields. As the seats are significantly limited, students go through a rigorous selection process

for these programs. All these factors necessitate students to enroll for training to help them groom

for such niche roles. As a result, apart from a rise in the training of students to clear traditional

certifications, the segment will also witness the establishment of new entities catering to niche

requirements. Also, as few institutes offer such training, the training institutes have the leverage to

charge premium fees and garner better margins as against traditional training institutes.


23



07.4 Test Preparation Market in US by High School Level Exam Segment


The test preparation market in the US by the high school level exam segment was valued at $566.3

million in 2014 and is expected to reach $639.7 million by 2019, growing at a CAGR of 2.47%.

Test Preparation Market in US by High School Level Exam Segment 2014-

2019 ($ million)


This segment includes exams that are conducted for the purpose of getting admission to high

schools, such as SHSAT, ISEE, and SSAT. SHSAT is used as a criteria to gain admission to eight

specialized high schools in New York. This exam is organized for all eighth and ninth grade students.

The SSAT is another test organized by SSATB for students in 3-11th grade to gain admissions to

elementary, middle, and high schools. ISEE is another entrance test that is used to administer

students into schools. This test is organized at three levels for different grades, including 5-6 grade,

7-8 grade, and 9-12 grade.

Enrollments into preparation of such exams are increasing rapidly. The revenue generated from

this segment is growing rapidly compared to other mentioned segments. Due to the

standardization of course material, most institutes compete in terms of price or fees. In this

segment, a large portion of learners concentrate on a few leading institutes as these organizations

have a legacy reputation of providing best-in-class training. As high school education is


24



mandatory to achieve complete school education, most students enroll for the training. Therefore,

despite a decline in course fees, the market should witness sustained demand, driven by the rise

in student enrollments.

07.5 Test Preparation Market in US by Other Exam Segment


The test preparation market in the US by the other exam segment was valued at $290.0 million in

2014 and is expected to reach $297.3 million by 2019, growing at a CAGR of 0.50%.

Test Preparation Market in US by Other Exam Segment 2014-2019 ($ million)


Apart from all the exams mentioned above, test preparation companies are also offering their

services to students to enhance their performance in other exams pertaining to language

proficiency. This includes helping students in Pre K-12 to improve learning and retention. As a result,

the students gain a better understanding of the subjects and enhance their cognitive abilities in

subjects. The rate of enrollments to prepare for these exams is lower compared with the

abovementioned segments. The lack of appropriate and adequate products available for Pre K-

12 students has lowered market penetration to an extent. This provides opportunities for vendors

seeking to create new products for this untapped segment. This segment mainly covers tests such

as TOEFL, TOEIC, and IELTS, which are used to measure cognitive ability, intelligence level, and

also to understand psychology.


25



08. Buying Criteria

Parameter Details Customer Segments Significance Attached

Brand

Customers are giving

preference to the brand

name of vendors while

purchasing. Hence,

vendors should improve

brand visibility.

Educational institutes

Individual customers

Coverage

The test preparation

material should cover

each and every aspect of

exams and subjects.



Quality

Vendors should make sure

that there is no

discrepancy in the

information and also

ensure that the

information provided to

students is

comprehensive.



Customer

service

Good customer service is

essential in resolving any

confusion of customers.

Test preparation providers

should have a system for

redressing grievances and

complaints.



Key

The impact of the buying criteria is graded on the basis of the intensity and duration of their

influence on the current market landscape. The magnitude of the impact has been categorized

as described below:




Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High1 2 3 4 51

Low High 1 2 3 4 5


26



09. Market Growth Drivers

Some of the major drivers of the test preparation market in the US are discussed below:




Rise in Employment Opportunities


Education standardization and benchmarking initiatives are fueling the growth of the test

preparation market in the US. Following the enactment of the NCLB act, emphasis on a standards-

based education system has increased significantly. The act makes sure that education is

available to each and every child. In order to monitor the growth of the learning quotient of

students, a range of standardized tests such as SAT and ACT are used at various levels. Notably,

schools and colleges have been entrusted with the responsibility of enhancing the performance

of students in these tests. The US government has strict laws in place to deal with non-performing

educational institutions. The measures that the country could take against such institutes include

curtailment of funding. Therefore, some educational institutes have begun to incorporate such

tests to comply with rules and regulations laid down by the US government. Nonetheless, the

resources available for students to prepare for these tests are inadequate in some institutes, which

has fueled the demand for test preparation services in the country. Apart from that, an increasing

number of schools, universities, and students are taking help from the providers of test preparation

tools and courses.


The US government has shown keen interest in building the technical capabilities of students to

make them more employable. In line with this strategy, it has introduced TechHire in 2015, which

is an ambitious plan to hire and provide training for new technical positions by around 300

employers including Google, Goldman Sachs, and Bank of America. The program will be run in 20

cities with the help of a $100-million fund, which will be provided by the Department of Labor. The

fund will be available for companies engaged in the training and hiring of disabled people,

women, and weaker sections of society. Apart from that, YesWeCode, a company that provides

technical training to young people seeking funds, has also decided to contribute $10 million to

the TechHire program to support scholarships, and companies such as Treehouse Island, Dev

Bootcamp, and Udacity are also offering training for students for free or at a discount. All these

factors are expected to boost the growth of the market during the forecast period.


27




There is a direct correlation between structural changes brought about in standardized exams

such as SAT, MCAT, LSAT, and ACT and the demand for test preparation instructional programs

and materials. For instance, in 2015, recent changes in MCAT, an admission exam for medical

students, has further pressurized students to aim for high test scores. These changes are quickly

resolved and incorporated in the materials and services provided by test preparation companies.

Also, students are increasingly relying on test preparation service providers to understand the

requirements and perform well in exams. Hence, the profitability scenario for test preparation only

gets better under such circumstances.

Rising Employment Opportunities

The growth prospects of the market lowered during the financial crisis of 2008-2009. However, the

US did manage to register a steady recovery in the past few years, which bodes well for the overall

employment scenario of the country. The US has not reached a stage in its economic scenario

wherein its job data matches that of the pre-recessionary period. Although lot of investments have

been made, which has led to positive changes in the employment scenario, it has still not gained

the confidence of the youth and working population in the country. As a result, candidates who

have work experience are pursuing certification courses and diplomas such as CFA to gain

expertise and distinguish themselves from others. The growing enrollment in test preparation

courses is also because of the government's initiatives to improve the talent pool and make

students more employable.


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10. Drivers and their Impact

Driver Impact on Key Customer Category

Education Institutions Individual Customers

Reliance on Standardized

Testing


Changes in Standard

Exam Structure

Rise in Employment

Opportunities

Driver Impact on Geography

US

Reliance on Standardized

Testing


Changes in Standard

Exam Structure

Rise in Employment

Opportunities

Key

The impact of the drivers is graded on the basis of the intensity and duration of their influence on

the current market landscape. The magnitude of the impact has been categorized as described

below:




Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5


29



11. Market Challenges

Some of the major challenges in the test preparation market in the US are discussed below:

Credibility Issues




Credibility Issues

Several test preparation solution providers have forayed into the market, driven by the expansion

of the market in the US. Growth in the number of service providers has resulted in the availability

of various test preparation courses. Hence, learners are hesitant and suspicious about the quality

of the program while procuring these services from unknown and small vendors. Notably, quality

of program content coupled with faculty and industry experts, who design the test material and

guide, has gained immense significance in the market.

Large organizations possessing knowledge about the content of a specific course and having a

reputed name in the industry for training are able to differentiate their products from vendors in

terms of quality. However, the test preparatory programs of smaller organizations are facing

difficulties in terms of financial capability to deliver test preparatory courses and programs in terms

of the quality, comprehensiveness, and reliability. In addition, the lower brand visibility of small

companies compared to the larger ones has not allowed the vendors to unlock the true potential

of the market. Apart from public and private schools, individual students are unconvinced about

the course coverage and course quality of small-scale test preparation centers. Therefore,

accreditation from a reputed organization such as the NAAC is expected to help small test

preparation centers attract more students into their fold.


A significant percentage of people in the education industry are against the use of standard tests

for measuring the performance of a student. They reckon that such a test-taking culture,

especially for K-12, will not prove beneficial in the long run. Notably, the tests conducted are not

creating a conducive environment for the overall development of students. This is leading to a

dearth of opportunities for encouraging and fostering the individual talent of a given student.

Although tests develop the competency of students, they are not completely recognizing the

individual needs of students, which is affecting their learning potential.


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Even educationalists are unconvinced of the use of tests for judging the standing of teachers and

educational institutions. The US government is granting funds based on the performance of

schools and other educational institutions. Consequently, some teachers have developed a

resentment of sorts because they do not deem this as the appropriate criterion to judge an

educational institution. If the same trend continues, more teachers are expected to develop

resentment, which is not an ideal scenario for the overall market to thrive. The US government is,

therefore, required to take adequate measures to address the underlying concerns of teachers.


The providers of test preparation materials and mock tests are witnessing increased competition

from open source providers of the same. The number of open source content providers has seen

a marked increase during the past few years. The growing support from non-profit organizations

such as the Hewlett Foundation and the Gates Foundation has further fueled the demand for

open source content.

The instructional materials developed and delivered by open source providers are posing a

significant threat to vendors such as Kaplan and Houghton Mifflin Harcourt, who charge a fee for

instructional programs and courses. The services offered by open source providers are less

expensive and are readily available in the market. They are also easily accessible for students. The

comparatively lower pricing for test materials and digital products is negatively affecting the

demand for products that are charged for a fee or subscription. Although this phenomenon will

not have a widespread impact on the sales of huge vendors such as The Princeton Review, as

schools and colleges mostly procure their test preparation requirements through them, it will

certainly contain absolute market penetration. This could limit the sales potential of large vendors

and hinder the expansion of their customer base.


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The market is expanding rapidly, which is attracting many players to tap the high potential of the

market. Several test preparation start-ups are foraying into the market. They enjoy an

overwhelming support of investors seeking to leverage the untapped market to increase their

profits. Also, the market is not capital intensive in terms of course material designing and faculty

required for guiding students in their test preparation. However, small players and start-ups are

experiencing tough competition from large vendors such as Pearson in terms of expansion of

distribution channels to reach out to a larger consumer base and provide unique services.

Notably, huge players such as Pearson have established themselves by forming tie-ups with

various schools and universities. Apart from that, new entrants need to innovate swiftly to withstand

the financial strength of the leading vendors. Therefore, many players entering the market are

facing issues pertaining to sustainability, which is a key hindrance to continued operations and

long-term profitability.


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12. Impact of Drivers and Challenges

Key

The impact of the drivers and challenges is graded on the basis of the intensity and duration of

their influence on the current market landscape. The magnitude of the impact has been

categorized as described below:

Low: Negligible or no impact on the market landscape

Moderate: Medium-level impact on the market

Moderately High: Significant impact on the growth of the market

High: Very high impact, with radical influence on the growth of the market


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13. Market Trends

Some of the major trends in the test preparation market in the US are discussed below:

Increased Focus on K-12 Segment

Rigorous Marketing



Increased Focus on K-12 Segment

Test preparation material providers have tapped the potential of the market for certification and

university level exams. The high potential of the K-12 market is attracting a lot of vendor attention.

Also, the opportunities in the market have increased, driven by steady growth of the K-12 market.

The K-12 segment is quite decentralized and accommodates multiple public and private schools

with different customization needs, which is fueling the adoption of test preparation materials.

However, companies need to establish tie-ups and maintain long-term working relationships to

consolidate their market reach in the long run.

The market performance essentially depends on student enrollments in schools. Notably, the US

government has taken several steps to standardize K-12 education in public as well as private

schools. It has introduced Common Core state standards, which are academy standards set for

measuring improvements in student knowledge and learning in math and English. Nonetheless,

such initiatives may take time to show results, which necessitates the vendors to design customized

products.

Rigorous Marketing

The test preparation market in the US is characterized by the presence of multiple vendors. The

large vendors are spending high amounts on the marketing and promotion of their products and

services. These activities are an important part of their strategy to establish their brands in the

market and attract target customers. Apart from that, they are engaged in organizing fairs and

forging partnerships with other companies to spread brand awareness and increase brand

visibility.

The companies that develop test preparation content have also kick-started initiatives to gain a

better understanding of market trends, target customers and their needs, and products and

services offered by the competition. They factor in the obtained customer insights and

accordingly formulate their design strategy, which paves the way for the development of unique

products, thereby attracting more customers to the market.


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The changing demand patterns and a dynamically changing external environment has forced

test preparation firms to adopt various other means to make their products available. Therefore,

they have opened many distribution centers at different locations to enhance service delivery.

The increased influence of the Internet on the education sector in the US has shifted companies'

focus to the use of online media for a gamut of purposes. This has created a viable option for

providers and customers. Effective use of online media enables providers to reach out to a large

set of customers, while incurring minimal costs. Students, especially those enrolled for certification

exams such as CFA and FRM, are finding it a flexible option, through which they can study anytime

and anywhere. Apart from that, the increased use of mobile devices such as tablets and iPads

among students has accelerated accessibility. Hence, a growing online distribution platform is

expected to unlock a whole new method of market penetration.


Test preparation start-ups are swiftly picking up momentum and attracting the attention of venture

capitalists primarily in the high school and university space. The US government is actively

promoting standardized learning environments in schools and colleges. Investors in the country

are interested in expanding the education ecosystem in terms of technology used in schools and

colleges. Apart from that, small companies with unique ideas are gaining traction among investors

that are facilitating the development of their back-end infrastructure and are enhancing their

delivery methods. For instance, Discovery Communication has invested $20 million in Grockit

through Learnist, a social learning platform for students. The funds received will help Grockit

improve the distribution, marketing, and promotion of its products and services.


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14. Trends and their Impact

Key

The impact of the trends is graded on the basis of the intensity and duration of their influence on

the current market landscape. The magnitude of the impact has been categorized as described

below:





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15. Vendor Landscape

15.1 Competitive Scenario

The test preparation market in the US enjoys the presence of several players catering to the needs

of schools and individual students with the help of tie-ups with various schools, colleges, and

universities. The revenue generated is mainly underpinned by the number of enrolled students for

test preparatory classes.

The market can be best described as a growing market. Previously, M&A was used by the large

organizations as a strategy to penetrate the market. Over the years, small vendors have also

started following suit to establish a sizeable market presence. It is attracting considerable private

equity, driven by factors such as long-term visibility and advanced cash inflows. Apart from that,

investments in start-ups trying to capture a niche market area have increased. For instance,

Grockit has received an investment of $20 million from Discovery Communications, which is

expected to help the company build and improve its product, Learnist, a learning board for step-

by-step learning on different topics.

Several new players are foraying into the market, especially in niche areas such as the IT,

healthcare, and BFSI sectors. These vendors are innovating to develop new tech-centric course

materials. They are focused on delivering their products through multiple distribution channels,

and designing specific products for Pre K-12 schools as well as disabled students needing special

care and attention. Apart from that, partnerships with technology service providers have gained

momentum, driven by the need to capitalize on online delivery platforms.

15.2 Market Share Analysis 2014

ArborBridge is one of the major vendors in the market. The company is trying to increase its market

share in some of the niche segments and invest in advanced technologies, including cloud

computing. In addition, it has intensified its efforts to increase its brand visibility. It offers quality

products at competitive prices and is adapting well to the dynamically changing technological

landscape. Apart from that, it has been actively involved in building a pool of industry experts and

academicians.

Club Z! Tutoring Services is another important player in the test preparation market in the US. The

company caters to the varying needs of a wide range of industries through its products and

services. It is successfully growing its customer base by providing good customer service and has

a strong R&D division, in which it is investing significantly to deliver technologically advanced

products, while ensuring high quality.


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Pearson is another important player in the test preparation market in the US. The company caters

to the needs of a diverse range of industries through its products and services. It has been

continually introducing new products and services to the market. It focuses on expanding its

network by partnering with institutions, and it is targeting a high number of schools, colleges, and

universities.

The Princeton Review is a key vendor in the test preparation market in the US. The company has

a diverse product portfolio and focuses on expanding its marketing and distribution channels in

the US. It is investing mainly in new markets and is increasingly focused on developing a team of

skilled and creative professionals by hiring and retaining talent. Apart from that, it is increasing its

market penetration through M&A.

15.3 Other Prominent Vendors

Company Description

Barron's Educational Series Publisher of school directories and test

preparation textbooks

Becker Professional Development Corporation

Provides training and other professional

education solutions for project management,

accounting, and finance

Huntington Learning Center Provides tutoring and test preparation services

for high school level exams

Kaplan One of the leading vendors in providing

services related to career and education

Knewton US-based online test preparation company

Manhattan Review MNC that offers educational services

Peterson's Nelnet A US-based company that provides

educational content

Revolution Prep Provides education-related services and

software


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16. Key Vendor Analysis

16.1 ArborBridge

Key Facts


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Business Overview

ArborBridge was established in 2011 and is headquartered in Santa Monica, US. It provides online

and offline K-12 test preparation and essential skills development programs and courses.

The company's services are categorized as follows:

SAT and ACT programs: Offers various learning packages in a price range of $2,495 - $8,995

Counselors: The institute, in collaboration with independent college counselors, provides

services to its students to ensure successful admissions in leading US colleges and universities

ArborBridge has strong faculty base and best-in-class online teaching methods. It serves students

in over 40 countries worldwide.

Service Segmentation

ArborBridge: Service Segmentation

Recent Developments

Company Details Description

Key Highlights

April 2015: Enters into a partnership with ChaseFuture

(an admissions outfit based in China) to train students

for SAT and ACT exams and perform well in colleges

August 2014: Ranked 2,156 on the 33rd annual Inc. 5000

ranking scale


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SWOT Analysis


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16.2 ClubZ

Key Facts

Business Overview

ClubZ was established in 1995 and is headquartered in Tampa, Florida, US. The organization

primarily offers in-home tutoring services to the K-12 students through a network of franchises in

the US. The institute provides customized learning program and selects its tutors and trainers

through the proprietary method known as Z! Tutor match.

The institute also offers tuition services at school campus, libraries, and community centers. In

addition, ClubZ conducts online tutoring courses in selected locations. In addition, the institute

addresses the educational needs of ESL students and children with learning disabilities.

ClubZ is one of the approved supplemental educational service providers under the NCLB act of

the US government.

The institute mainly provides the following services:


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Test preparation: Provides tuition services to prepare for the SAT, ACT, PSAT, GRE, and GMAT

exams.

Academic tutoring: Offers tuition services for the K-12 students through ClubZ's highly qualified

academic tutors, certified teachers, and college graduates who are experts in their respective

subjects

The institute serves more than 300,000 students and runs by franchise owners in more than 500

North American cities in the US.


ClubZ: Service Segmentation

Recent Developments


Key Highlights

February 2015: Completes 20 years in the education

and in-home tutoring sectors

October 2014: Updates diagnostic test formats of SAT

and ACT


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SWOT Analysis


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16.3 Pearson

Key Facts


Stock Listings London Stock Exchange

Ticker Symbol PSON


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Business Overview

Pearson was founded in 1844 and is headquartered in London, England, UK. It is a media and

education company. It offers learning materials, technologies, assessments, and services to

professionals, teachers, and students.

The company operates through the following business segments:

North American Education: Offers adaptive learning capabilities in more than 200 MyLab and

Mastering products across 11 subjects. In 2013, the total number of MyLab registrations were

11 million. It also offers Pearson clinical assessment, Q-interactive (a portable digital tool

enabling mental health professionals to automatically manage the administration of clinical

assessments, digital stimuli, and response recording through stylus notes and audio)

International Education: Has achieved a strong underlying performance in emerging markets,

particularly in South Africa and China. In China, student registrations at Wall Street English was

65,000 in 2013

Professional: Focuses on training, testing, publishing, and certification for professionals. It also

offers vocational training

FT Group: Includes contents and advertisements. This segment offers education products such

as FT Newslines (an annotations tool). It has 415,000 digital subscriptions

As of December 2013, the company had 39,964 employees. It has operational presence in 80

countries.


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Business Segmentation by Revenue 2013

Pearson: Business Segmentation by Revenue 2013

Source: TechNavio Analysis


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Business Segmentation by Revenue 2012 and 2013

Pearson: Business Segmentation by Revenue 2012 and 2013 ($ billion)


Geographical Segmentation by Revenue 2013

Pearson: Geographical Segmentation by Revenue 2013



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Recent Developments


Key Highlights

October 6, 2014: Selects 13 of the most promising

education start-ups in Africa to begin the next stage of

its "Edupreneurs" program along with its partners Village

Capital and the Omidyar Network

September 30, 2014: Partners with busuu to launch

Global Scale of English test

September 24, 2014: Partners with Camfed to train 5,000

learner guides in Sub-Saharan Africa

July 21, 2014: Announces its strategic partnership with

the Chicago incubator, 1871 (an entrepreneurial hub

for digital start-ups)

SWOT Analysis


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16.4 The Princeton Review

Key Facts

Business Overview

The Princeton Review was established in 1981 and is headquartered in Natick, Massachusetts, US.

It is a tutoring institute that provides online and in-person tutoring services. On July 2014, IAC's

Tutor.com acquired The Princeton Review. Tutor.com is a leading global online tutoring company

that delivers over 6,000 one-to-one training sessions daily.

The Princeton Review provides test preparation services to the K-12 and higher secondary

education segments with its strong network of over 5,000 teachers and tutors. Apart from the US

and Canada, The Princeton Review has international franchises in 14 other countries.

The institute's services are categorized as follows:


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College: Includes tutoring services for the SAT, ACT, PSAT, and AP Tests

Graduate: Provides test preparation services such as GRE, GMAT, LSAT, MCAT, and DAT

Academic subject: Offers services for the K-12 segment for math, science, and English

College rankings: Helps individuals to determine the right college and get information on

financial aid

K-12 and community partnerships: Includes services such as professional development, ISEE,

and TOEFL preparation

The Princeton Review served over 3.5 million students in 2014.


The Princeton Review : Service Segmentation


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SWOT Analysis


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17. Other Prominent Vendors

17.1 Barron's Educational Series

Overview

Barron's Educational Series was founded in 1941 and is headquartered in New York, US. The

company publishes school directories and test preparation textbooks, and delivers all its books via

the online media. Apart from publishing books for children, it publishes books encompassing

cooking, business, employment, art, and learning of foreign language. The company also offers

test preparation materials for exams such as SAT, ACT, AP, TOEFL, GMAT, TOEIC, GRE, and IELTS,

and profiles of American colleges. It provides the learning materials for these exams in both audio

and video forms, including CDs, DVDs, audio cassettes, and CD-ROMs.

Strength

It offers a wide range of books

Weakness

It is heavily dependent on the domestic market

17.2 Becker Professional Development

Overview

Becker Professional Development was established in 1957 and is headquartered in Illinois, US. The

company provides training and professional education solutions for project management,

accounting, and finance. It operates as a subsidiary of DeVry Education Group. Notably, the offers

the CPA exam review through online courses and classes. In addition, it offers courses for people

seeking to continue their professional education, and also for CIMA, and ACCA. Other key

offerings of the company include COMLEX Exam Review and USMLE Exam Review targeted at

physician training.

Strength

It has a diversified geographical presence

Weakness

It has a limited product portfolio


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17.3 Huntington Learning Center

Overview

Huntington Learning Center was founded in 1977 and is based in New Jersey, US. The company

offers tutoring and test preparation services for high school-level exams. Notably, it has multiple

test centers providing tuition in math, vocabulary, writing, study skills, and reading. Apart from that,

the company possesses experience in guiding students for exams such as PSAT, SAT, ACT, and

state standardized tests.

Strength

It has a strong presence in the domestic market

Weakness

It offers test preparation solutions only for high schools

17.4 Kaplan

Overview

Kaplan was founded in 1938 and is based in Florida, US. The company offers services related to

career and education to businesses, students, and education institutions. It operates as a

subsidiary of Graham Holdings. It helps students prepare for exams pertaining to medical licensing,

graduate admission, bar review, college admission, nursing, financial services, and high school

admission. Apart from that, the company has established a sizeable market presence in the

professional education space, wherein it offers continuing education, learning after post-

secondary education, and licensing to businesses and individuals for appraisal education

(education for people engaged in the evaluation of real-estate and property), home inspection

services, architecture, and insurance licensing. It also has facilities that provide private tutoring

services.

Strength

It offers new and unique products that incorporate quality and technology

Weakness

It operates in a highly competitive market and, therefore, has limited scope to alter its pricing

structure


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17.5 Knewton

Overview

Knewton is as an online test preparation company that was founded in 2008 and is based in New

York, US. It caters to education-related technological requirements of publishers, companies,

technology start-ups, and institutions. It also helps in building infrastructure platforms to facilitate

the development of adaptive learning applications. Apart from that, the company helps students

to prepare for exams such as SAT, GMAT, and LSAT. The technological solutions offered by the

company help in assembling content graphing, dat

test preparation market in us 2015-2019

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