Businessmodel of Rosetta Stone

Customer Segments

Rosetta Stone offers language and reading software solutions to commercial and institutional clients, as well as to general consumers. The Company’s customers can be organised into the following core categories:

• Consumers, comprising general consumers and language learners around the world;
• Corporations, comprising commercial entities across multiple business sectors, including the financial services, energy, retail, and healthcare industries;
• Educational Institutions, including schools and higher education institutions from K-12 through to college and university; and
• Government and Non-Profit Institutions, including municipal, state, and federal government bodies, public agencies and organisations, and not-for-profit institutions. Rosetta Stone provides solutions to a number of high-profile companies, including Royal Dutch Shell, Kimberly Clark, and Best Buy.

Rosetta Stone serves a global client base, including customers across the Americas, Europe, Asia Pacific, the Middle East, and Africa.

Value Propositions

Rosetta Stone provides value to its customers in the following ways:

• Its brand strength and reputation, with the Company established the most well-known brand in language learning around the world, having a positive track record dating back a number of years, and serving a range of high-profile clients;
• Its broad range of products and services, with the Company offering courses in more than 30 languages for consumers, as well as language learning solutions that are designed specifically for businesses and educators;
• Its accessibility and ease of use, with the Company offering its courses across multiple channels that can be accessed online or through onsite software, including web-based software subscriptions, digital downloads, mobile applications, and compact disc packages;
• Its proprietary technologies and platform, with the Company utilising a range of proprietary technologies and intellectual properties in the development and delivery of its language learning programs, making its offerings unique within the industry; and
• Its industry expertise and experience, with the Company employing specialist linguistic and technical personnel across its two operating segments, to ensure that its solutions are accurate, reliable, and efficient. ### Channels

Rosetta Stone operates a website at www.rosettastone.com, through which it provides information on its various consumer, corporate, and educational solutions, as well as its various available languages.

Rosetta Stone operates an online sales channel that allows customers to purchase and download learning resources or pay for online subscriptions directly from its website. The Company’s products are delivered across multiple channels, including online software subscriptions, digital software downloads, mobile applications, and compact disc packages.

The Company also sells products to consumers via call centre operations, third party ecommerce websites, retail partners – including Amazon Barnes and Noble, Target, and Best buy – and daily deal partners.

Rosetta Stone makes the bulk of its sales to institutions and corporations through its direct sales force that is organised by geographic region. The Company’s sales personnel operate out of its network of offices across its operating regions. Rosetta Stone also utilises the services of third party resellers and distributors to reach corporate and institutional clients around the world.

Customer Relationships

Rosetta Stone sells its products in various forms to consumers on a self-service basis, with customers able to download software, subscribe to online services, and purchase physical compact disc sets directly form the Company’s website. Customers can also download the Company’s mobile apps directly from the Apple App Store and Google Play Store, and can access the Company’s online portal independently without interact with sales and service personnel.

Rosetta Stone offers a more personalised service through its call centre and directs sales teams, who consult closely with customers, in particular corporate and institutional clients, in order to fully establish their requirements and circumstances. The Company is able to scale and tailor its offerings in many cases, and seeks to establish longstanding relationship through high-quality customer service.

Rosetta Stone offers ongoing support to its consumer and commercial customers, who are able to interact directly with dedicated customer support personnel over the phone, via an online contact form, or through a live online chat service. The Company also offers a range of support resources, including FAQs, installation and user guides, and payment guides.

Rosetta Stone maintains a social media presence across several networks – including Twitter, Facebook, Google+, and YouTube – through which its able to public company updates and interact directly with customers.

Key Activities

Rosetta Stone offers a range of personalised language and reading programs for consumers, corporations, government bodies, and non-profit institutions.

The Company aligns its operations into reportable business segments: Enterprise and Education, which derives revenue from the sale of language learning products and solutions to educational institutions, corporations and government agencies around the world; and Consumer, which derives revenue from the sale of similar language learning courses to individual consumers and retail partners. Rosetta Stone delivers its course across multiple channels, including cloud-based online platforms, digital software downloads, mobile applications, and physical product sales.

The Company serves a global client base, including commercial and consumer customer base across the Americas, Asia Pacific, Europe, the Middle East, and Africa.

Key Partners

Rosetta Stone works closely with a network of partner companies and organisations across its two operating segments. These partners can be organise broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of services, equipment, tools, and resources that the Company utilises in support of its core software development and delivery operations;
• Channel and Distribution Partners, comprising the Company’s extensive network of retail partners, third party resellers, distributors, marketing affiliates, and independent sales agents that assist in extending the reach of the Company’s in-house sales force;
• Technology and Development Partners, comprising software developers, IT service providers, technology companies, and platform-as-a-service providers with which the Company collaborates on joint offerings and which support the development and maintenance of the Company’s solutions; and
• Strategic and Alliance Partners, comprising market leading companies across multiple business sectors with which the Company collaborates on joint projects, including in branding, marketing, and development. Rosetta Stone has a number of key partnerships in place. This includes a strategic partnership with online language learning platform LiveMocha, reseller partnerships with BME, Creative Tech, and Mattar Consulting, and high-profile retail partners such as Amazon, Target, and Best Buy.

Key Resources

Rosetta Stone’s key resources are its technologies and intellectual properties, its software products and online platform, its IT and communications infrastructure, its sales and distribution channels, its partnerships, and its personnel.

Rosetta Stone owns and utilises various proprietary technologies that are key in the development of its software products and platform. A search of records published by the US Patent and Trademark Office identified a number of patent applications filed in Rosetta Stone’s name, as both applicant and assignee, including applications entitled ‘Method and system for reading fluency training’, ‘Performing a computerized language teaching lesson using a main computer and a mobile device’ and ‘System and method for teaching non-lexical speech effects’.

Rosetta Stone owns and or leases various corporate office locations around the world, as well as call centre locations.

Cost Structure

Rosetta Stone incurs costs in relation to the development of its technologies and software solutions, the development and maintenance of its online platform, the maintenance of its IT and communications infrastructure, the procurement of services, the operation of its sales and call centre operations, the management of its partnerships, the implementation of advertising and marketing campaigns, and the retention of its personnel.

In 2015 Rosetta Stone recorded total operating costs in the amount $222.96 million. This included sales and marketing expenses in the amount of $136.08 million, research and development costs in the amount of $29.94 million, and general and administrative costs in the amount of $50.12 million.

Revenue Streams

Rosetta Stone generates revenue through the development and sale of various language learning and reading products and solutions. The Company derives revenue in the form of physical and digital sales, subscription fees, and service contracts.

In 2015 Rosetta Stone generated revenue in the amount of $217.67 million, down on the $261.85 million recorded by the Company in 2014. The bulk of the Company’s revenue, $151.70 million, was recorded as subscription and service revenue, with the remainder categorised as product revenue.