Case Study #26: Where the Wild AND Revenue Generation Things Are in the San Diego Zoo

The last time I visit a zoo is over twenty years ago. As we age, we engage in different kinds of entertainment and leisure. Today, a ten-year-old happily watches panda bears at the zoo munch on leaves. Twenty years later, that ten-year-old will most likely be engaged with a different form of entertainment on a weekend. This impacts the growth of brands, such as Disney and Mattel, or non-profit organizations, such as the Lincoln Park Zoo or San Diego Zoo, whose core audience segments are children and pre-teens. According to the Population Association of America, 21 million children who are under the age of 5 today will be in middle and high school in 2017. Currently, this segment represents 6.8% of the total U.S. population. In 1983, children under the age of 5 represent 8.5% of the total U.S. population. As time goes on, the percent of children who are under the age of 5 will decline as a percent of the total U.S. population and this will affect the growth of brands or associations whose core audience segments are children and pre-teens.

This morning, I find a great article in Businessweek about the San Diego Zoo and why it is a great example of growth through innovation. The San Diego Zoo has 4.5 million annual visitors, generates $200 million in annual revenues and will show a $13 million operating profit in 2009 (Scanlon, Jessie. “San Diego Zoo’s Newest Exhibit: Innovation”. Businessweek, October 14, 2009). But, Chief Financial Officer Paula Brock recognizes that the long-standing model of funding conservation research and educational initiatives from entertainment revenues (tickets, food, and merchandise) and donations cannot be maintained (Scanlon).

Concession stands are main revenue streams for movie theaters, ball games and zoos. Not only do the target zoo audiences shrink over time, but a weakened economy puts pressure on incremental spend above memberships fees and admission prices. Reducing the inflated price of goods at the concession stands may drive some demand, but not cover operational costs in the long-term. This will inhibit the funding for conservation research and educational initiatives.

The San Diego Zoo aligns with a consulting firm and its own employees to understand how to increase its revenue streams through diversification. After the San Diego Zoo embraces its thought leadership as a conservation entity, it deploys a three-pronged strategy to communicate its message. The Sand Diego Zoo communicates its core competencies of conservation through partnerships discussing environmental issues, online and offline experiential zoo activities and conservation consulting. All of these touchpoints are very integrated and consistent in boosting San Diego Zoo’s competitive advantage as a leader in conservation. These activities will offset declines in revenue from target zoo audiences by diversifying in relevant areas that are of growing global importance.