The Future of Education

Chris Hoehn-SaricCEO Educate, Inc

$33.6

$68.2

$154.9

$242.3

$300.0

$25.3$11.0

19991979 1991 1994 1995 20031993 2004 est

99% 97%

47% 45% 43%35%

0%

20%

40%

60%

80%

100%

Brand Awareness

The Education Industry

• $900B – 2nd Largest Segment of US Economy

• Growing at 2x rate of inflation• High Degree of Consumer

dissatisfaction• Resulting in …

Education – Paradigm Shift – 1980From Castor Oil to

Monolithic, Institutionally Controlled, state provided, “free” education

Apartheid Education – Geographically defined education based on a citizen’s ability to pay for housing

Consumers exclusively relied on schools

Education – Paradigm Shift – 2004Cherry Chewable Cough Drops

Educational consumerism & deregulation are driving reform and opportunity

Schools, Non-profits and Businesses must change how, when and where they deliver education

Three Forces Driving Change

GROWINGCONSUMERISM

GOV’T POLICY

ECONOMICDRIVERS

Economics

High School Diploma

103% of Avg Salary

Manufacturing

73% of Avg Salary

Knowledge Based

1970 Today

28704

46800

70148

0

20000

40000

60000

80000

$ D

olla

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Annual Salary

High School AA Degree BA/BS MA/MS PHD

Government Policy

• No Child Left Behind – Standards based education

• 1980’s Medicare drove deregulation and reform - 11.5% of total healthcare spending

• The “Special Edification” of classroom instruction

The New Consumer

• Consumers Demand a voice in schools and education

$12B is spent on supplemental education products and services

1 out 6 children has left the traditional public schools - Charters, Private, Virtual Charter, Home Schooling

The New Consumer – Kids are now decision makers

Parents no longer tell kids what they are having for dinner ...They ask what their kids would like.

Kids 7 to 12 spend $8.9B/ year on products

Brands Matter

“I want it all! Tailor it to my kids’ needs! Deliver it online! ”

“I want it all! Tailor it to my kids’ needs! Deliver it online! ”

- How many moms under 40 have tattoos?

- What does POS mean to your 12 year old?

- What form of online music sold more songs than the Apple IPOD last year?

Teens now split their time 60% - TV 40% Internet

LeapFrogToys and Education

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200

300

400

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Revenues

19992000200120022003

In the past 60 days, what has become the #1 selling DVD/Book in Sam’s Club & Costco?

In the past 60 days, what has become the #1 selling DVD/Book in Sam’s Club & Costco?

Conclusions

• Education will follow the rest of the economy

• We must respond with programming, services, and products delivered in modalities that resonate with Consumers

• Brand, Marketing, Advertising, Technology, & Packaging will differentiate effective education from “castor oil” education

Conclusions

• Education will follow the rest of the economy

• We must respond with programming, services, and products delivered in modalities that resonate with Consumers

• Brand, Marketing, Advertising, Technology, & Packaging will differentiate effective education from “castor oil” education