Research

Summary page

Research

Publication title: Differentiating needs; Customer demand for online training

key messages

The Differentiating needs: Customer demand for online training project identified the following key messages:

Purely online training is unlikely to be the main driver of demand. Good blended delivery, using a mix of face-to-face, online and paper-based distance approaches will be more successful in the marketplace. Blended delivery will mean a paradigm shift from 'teaching' to 'managing individual learning'.
The development of good client relationships and the ability to understand customer needs are crucial for suppliers of online training (only 3% of employers surveyed, who currently do not use online learning technology, would phone a provider to seek information about online training). The main needs of online training customers identified in this study are flexibility, easy-to-use software, hard-copy materials, and a range of modular pricing and service options.
The profile and behaviour of individual purchasers of vocational education and training (VET) are changing. Students are older; increasing numbers are completing modules rather than full courses; learning tends to be purchased 'just in time' for work or career needs; and learners are behaving like consumers-choosing only the elements of the training service they want.
Individual online learners are 'time-poor' and are likely to be studying for work-related reasons. They choose the training they want first and the mode of delivery second. Online training is chosen because it allows them to determine when to study. Online training should be available 'after hours' and during holidays. While this type of delivery can be expensive, costs may be recouped through modular price structures that range from basic prices for mainstream services, to premium prices for high levels of availability and support.
Employers and individual learner groups-identified as career changers, skill improvers and self-employed-want online training in short, simple, immediately available and easy-to-manage chunks. These chunks (or micro-segments) may be as short as one hour in duration, adapted to individual needs and should articulate into accredited modules and courses.
All customer groups felt that training providers should provide after-sales support that includes help with software installation and ongoing advice.
One of the largest potential market segments is separate packaging of the theory elements of New Apprenticeships for presentation online. Fully online delivery is not suited to most vocational courses (or younger students); however, online delivery of learning materials could expand the online training market with a minimal change in delivery paradigms.
The provision of online recognition of current competencies (RCC) attracted a high level of interest with focus groups. Online recognition of current competencies would fast-track the completion of qualifications and provide an introduction to online training that results in good immediate outcomes, thus establishing a large customer base with a positive online experience.
One of the most commonly mentioned opportunities for online training is compliance training. A third of employers in this research identified changing regulations as a useful area for online training.
Group learning is a largely untapped method of online learning. Study groups (which can be individuals or employees) increase the number of online training courses sold and provide the social interaction often lacking in the online environment.
Online learners showed a high level of dissatisfaction with their online training, with younger students expressing the most dissatisfaction. Perceptions of quality of the online training product need to be urgently addressed so that the early adopters provide a positive message to the next generation of online customers. Customers are assessing the quality of the entire training service, not simply the quality of the training materials.

executive summary

Introduction

Much research into issues relating to online training has been undertaken from a supply perspective (the developer and delivery perspective), but little formal work has been done on the demand perspective (the customer perspective). The Australian Flexible Learning Framework Research Program commissioned this research into 'factors influencing demand for online delivery' to address this gap. The research team took a market research approach to the task of defining demand. Key trends were identified in the existing literature and these were tested using customer surveys of individuals and employers. The survey findings were further refined with focus groups. The result is a 'big picture' view of online vocational education and training (VET) in Australia from the customer perspective. This report identifies demand features that apply to the mass online VET market as well as features that apply to specific market segments.

In strict marketing terms, a market is simply a group of potential customers with similar needs. The process of selling to a market is called 'marketing'. A typical approach to establishing a marketing strategy that addresses a large, poorly defined market (such as that for online training) is to identify sub-segments and to develop products and services specifically for those segments. This process can be highly cost-effective, because only those products and services that are 'saleable' are produced. Similarly, strategies for marketing products and services can focus on the specific benefits identified by customers, which produces better sales and allows a more effective assessment of marketing costs. The 'market' is not concerned about the policies, resourcing issues and constraints of the supply side. This means that the findings from this research do not necessarily accord with the current provision of online training. The challenges of adapting delivery to meet market needs are recognised in this report, but strategies to address these challenges need to be the subject of other research.

The online VET marketplace

The market for online training is potentially huge. However, because online training is dependent on rapidly developing technologies, and is most often blended with other delivery modes, it can be difficult to get a firm fix on its market demand. This research has looked at demand factors from the viewpoint of two main customer groups-employers and individual learners-in order to differentiate the needs of the potential market for online training.

Employers

Within the employer group, large organisations appear to be the best potential market segments. These organisations may be training providers in their own right and generally have a computer-literate workforce that needs to maintain up-to-date training in a rapidly changing environment. Organisations that buy or develop online training for their staff have their own set of motivations. Because organisational efficiency or profitability are key drivers, organisations tend to take notice of the needs of learners and adapt their products accordingly. In addition, their 'customers' are a captive market, since training, whether traditional or online, is a requirement of employment and learners have little choice if they are to remain with the organisation. The study also found that medium-sized businesses that valued staff development, small employers in their own businesses, and group training companies are potential market segments. Employers of New Apprentices thought that it would be useful to have the theory aspects of New Apprenticeships available online. In general, employers want online training in short, simple, immediately available and easy-to-manage chunks, as do career changers, skill improvers and the self-employed. These chunks may be as short as one hour in duration. Online training should be easy to customise and available throughout the year, both during and outside standard business hours.

Individual learners

Across the VET sector, the profile and behaviour of individual purchasers of training is changing. Students are older, increasing numbers are completing modules rather than full courses, learning tends to be purchased 'just in time' for work or career needs. Learners are behaving like consumers-choosing only the elements of the training service that they want. Individual learners who are current online users are 'time-poor', and are more likely to be studying for work-related reasons. They also choose the training they want first and the mode of delivery second. They like the flexibility that online training provides as they can choose when they want to study. Compared with non-users of online training, they tend to be older and to have done other studies since leaving school. Forty per cent of online students surveyed were studying for a career change. In the National Centre for Vocational Education Research's (NCVER) 2002 VET Student Outcomes Survey, career changers make up 17% of the learners who are module completers, and 20% of graduates of full courses (NCVER 2002a). Online learners want training that is just enough and just for them. This suggests that the best potential markets for online training are people who are studying to change careers and others with similar characteristics to this group. Student segmentation, based on reasons for study, indicates that people who are studying to improve their skills, becoming or remaining self-employed and self-developers who have a passion for learning, share characteristics with the career changers. Collectively, these groups make up 61% of graduates and 78% of module completers in the NCVER 2002 Student Outcomes Survey, with the self-developer segment alone making up 15% of graduates and 29% of module completers (NCVER 2002a).

The product

The development of good client relationships and the ability to understand customer needs is crucial for suppliers of online training. Being flexible, having appropriate and current materials in hard copy as well as online, easy-to-use software and providing customers with options in terms of pricing structures and service levels were found to be important factors from the customers' perspective. As other studies have found, one of the important reasons why some people do not want to use online training is that it lacks the social interaction that so many learners enjoy. Interaction with teachers and other learners remains the key requirement for many learners. Specific product features that could improve the take-up of demand across the market segments identified in this research were:

simplification of the online product so that it is no more difficult or time-consuming than traditional delivery
more blended delivery options, with a high level of transferability between modes of delivery
provision of hard-copy materials and learning texts
establishment of micro-segments of training, costed accordingly, that articulate into accredited modules and courses
facility for offering optional pricing for immediate commencement, learner and information technology support, training in online learning systems, group induction and practical sessions
creation of optional 'text only' type offerings to cater for consumers who are unable to access online training because of download and firewall barriers
elimination of delays in the commencement of training.

Customer responses throughout this research indicated that many providers of online training are developing and managing their products based on traditional delivery paradigms. In order to be successful in the online environment, providers need to develop systems that allow them to be learning managers-facilitating and supporting a blend of delivery modes that suit the needs of employers and individual learners.