Provision Of Audition Courses For Online Education Institutions Considering Learners’ Capabilities

The online education enterprises often provide free audition courses of the original contents for learners to ease their uncertainty about the quality of the paid courses.The business model based on audition widely used by online education enterprises is a specific implementation of the freemium model in the digital economy.On the one hand,free audition courses play a role in transmitting quality signals.On the other hand,the audition courses also cannibalize the market share of paid courses.In this paper we focus on how institutions should design such free courses to maximize their revenue mainly from following three sides:First,we investigate the situation of providing a single course by analyzing learners’ utility and market segmentation,and develop a profit-maximizing model,and obtain the optimal provision strategy and the quality of the audition course using L’Hospital’s rule and the implicit function theorem.The results show that the provision of free audition is not always the best strategy.The enterprise is better off providing free audition as long as the degree of substitution is relatively low.And that,for too low the degree,it is possible that the firm offers a complete sample course and continuously improves its quality level,since audition reveals maximum information with limited cannibalization.Second,the model is then extended to the situation of multiple courses.Two provision strategies,namely,the “Audit all courses partially strategy” and the “Audit selected courses fully strategy”,are examined and compared.The results show the larger values of the courses quality,the lower of the degree of substitution,the former strategy is more dominant.Meanwhile,the “Audit selected courses fully strategy” is more dominant when the quality level of the courses is relatively high and the variance of courses’ quality is larger.Finally,the case study of Zhihu VIP course is conducted to discuss the maximum revenue of the institution under the two strategies of the “Audit all courses partially” and the “Audit selected courses fully”.The research indicates the revenue of the Zhihu is better under the former strategy.This is due to learners generally underestimate the actual quality of the courses and the size of total number of learners who purchase the courses also becomes less.These research results enrich the relevant business theory research and provide online education enterprises with decision support for the selection of audition strategy.