Digital Economy - Platform Business Analysis: Online Education

This report analyzes the prospects of an online education platform business, examining its business model, pricing strategies, and the impact of data and AI. The report explores the two-sided market dynamics, where students and teaching organizations interact, and the use of a subscription-based model. It delves into the pricing strategy, suggesting a penetration pricing approach, and discusses direct and indirect network effects. Economies of scale are identified, along with the crucial role of data analysis in understanding consumer behavior and optimizing business strategies. The report outlines effective strategies for competing platforms, including correct pricing, innovation, and customer service. It also considers the potential for vertical integration and the challenges faced by new entrants in the market. The conclusion emphasizes the potential for success in this business, highlighting the importance of data analysis, unique strategies, and adapting to current trends.

Running head: PLATFORM BUSINESS
PLATFORM BUSINESS
Zaidoon Barham
Manchester Business School

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Table of Contents
Introduction......................................................................................................................................2
Background of the business.............................................................................................................2
Marketing aspects............................................................................................................................3
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
Platform business has been the primary business segment that is gaining acceptance in
today's society. The main reason for higher acceptance of platform business is that the audience
base that it affects have been significant. Therefore, it helps in improving the business process.
The platform business that is selected for the completion of this essay is the online education
business. According to the current platform business trend, the online education platform is
expected to be trending and growing drastically, and hence this will be benefitting the entire
working process (Allen and Seaman 2016).
This paper will analyse the different sides of the business, the pricing strategy, the
sources of direct and indirect network effects, the economies of scale, the role of data in the
success of the business, and the practical strategies that will benefit the process.
Background of the business
Online education is among the significant business prospects that have been trending
recently (Goodman, Melkers and Pallais 2019). Hence starting an online education business is
expected to be successful. Furthermore, the usage of blockchain in the operational process
could have a positive impact on the business model of the online education system. With the help
of the blockchain, the main difference that is spotted in the process is that proper recording of the
learning trajectory is understood (Jiang, Ballenger and Holt 2019). Therefore, it ensures that
there will be a proper assessment of the trusted certification regarding the learning process.
Sources are also made decentralised, and this acts as one of the significant benefits that should be
considered. These are the aspects that are expected to increase the efficiency of the business
workflow and hence will help in expanding the business.

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Marketing aspects
Sides of the market
There are two sides to the platform market represented by the sellers and the buyers. Both
sides of the business create value in the transactional process. With an acceleration in the
transaction process, the cost price that is incurred in the video manufacturing process reduces
(Goodman, Melkers and Pallais 2019). In the case of the online education business, the students
act as the buyer and the revenue generator. The teaching organisation acts as the seller side of the
market. The profit is earned via the platform of the two-sided business has been much higher
than the traditional one-sided business (Bagheri and Movahed 2016). The online education
business is focusing on the intermediary relationship among the students and the organising
committee. This section also ensures the fact that the relationship establishment is directly
related to revenue generation. In case there is any kind of change in the operational process of
the relationship of the buyer and seller (teaching organisation being the seller and the students
being the seller in this case) there is a direct change in the revenue generation (Natale and
Libertella 2016).
What is the business model
Subscription business model can be used by the proposed online education system. This
model ensures that the customers keep on paying a recurring fee at a regular interval for keeping
access to the contents that are provided. In this business, there is no selling of services; there is a
subscription fee for the services that are provided (Kumar et al 2019).

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Figure 1: Subscription Model
(Eom and Ashill 2016)
Pricing strategy
The pricing strategy will play an important role in the online educational system that we
are discussing. Usage of penetrating pricing strategy will be helpful in the process (Sun and Chen
2016). Penetration pricing strategy, the price at which the business starts selling its services are
generally lower. It is expected that the cost of the subscription will be much lower in the starting
section of the business (Cochran et al 2016). This ensures that prospect new clients at the
beginning of the business will be getting more attracted to the platform. Additionally, this
ensures that in case the business flourishes in a proper manner the subscription price will be
increased and hence this will improve profit profitability on the medium to long-run that will
affect the overall business positively.
What are the sources of direct (same-side) and indirect (cross-side) network effects? How
strong are they?
Direct effects are known as the same side effects. Direct effect can be defined as a
process that effects the value of serice in a positive manner when the number of users present
goes up. In this business model, the primary aspect that is considered is that there has been a

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proper service that has been growing requires the usage of telephones (Willcox, Sarma and
Lippel 2016). However, it has been seen that there has is not much effect of the direct network in
platform business (Tratnik, Urh and Jereb 2019).
The network group that founds its usage in the platform business is an indirect or cross-
side network. The indirect network has been focusing on two sides, namely customers and the
sellers. With the usage of the indirect network effect, the value of the business is expected to
grow gradually (Tratnik, Urh and Jereb 2019). For example, the value that is generated in the
interaction process with the client gets added to the network value. The main reason for this
increase in value is that multiple buyers can join the section at the same time.
Are there economies of scale?
There are economies of scale present in the business as well. It is seen that the cost that is
required for telecasting the first video has always been on the higher end. However, the entire
cost that is incurred in the next videos decreases in a drastic manner. Hence this reduction in cost
from the second videos itself will benefit the business. Promotional cost also gets decreased as
per the norms of economies of scale.
What is the role of data?
The role of data in the platform business is essential. The entire workflow of the platform
business is dependent on the analysis of data. In the online education platform, proper analysis of
the subscription rate is to be considered. This consideration ensures that the analysed data will
assist in a better understanding of consumer behaviour and therefore, better management of the
business strategies that should be implemented to expand the business. Big data have been
helping in increasing the velocity of the analysis process. IOT (Internet of Things) connected

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appliances are also considered. With the help of big data, real-time customer insight can be
gained. Budget optimisation can also be made. Data that are generated while the business
processing ensures that the management of the operational process gets better and a change
might be observed as well (Bharucha 2018). Big data is considered to be one of the most
important factors that will be helping in understanding the demands and needs of the students.
With the help of the data that are generated, the issues that are faced by the students will also be
known and hence this ensures that issues will be getting eliminated and this will be developing a
better relationship in between the students and the teaching organisation. It has been seen that
this kind of business is directly dependent on the relation of the two sides (Kihoza et al 2016).
Hence it can be stated that expansion of business is entirely dependent on the data and is directly
proportional to the accuracy of the data analysis process.
What are the most effective strategies for competing platforms?
a. Four significant strategies can be considered. The very first strategy that is to be
considered for the process is namely getting the pricing correct. It is seen that the pricing
of the service of inline education system acts very important. A smart pricing strategy can
be used in setting up of the business in a proper manner. In the case of smart pricing, the
fluctuation of price segments will be performed accordingly in an automated manner.
This will be increasing the authenticity of the pricing range.
b. Another strategy that is considered in the process is to implement innovation. There are
several similar kinds of platform businesses that are available in the market (Soares,
Steele and Wayt 2016). In order to gain success in the business process, uniqueness is to
be brought in. For instance, free course material can be provided to the premium students.

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This will ensure that there will be proper segregation of the assessment of the business
making, and this will be helping in increasing brand loyalty.
c. Providing better customer service is another strategy that increases good will of the
brand. This consideration includes the fact that the expansion of the business is visible,
and this will be providing a competitive edge over the competitors. It can be stated that
the entire business process that has a unique niche and this will help to create a self-
identity for the brand (Andrade et al 2019). Thus will be ensuring that there will be
establishing of a separate set of audience. This will be helping in establishing a seprate
set of audience.
Is there room for vertical integration for the platform or its competitors? How does vertical
integration impact participants in the platform ecosystem?
Yes, there is a scope of implementing vertical integration in the platform for the
competitors. Certain aspects will be affecting the clients in case there is a proper assessment of
the vertical integration (Faraj and Shimizu 2018). Vertical integration generally dwells in
eliminating the middlemen who are present in the business making and selling the service. This
includes that specificity of the client needs can be maintained and uniqueness in the videos can
be provided and hence client base will be gettoing benfitted directly. As there is no extra cost
implemented in busiuenss makig and hence vertical integration will be benefitting in revenue
collection process as well.
How easy is it for new entrants to challenge incumbents? Is there room for multiple players in
a steady-state, or is this a winner-take-all market

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Entrance in the market of online education has not been much of an issue. However, sustaining
in the field have been one of the significant issues. There are several similar startup businesses
that have been providing online education have not been able to sustain (Eom and Ashill 2016)
. However, there are no such marquee incumbents in the fields as the field have been
quite new. In digital platform the main benefit that is considered in the process is that the
platform it uses acts open for all. Hence new entrants are possible and comparativey easier than
other busiensses. The new entrants also enjoy similar exposure like the incumbents and hence
this beefits the working process.
After proper assessment of the market, it can be stated that multiplayer can be present in
the competition, and healthy competition will be maintained.
Conclusion
Form the above discussion; it can be concluded that starting an online education business
will be providing high chances of success. With the help of big data implementation, there are
certain benefits that might be received in the platform business. Analysis of the client's demands
will be performed in a better manner, and hence business administration might get better. In case
these strategies that are stated in the report are followed in a proper manner the entire working
process of the business will be getting affected in a positive manner. The strategies will ensure
that there will be uniqueness in the business process will be prevailed and this will be helping in
gaining a competitive edge form the other online education businesses. As the business will be
getting started, proper care musty be taken in the initiation phase of the business. Revenue
collection process will also be highly benefitting. One of the critical aspects is that proper
analysis of the business and to analyse the current trend and consumer behaviours. Digital

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econiomy have been the main reason of entrance of several new businesses. One of them is the
online education and the exposure that is provided due to the digital platform, the business gets
benefitted in a positive manner.
References
Allen, I.E. and Seaman, J., 2016. Online Report Card: Tracking Online Education in the United
States. Babson Survey Research Group. Babson College, 231 Forest Street, Babson Park, MA
02457.
Andrade, M.S., Miller, R.M., Kunz, M.B. and Ratliff, J.M., 2019. Online Learning in Schools of
Business: The Impact of Strategy on Course Enrollments. Journal of Higher Education Theory
and Practice, 19(5).
Bagheri, M. and Movahed, S.H., 2016, November. The effect of the Internet of Things (IoT) on
education business model. In 2016 12th International Conference on Signal-Image Technology
& Internet-Based Systems (SITIS) (pp. 435-441). IEEE.
Bharucha, J., 2018. Exploring education-related use of social media: business students
perspectives in a changing India. Education+ Training.
Cochran, J.D., Baker, H.M., Benson, D. and Rhea, W., 2016. Business student perceptions of
online learning: Using focus groups for richer understanding of student perspectives.
Organisation Management Journal, 13(3), pp.149-166.
Eom, S.B. and Ashill, N., 2016. The determinants of students' perceived learning outcomes and
satisfaction in university online education: An update. Decision Sciences Journal of Innovative
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Faraj, S. and Shimizu, T., 2018. Online communities and knowledge collaborations. In Oxford
Research Encyclopedia of Business and Management.
Goodman, J., Melkers, J. and Pallais, A., 2019. Can online delivery increase access to
education?. Journal of Labor Economics, 37(1), pp.1-34.
Jiang, M., Ballenger, J. and Holt, W., 2019. Educational Leadership Doctoral Students'
Perceptions of the Effectiveness of Instructional Strategies and Course Design in a Fully Online
Graduate Statistics Course. Online Learning, 23(4).
Kihoza, P.D., Zlotnikova, I., Bada, J.K. and Kalegele, K., 2016. Designing a business model for
online education resources and e-learning implementation in a developing country: Case of
Tanzania. International Journal of e-Education, e-Business, e-Management and e-
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Natale, S.M. and Libertella, A.F., 2016. Online education: Values dilemma in business and the
search for empathic engagement. Journal of business ethics, 138(1), pp.175-184.
Soares, L., Steele, P. and Wayt, L., 2016. Evolving higher education business models.
Sun, A. and Chen, X., 2016. Online education and its effective practice: A research
review. Journal of Information Technology Education, 15.

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Tratnik, A., Urh, M. and Jereb, E., 2019. Student satisfaction with an online and a face-to-face
Business English course in a higher education context. Innovations in Education and Teaching
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