Page 1: Boosting Demand in the "Experience Economy"

• Nonprofits have been slow to embrace marketing science

  • One institution's success shows the potential upside

• Government assistance drives entrepreneurship

• The downside to discounting prices

Marketing Boosting Demand in the "Experience Economy"

• Georgia Aquarium's success in attracting visitors

  • Opened in 2005, biggest aquarium in the world

  • 3.5 million visitors in the first year

  • No marketing needed initially

  • Attendance dropped in subsequent years

  • Conducted a study of other aquariums, industrywide problem

• Bringing in V. Kumar to increase attendance

  • Mark Becker's idea to bring in Kumar

  • Identified constraints: increase revenue without raising ticket prices, boost attendance without compromising visitor satisfaction, no new spending

• Identifying valuable customers and designing a media plan

  • Determined top 50 zip codes of visitors and season-pass holders with highest net revenue

  • Created demographic profiles of visitors and high-spending pass holders

  • Identified "look-alike" customers

Optimizing the Mix

• Shifted media spending away from online and toward cable TV

Reaping the Rewards

• Results of the marketing strategy

  • Attendance increased by 10%

  • Revenue increased by 12%

  • New pass holders increased by 12%

  • Pass renewals increased by 10%

• Media spending breakdown in 2012 and 2013

  • TV: 40%

  • Radio: 30%

  • Online: 19%

  • Other: 7%

  • Magazines: 4%

Page 3

• Areas with high concentrations of residents resembling target profiles proved to be bigger growth markets than anticipated

  • New homes and apartments were being built in these areas

  • An influx of young people

• Developed a media optimization model to target potential customers

  • Analyzed the effectiveness of each type of media on current and potential customers

  • Considered factors such as media performance, macroeconomic factors, ticket prices, visitor satisfaction, competition from local attractions

  • Identified that the aquarium relied too heavily on mass media

  • Recommended a modest increase in overall spending, better targeting of radio, TV, magazine, and outdoor advertising, and a slight decrease in online spending

• New plan called for a rise in media spending from $2 million to $2.7 million in 2013

• Allocating the spending within markets

  • Recommended pulling billboards from highways and placing them along less heavily trafficked roads in newly identified markets

  • Recommended shifting TV ads from broadcast networks to cable shows popular with the demographic targets

  • Focused print ads on magazines

Interview with Carey Rountree

• Marketing-science approaches are cutting-edge in the business

• Lesson for other experience-based organizations: anyone can identify valuable customers and their behaviors

• New talent hired: data analyst to analyze trends and provide monthly reports

• Challenges: determining which media to buy and being agile due to fast-changing media habits

• Unexpected result: identified potential philanthropic contributors among pass holders

Idea in Practice

• A $700,000 increase in media spending resulted in revenue exceeding predictions by $8 million

• Nearly 12-fold return on investment

Page 4: Negotiation the Downside of Discounts

• A customer threatens to move to a competitor unless it gets a discount

• The seller cuts the price, making it harder to hold firm on pricing in the future

• Vantage Partners surveyed 83 senior sales leaders at Fortune 500 companies

• Discounts can quickly erode the average price for all customers

• Companies need to think about the long-term consequences for pricing power

Georgia Aquarium Case Study

• The aquarium implemented a new pricing plan in 2013

• The plan included seasonal fluctuations in attendance and monthly budget allocations

• Discounted pricing during off-peak hours was implemented

• The new plan resulted in a 10% increase in attendance and 12% increase in revenue

• Pass holders increased by 12% and pass renewals by 10% over projections

• The plan turned a $700,000 increase in media spending into $8 million in revenue

• Strategies were implemented to ensure increased attendance didn't diminish the visitor experience

• Satisfaction increased by 3% over the previous year

• Perceived value of admission, likelihood of returning, and café and gift shop purchases all rose

The Value of Pricing Discipline

• The framework adopted by Georgia Aquarium is applicable in any consumer industry

• Data analysis and marketing models are essential for sustaining experience-based businesses

• The right marketing-science approach can balance conflicting objectives and turn performance around

How Quickly Does the Discounted Price Become the "New Normal"?

• Options: <1 month, 1-3 months, 3-6 months, 6-12 months, 1-2 years, 3-4 years, never

• Most respondents indicated that the discounted price becomes the "new normal" within 1-3 months

How Often Do You Grant Discounts?

• Options: never, rarely, sometimes, frequently, almost always

• Responses varied, with a majority indicating that discounts are granted sometimes or frequently

When You Grant Discounts, How Much Are They?

• Options: <5% off, 5%-9%, 10%-24%, 25%-50%, >50%

• Responses varied, with a majority indicating that discounts range from 5%-9% or 10%-24%

Source: "The Value of Pricing Discipline: A Vantage Partners Sales Study on the Impact of Pricing Exceptions"