Jaya Tuition Centre Jalan Merlimau, Melaka: Survival of the Fittest

JAYA TUITION CENTRE

1 JAYA TUITION CENTRE

ABSTRACT

This case revolves around the business survival of Jaya Tuition Centre, Melaka

(JTCMM), a franchisee of Jaya Tuition Centre (JTC). JTCMM has been showing poor performance compared to other JTC franchisees. The difficulties facing JTCMM are reflected by symptoms such as declining in sales, customer’s complaints, and difficulties in retaining customers. The management had implemented several changes in the tuition centre such as offering an Exam Based Tuition classes, Homework Guidance Service and

Transportation Service. These changes helped to increase the number of students and generated higher revenues for JTCMM. However, compared to other JTC tuition franchisees, JTCMM had the lowest sales revenue. The management was faced with the challenge to redress the tuition centre’s situation by showing at least 20% increase in sales revenue in the next six months. Areas of improvement that need to be considered include: service positioning, service personnel competencies, service outlet environment, customer experience and augmented service.

Keywords: tuition centre, marketing, services, customers, service quality, service experience

2 PROLOGUE

It was May 11, 2010, another usual day at the Jaya Tuition Centre of the Jalan

Merlimau, Malacca branch (later referred to as JTCMM). Mr Loo was pacing around his table, recollecting his conversations with Mr Jaya, the franchisor and founder of Jaya

Tuition Centre (later referred to as JTC);

‘ Mr Loo, since you took over the franchise, you have not shown much improvement in terms of the revenues of your centre compared to the other franchisees of

JTC in Melaka and in Malaysia. All centres generate average monthly revenue of RM

20,000, but your center’s performance is almost 30 percent below the average”. Mr Jaya said while looking at the individual tuition centre’s report.

Every month, Mr Jaya as the franchisor, calls for a meeting with all franchisees managing the tuition centres from all over Melaka, the southern state in Malaysia. On that day in May, the meeting became heated as Mr Jaya pointed out the weak performance of

JTCMM while Mr Loo protested the comments.

3 “But we are still showing positive signs every year” Mr Loo recalled how he tried to

defend himself. “No, you need to show me at least 20 percent increase in your sales

revenue by December this year. I think you are fully aware that if your record is still

like this, I will have to put up this center for offer to the other franchisees”. Mr. Jaya

said in a very stern voice. The other franchisees were all looking at the report being

shown on the screen in that meeting room, while Mr Loo looked down at his papers

on the desk.

JAYA TUITION CENTRE (JTC) FRANCHISE SYSTEM

The franchisor, JTC, was established in year 1998 in Johor Bharu, the southern most state in Peninsular Malaysia. Its founder, Mr. Jaya and Mrs. Jaya were both graduates from University of Technology in Malaysia. Starting with a single shop lot with two teachers, JTC had grown to a company with 50 franchisees located in Johor,

Malacca and Selangor by the year 2010. Figure 1 shows the franchisees in three states in

Malaysia.

4 Figure 1. JTC franchise tuition centres in Malaysia

Generally, JTC held two meetings every month that provided opportunities for the management team from every JTC franchise to report or discuss their centre’s progress.

A general meeting were usually held on the first Saturday every month, in Kajang, in the state of Selangor, Malaysia. The general meeting was attended by every franchisee in other states of Malaysia, i.e.from Johor, Melaka and Selangor. The other meeting, which is a regional meeting was held at different states on the Mondays following the general meeting. The regional meeting for the state of Melaka was attended by every franchisee from Malacca These two meetings revolved around discussions to increase the number of students in the tuition centres as well as strategies to improve students’ results.

As the franchisor, Mr Jaya had been responsible for the distribution of updated teaching materials such as exercises and notes every month to all franchisees during the meetings. In addition, Mr Jaya also organized many seminars for the tuition centres related to improving the teaching of students at each franchisee’s tuition centre. Together with the franchisees, Mr Jaya also organized seminars for students in the tuition centres such as motivational talks, examination preparation skills and intensive short courses for students with special needs.

All franchisees follow the same management system and teaching methods in their tuition centres. In terms of royalty, all franchisees need to pay a monthly fixed 11% of their revenue to the franchisor. In addition to that, in the event that the franchisees are

5 involved in seminars organized by the franchisor, Mr Jaya, an additional 2% will be deducted from the revenue of students registration fees for that seminar.

JTCMM – AN OVERVIEW

In December, 2008, Mr. Loo took over the franchise of Jaya Tuition Centre of the

Jalan Merlimau, Malacca branch (JTCMM) with a RM 15,000 loan. Before Mr Loo took over the franchise, JTCMM was already in a difficult situation because the centre had limited number of students and it can barely cover its operating expenses. Revenue were far below the average of other franchisees’ tuition centres. As of that year in 2008,

JTCMM had been unable to achieve their target revenue, having only 80 registered students for the whole year.

POSITIONING OF JTCMM

As a franchise, JTC’s name has been quite popular among students and teachers all over Malaysia. JTC was known for its teaching modules especially in Science and

Maths subjects. All franchisees were provided with teaching modules and teaching packs which include teaching notes, learning exercises, exam tips and some motivational quotes. JTCMM on the other hand has always followed the guidelines from JTC and all teachers in JTCMM used the modules provided by JTC. At the same time, other tuition centres in Melaka and other parts of Peninsular Malaysia also provide similar teaching packages to their students. These tuition centres however, can be differentiated based on the main language used as medium of teaching, either using Bahasa Melayu, English,

Chinese or Tamil.

6 In making the decision to go for tuition classes, many parents and their children look at the track record of the tuition centre. Performance of tuition centres are usually measured in terms of students’ results in the major exams taken by all students in government schools in Malaysia. Major exams taken by Malaysian students include

UPSR for primary school and PMR and SPM in elementary schools. Some parents and students also choose tuition centres based on the reputation of the tuition teachers. Table

1 summarized the performance of JTCMM students in UPSR and PMR examinations.

Number of students Performance UPSR (Standard 6) PMR (Form 3) Straight As 4 2 Fail certain subjects 5 12 Pass all subjects 23 24 Total 28 36 Passing Percentage 82% 67% Table 1: Performance of JTCMM students 2009

Mr Loo also remember one of the parent saying to him last month “I heard there were students from this tuition centre who failed Maths and Science in the last SPM, didn’t your teachers give enough exercises for them?”

SERVICE PERSONNEL AT JTCMM

When Mr Loo took over JTCMM, he maintained the four exisiting temporary teachers of the centre and recruited Miss Amy as his assistant manager. Miss Amy hold an Advanced Diploma in Business Management, while the four temporary teachers,had

SPM level qualifications. Mr Loo decided not to add any more staff in his effort to cut

7 cost for the center. Thus, for the first six months of the business, Mr. Loo carried out all the administrative tasks related to running JTCMM. Mr Loo also was involved in teaching students because the temporary teachers are not enough to cover all classes held by the tuition centre. Mr Loo also initiated transportation service for the students, which is an extra service to the students. He had to arrange for the vehicle and driver for managing he transportation service for the students.

Due to the increase in number of students, Mr. Loo could no longer take the responsibilities by himself, thus in June 2009 he hired two permanent teachers (both holding a Diploma in Business Management) and a driver to take over these responsibilities. Mr Loo recalled the incident yesterday when two children were brushed through the front door and he heard them saying “Teachers at the other tuition centre are more friendly and they have helped many students to get good results in the last SPM results”.

THE SERVICE

JTCMM business hours were from 8.30a.m to 10.00p.m and operations are during weekdays only. The core business was tuition services to primary and secondary school students as shown in Table 2 below.

Subjects offered Primary School Secondary School Students Students Bahasa Malaysia * * Bahasa Malaysia * (Penulisan) Bahasa Cina * * English * * Mathematics * * Table 2: Subjects offered for tuition

8 JTCMM also offered extra tuition classes (Exam-Based Tuition) for school children who will be sitting for major examinations at school such as UPSR, PMR and

SPM. The classes are shown in Table 3.

Class Activity Duration Fees UPSR Extra class July-Sep RM48 PMR Extra class July-Oct RM48 SPM Extra class Aug-Nov RM50 Table 3: Exam based Tuition classes

The tuition fees (shown in Table 4) were determined by discussion among the franchises in a particular branch and approved by the franchisor in a monthly meeting. Teachings were supplemented by supporting equipments such as the Overhead Projector (OHP), speaker and whiteboard. Tests were given to students from time to time to assess the level of student’s understanding. Positive reinforcements such as small presents were given to students with good performance.

Subject Taken Primary School Fees Secondary School Fees (RM) (RM) First 38 42 Second 35 40 Third 30 36 Fourth 30 30 Fifth FOC* NA* Table 4: Tuition fees . *FOC= Free of charge, NA= Not available/offered

For the past several years, employees in JTCMM followed similar workflow everytime they provided their tuition services to the students. Staff will do the registration for students according to their preferred subjects and payment method. The teachers will then offer subject classes on schedule based on the number of students in class and thefrequency of classes per week. JTCMM also had a database of its customers and it followed standard procedure in accounts keeping for the company. Appendix 1 shows the service blueprint of JTCMM.

9 Besides tuition classes, JTCMM offered additional services complementary to the tuition classes, which were the ‘Homework Guidance Service’ and transportation service’. In the ‘Homework Guidance Service’, the teachers in JTCMM provided the guidance for students to do their school homework. Only registered students who were already following tuition at JTCMM were eligible for this additional ‘Homework

Guidance Service’.

The transportation service was another additional service provided by JTCMM for students whose parents did not have time to send their children to and from the tuition centre. They charged RM 10 per trip for this additional service. In general, compared to other tution centres, JTCMM was the furthest from both primary and secondary schools in that area.

JTCMM was located at the first floor of a double storey shop lot surrounded by housing areas.It usually takes 5 to 20 minutes for students from both schools to get to

JTCMM. Although it was just a walking distance from the schools to the tuition centre, some students prefer to take a bus or car pool to save time. While other students have different timetable at school, students also find it difficult to arrive at the centre on for certain classes. Figure 2 shows the location of JTCMM in relative to competitors, target market and schools.

10 Figure 2: Location of JTCMM, competitors, target market and schools.

Colour Label Green JTCMM Blue Competitor of primary students’ market Yellow Competitor of secondary students’ market Red Competitor of primary and secondary students’ market Pink Primary school Black Secondary School

THE SERVICE ENVIRONMENT

JTCMM had three classrooms with capacities that were able to locate 22 students in two rooms respectively and 12 students in another room. Each classroom is equipped with air conditioning unit to ensure a comfortable learning environment. Besides that, an

Overhead Projector (OHP) and speaker were used to facilitate the teaching process.

Figure 3 depicts the layout of JTCMM. However, Mr. Loo recalled complaints JTCMM had received;

“Mr. Yap, your tuition centre is very small and I hardly have a place to sit to wait for my children” commented one of the parents.

11 Figure 3: Layout of JTCMM

In terms of the schedule for tuition classes at JTCMM, the centre developed its own schedule based on availability of the tuition teachers. This approach was also used by many other tuition centres including several JTC frachisees, mostly because of the difficulties in having full time tuition teachers. Part time teachers usually are teachers who work in government schools or fresh graduates who were waiting for jobs. These part time teachers have lesser flexibility in terms of time for the tuition cases, especially those part time teachers who are government school teachers. Another complaint raised by parents directed through Ms. Amy.

“The main reason was that the timetable of our tuition centre does not suit the students or parents. They do not have time to rush their children home just to catch the transportation we provided thus they opt for other tuition centre which they can send their children to straight after school.”

12 THE CUSTOMERS

Students who go for tuition or extra classes outside their normal school hours are normally students who want to study more, do revision and get more personalized attention from teachers at the tuition centres. Parents of these students are willing to spend money for the tuition fees and the students are expected to spend extra time to study outside normal school hours. Majority of students who go for tuition classes are those students who are in exam classes, such as those taking UPSR, PMR and SPM (all major examinations for students in government schools in Malaysia). Parents who send their children for tuition expect that their children will be coached by the tuition teachers and parents also expect that tuition centres will provide more in-depth discussions of the topics that the students learned at school.

The target customers of JTCMM were students from the primary and secondary schools around the Jalan Merlimau neighbourhood. In year 2010, the number of students for primary school and secondary school was about 800 and 1200 students respectively.

The students in JTCMM were divided into three categories – UPSR, PMR and SPM category. Primary school students from standard 1 to 6 are categorized in the UPSR category. For secondary school students, the PMR category consisted of pupils from form

1 to form 3. While in the SPM category pupils were from form 4 and form 5.

JTCMM REVENUE AND EXPENSES

The annual revenue gained every year by JTCMM will be lower at the end of year due to school holiday. The peak season will be at the middle of the year, especially a couple of months before final examination. The monthly revenue generated from UPSR

13 and PMR categories for JTCMM in year 2009 and 2010 is shown in Figure 3. Although the overall number of students increased from year 2009 to 2010, one or two students left

JTCMM every month since Mr. Loo took over JTCMM. The exit and entry rate of students were almost the same for March and April year 2010.

Figure 4: JTCMM monthly revenue year 2009-2010

The number of students decreased drastically at the end of the year mainly because students who have sat for their UPSR, PMR and SPM examinations will stop their tuition classes, as commented by Ms. Amy during one of her discussion with Mr. Loo with regards to JTCMM current business standing;

‘..there were around 70% of our students who stopped their tuition classes in JTCMM as they did not find any improvement in their studies after coming to our tuition centre.

According to the students’ database record, the highest number of students leaving our tuition centre was after the result for midterm and final examinations were released”.

However, the revenue of JTCMM increased dramatically in January 2010, mainly contributed by new students registering plus the existing students. The average monthly revenue for JTCMM was RM 15,000 and it was relatively lower than the average monthly revenue of RM 20,000 generated by the other five JTC franchises in Malacca.

The monthly revenue was reported to the franchisor every end of the month and the performance of JTCMM always ranked fifth amongst the franchises in Malacca.

The monthly expenses of JTCMM included monthly salaries of the staffs in administration costs, transportation costs, rental and utility cost, and franchise fee. The monthly salary for a franchisee was RM 3,000, a permanent teacher’s salary was RM

14 800, a temporary teacher was RM75 per hour and driver was RM 200 per month.

JTCMM spent around RM200 per month to prepare handouts and exercises to students.

While the monthly transportation cost was around RM600. The rental for the business operation was RM 600 per month. The average yearly franchisee fee was RM 15,000.

The average monthly cost of operating JTCMM was RM 11,400.

PROMOTIONAL ACTIVITIES BY JTCMM

JTCMM used three types of promotion techniques, which were flyers, tuition trials and bundle pricing. Flyers were distributed around housing area two weeks before and after school starts. New students were entitled for trial run tuition with discounted tuition fees. JTCMM also offered bundle pricing, where every fifth subject taken were offered free of charge.

A few months before examinations, JTCMM started to distribute their promotion flyer and pamphlet door to door in targeted neighbourhoods. The promotional activities started from June to August because the UPSR, PMR and SPM examination were in

September, October and November respectively.

“The promotional activities that we had carried out to obtain new students were not as effective compared to the as positive word of mouth by the students and their parents. Thus we will have to make sure that there is an improvement in the students’ grades and result besides providing a superior service quality.” said Mr. Loo

“We had facilitated the positive word of mouth among the customers by giving gift to those who recommended their friends to the tuition centre. This really works

15 because there were many new customers recommended by existing customers!” said Ms.

COMPETITORS IN THE TUITION CENTRE BUSINESS

In general, all tuition centres compete among each other for students enrolment.

Tuition centres also compete with home schooling and at-home tuitions where teachers go to individual houses to give tuition. In the surrounding area of Jalan Merlimau,

Melaka, there were nine other tuition centres that were competing intensely with

JTCMM. Out of nine competitors, five were competing in primary students’ market; one was competing in secondary students’ market, and three were competing in primary and secondary students’ market. Competitors in primary students’ market were Bistari

Tuition Centre (BTC) and Sukses Tuition Centre (STC). Direct competitor in secondary students’ market was Gemilang Tuition Centre (GTC) while competitor for primary and secondary students’ market was Cemerlang Tuition Centre (CTC). Table 4 shows the list of competitors and services.

Teachers’ Customers Competitors Services provided Pricing background Primary BTC Local School Tuition RM32/subject teachers Additional service* RM25/trip RM40/daycare

16 Local School Tuition, RM32/subject teachers STC RM 20/trip Additional service* RM45/daycare School teachers & local Secondary GTC Tuition RM35/subject university students Tuition plus Local university RM30/subject additional subjects- students (Primary) Primary and mental arithmetic CTC RM35/subject Secondary & brain (Secondary) development Additional service* RM35/trip Table 4: List of competitors and their services * The additional services include Transportation & Day care service by BTC& STC only).

BTC and STC tuition centres comes with additional service providing day care.

Meanwhile GTC is a tuition centre that provides basic tuition service with hired tutors that were combination of school teachers and university students from Multimedia

University (MMU). Another competitor, CTC, was a joint venture of a few school teachers which also hired MMU’s students to teach pupils at their centre. CTC also offered some additional subjects such as mental arithmetic and brain development.

The subjects offered by competitors and JTCMM were mainly similar. However, competitors of JTCMM were also well known for other additional services provided.

Amongst them were direct transportation services ‘which is ‘picking up’ students straights from school to the tuition centre, day care centre and offering other additional subjects. In addition, facilities for students to take bath at and have lunches are also provided.

These competitors are located around Jalan Merlimau neighbourhood. However, they are nearer to the schools compared to where JTCMM is located. Moreover they can

17 also accommodate higher number of students. Table 5 shows the capacities of these competitors’ in 2010.

Number of students that Total number of students that Number of Competitors can be located in each can be accommodated at a classrooms classrooms time BTC 6 20 - 30 160 STC 4 35 - 40 120 GTC 7 25 - 40 220 CTC 4 45 - 60 200 Table 5: Competitors Capacities 2010

EPILOGUE

‘Our tuition centre’s core service is the tuition service but we also provide a full time guidance for learning and transportation service in addition. In your opinion, have we done enough so far?’ asked Mr. Loo to Ms. Amy.

‘Generally, the parents love the transportation service we provided. However, sometimes, there were students who came back home late after school, thus, they were not prepared or not in when the driver arrived at their home to pick them up for tuition.

18 These conditions worsen when several trips were needed to fetch students for classes.

This creates a problem for us’, Ms. Amy commented.

An imploding thought hounded Mr Loo:

“ When I took over this franchise last year, I wanted to turn over the company’s situation by putting in more effort and provide top quality services but everything seems to run downhill. I need to devise an action plan to turnaround JTCMM current situation.

Most pressingly I need to work out an immediate solution to increase the revenues of

JTCMM in the next six months or else…?!”

19 Appendix 1 : : JTCMM Service Blueprint