Beat the Elite Finals 2014

Finale Finale.pptx Draft—for discussion only 0 Beat the Elite's Geographic Covering

Beat the Elite Explorer Tour:

Denmark: • Roskilde University Center • Copenhagen University • Denmark's Technical University • Århus University • Copenhagen Business School

Sweden: • Stockholm University Oulu • Uppsala University • Stockholm School of Economics Bergen Oslo Helsinki Uppsala Norway: • Aalto • NHH Bergen • Hanken Stockholm • BI Oslo • SU Århus • SSE Finland: • Aalto University • Hanken School of Economics Copenhagen Roskilde• CBS • RUC • KU • UCS • DTU Visited participating schools Additional participating school Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 3 Welcome Team 1

Team members: • Rolf Trustrup Nørregaard Andersen, FSM, CBS • Jakob Skytte, FSM, CBS • Awais Shafique, AEF, CBS • Rasmus Ditlevsen, FIR, CBS Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 4 Sprint Like A Gazelle Beat the Elite, CBS Case Competition, Feb 2014

Rolf Trustrup Nørregaard Andersen, CBS, M.Sc. Finance & Strategic Management Jakob Skytte, CBS, M.Sc. Finance & Strategic Management Awais Shafique, CBS, M.Sc. Applied Economics & Finance Rasmus Ditlevsen, CBS, M.Sc. Finance & Accounting Copenhagen Zoo should focus on becoming a holistic experience by combining innovation, business and science

Situation: Complication: Recommendation:

§ Copenhagen Zoo (CPH Zoo) has been § CPH Zoo suffers from numerous § CPH Zoo needs to deliver on a threefold through a turnaround phase and is internal and external complications strategy ready to take the next step § Internal § CPH Zoo is recognized as one of the § Bottleneck of operations § Attract new customers and increase top European zoos, however still not § Limited customer base share of wallet a main attraction for tourists § Low share of wallet § Due to a very unilateral customer § External § Adjust price structure to align with base, CPH Zoo is struggling to attract § Seasonality & weather conditions industry average customers outside the capital region § Reduction in subsidies We recommend CPH Zoo to § Limited public transportation § Create a link between the educational leverage existing customers, & scientific perspective and business tap into the tourist customer perspective segment, optimize the prizing structure as well as strengthen How does CPH Zoo meet its operational targets by 2020 while at the same time strengthening the brand value through increased educational &scientific perspective? focus on the scientific perspective, thereby enabling 1 CPH Zoo should increase its international profile both -0,7% CPH Zoo to meet its 2020 scientifically and commercially targets 147 151 143 143 142

2 CPH Zoo’s growth rate in visitors should be a minimum of 5% ann., using 1.1m visitors in 2012 as baseline and reaching a sustainable level of 1.6m visitors in 2020

2008 2009 2010 2011 2012 3 CPH Zoo should operate independently from government subsidies by 2020 After a turnaround following the financial crisis, CPH Zoo must develop a new strategy 4 CPH Zoo’s profit margin should be higher than 8% and to come back on a sustainable growth path remain so, even when government subsidies are phased with a scientific perspective out, while maintaining high service levels

Sources: Annual Reports, Case Material, Case Team Analysis

Introduction Situation Complication Recommendation Implementation 6 Increased competition for consumer spending makes it difficult for CPH Zoo to deliver on its high financial targets

CPH Zoo made it through the financial crisis and are, after several years of stagnating ... however the leisure market is very fierce due to low consumer spending as well as growth, now showing a promising number of visitors ... numerous leisure alternatives in the capital region DKKm # of ann. visitors (RS) and ann. revenue (LS) % of Danish population yearly visiting Global market forecast theme park 300 1,5 entertainment attractions (2012) industry, DKKbn (2012)

200 1,0 Theme parks 55 +3,8% 147 151 143 143 142 174 117 161 98 106 Zoos 42 100 N/A 0,5 Entertainment 23 Centers 0 0,0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Aquaria 17

PM 2,5% 1,0% -1,9% 3,3% -0,6% -0,5% 9.9% 3.3% N/A Circus 17 2015 2017 - CPH Zoo has been able to succeed during and after the financial crisis due to - Low disposable income, limited leisure time and strong competition for spending opening of the new Elephant House and the Arctic Circle, as well as due to money on leisure activities are factors that affect the overall entertainment significant events, where 2013 was a record year with the highest historic industry number of visitors in one year and in one day - The market for theme parks is projected to grow by CAGR 3.8% until 2017, where - Copenhagen Zoo is among the top 12 most-visited zoos in Europe and one of the the growth factors, in addition to general improvements in the global economy, leading zoos in the Nordics, with a strong and recognized national brand (top 10), include rising consumer spending on leisure activities, a tendency to spend free however is still not considered a main attraction time in outdoor theme parks, and the growing popularity of mass entertainment - CPH Zoo has a unilateral customer base, where 90% of all visitors travel less than - Copenhagen Zoo is challenged in how to position itself in the international as well 100 km to visit the zoo and of all visitors approx. 75% of the visitors visit the zoo as local market and how to grow in the market with only their family

- Approx. 5-10% of Copenhagen Zoo’s visitors are tourists, where the low level is Highly Differentiated & Competitive Landscape uncertain for the current management

Sources: Annual Reports, Case Material, Danskernes Kulturvaner 2012 (Epinion), PRWeb 2012, Case Team Analysis

Introduction Situation Complication Recommendation Implementation 7 CPH Zoo is operating in an environment posing many complications that must be taken into account when formulating a new strategy

Internal Complications External Complications

1 Bottleneck in operations 1 Seasonality and weather conditions 147 151 143 143 142 106 117 150 Rev 98 160 184 195 100 ‘000 140 141 140 124 DKKm 120 97 45 51 39 Ø 120 2005 2006 2007 2008 2009 2010 2011 2012 Jul Jan Apr Jun Oct Feb Sep Dec Aug

CPH Zoo is suffering from a bottleneck, as it is not possible to extend the location Mar Nov May outside the current premises and have limited parked space, which means that Seasonality and Danish weather conditions greatly impact the number of visitors CPH Zoo needs to optimize it’s current operations per month, which has had an unfortunate effect as visitors do not receive satisfactory service during off-seasons or during peak-days 2 Limited customer base Visitor Demographics Willingness to Travel to a Zoo 2012 (42 min max) 2 Reduction in government subsidies

90% by car DKKm 18,6 18,3 18,7 18,1 18,2 17,6 16,8 60% by public transportation The current customer base can be limited to within a 2007 2008 2009 2010 2011 2012 2013 % of 40min drive from CPH Zoo, which means that the main 16% 13% 12% 13% 13% 12% N/A customer area is the capital region, limiting the potential Rev of further growth and stresses the importance of share of Subsidies allocated to CPH Zoo is expected to drop to zero in 2020 from DKK wallet per visitor 16.8m in 2013, which implies that CPH Zoo needs to create an independent revenue base to replace to funding gap

3 Low share of wallet 3 Limited public transportation opportunities 100 Utilization of the annual card holders and the venue 19 min walk Ave. Sale CPH Zoo is limited by public transportation, which is a per visitor is low and the average consumption per visitor in Zoo Food and Shop was only DKK 100, also very low major hassle for the tourists as well as for attracting 10 and retaining visitors travelling by public transportation

Souvenir shop ZFS Sources: Annual Reports, Case Material, Rambøll Management Consulting, Case Team analysis

Introduction Situation Complication Recommendation Implementation 8 Copenhagen Zoo can develop a platform for growth by focusing on three levers

Customers Pricing Science

Existing customers • Benchmarking with competitors shows that CHP • Collaborative Masters degree in Sustainable • CPH Zoo has significant potential for increasing Zoo significantly under-price its relative value of Wildlife with University of Copenhagen share of customer wallet annual card compared to single tickets • Create a regional preservation hub for Nordic animals • Seasonal balance can be improved with only a • Estimated price elasticity is less than one thus • Offer expert experience in animals’ natural few alterations allowing CPH Zoo a significant revenue potential environment that can be realized by minimizing consumer • Strong focus on science creates positive publicity New customers surplus by optimizing pricing strategy and thus led to more private funding together • CPH Zoo can tap into a with an increased perception among public and lucrative tourist market • Increasing price will most likely led to a tourists decrease in customer satisfaction, however this is • Increase customer traction by easing access to mitigated by a better product offering within the CPH Zoo Zoo (i.e. more restaurants)

Recommended strategy will result in 1.67m customer and 8.5% profit margin in 2020

Sources: Annual Reports, Case Material, Case team analysis

Introduction Situation Complication Recommendation Implementation 9 Existing and new customers provides significant potential for both topline and bottom line

Existing customers New customers

# of monthly visitors (’000) • Tourists offer an interesting opportunity as they have high willingness to spend 195 184 and the number of tourists in Copenhagen is growing with approx. 8% annually 160 140 141 140 120 124 97 Current reserved: 45 51 39 110k By capturing approx. 30% of the potential Non- Potential Families: market, Zoo will gain Families: 750k new approx. 210k new 4,250k

Jul customers: Jan Jun Oct Feb Apr Sep

Aug Dec customers Nov Mar May 640k • High seasonality is correlated with the weather conditions and implies that offerings consistent with Danish weather conditions must be created

• To attract tourists a complementary shuttle service should be offered, as the current infrastructure is insufficient • Busses will be operated in a partnership with Arriva

Mainly indoor Mainly outdoor • Number of catering alternatives can be increased to industry average of 8 from the current number of 2 • Approx. 50% of the zoo is outdoor hence more indoor alternatives must be developed (Old Elephant House) • By offering a free shuttle bus Zoo can gain traction with tourists and in general • Develop backup events that can be rolled out in case of bad weather and offer increase the number of customers following the convenience of direct free single-use rain coats transportation

Focus on tourists will allow CPH Zoo to tap into a potential market of 640k customers

Sources: Annual Reports, Case Material, MasterCard, UNWTO, European Cities Marketing, Markussen et al. (2007)

Introduction Situation Complication Recommendation Implementation 10 Operations can be adjusted to harvest low-hanging fruits from pricing and improve the link between science and business

Focus on Pricing Contribute to science

• Mapping the relative price of a single ticket to an annual pass illuminates that 1 Master’s degree in collaboration CPH Zoo is pricing significantly lower than average for the ten best performing European Zoo’s1 5 CPH Zoo should engage in 5 5 offering a Master’s degree in Direct link between 4 4 5 academia and 4 collaboration with University of 4 Ø 4 Copenhagen in Sustainable business Wildlife for potential recruiting 3 3

2 Nordic Animal Preservation Hub

Köln Create a regional preservation Gain international Basel Berlin Zurich Vienna Leipzig hub for Nordic animals in recognition, Stuttgart Hamborg Munchen collaboration with Skåne leveraged towards Copenhagen Djurpark an international brand profile • Raising the relative price of an annual pass to industry average will result in a price of DKK 750 for an annual pass

• Increasing price will lead to a loss of customers, however, we expect that this will be outweighed by the price increase (running a scenario shows that CPH 3 Protect and promote wildlife Zoo can afford to loose slightly more than 50% of their customers assuming annual card holders will instead visit the Zoo once every year) CPH Zoo should proactively seek to help protect and promote Gain stronger • This will further allow for new customers during peak hours where the Zoo is wildlife in its natural habitat e.g. scientific profile and currently facing bottlenecks offer to supply experts for greater knowledge endangered geographical gathering locations 1Dutch zoo’s are not included as they do not offer an annual pass

Sources: Annual Reports, Case Material, MasterCard, UNWTO, European Cities Marketing, Markussen et al. (2007)

Introduction Situation Complication Recommendation Implementation 11 The strategy offers a lucrative financial outlook and limited risk

Development in visitors (‘000) Development in revenue (DKKm) Development in net income margin (%)

Number of visitors New customers Pricing initiative Base case Net income margin

+5,2% 1.665 267 8.5% 8.5% 1.557 1.610 253 260 8.0% 8.3% 238 244 11 1.435 1.490 1.455 1.443 1.488 232 11 11 227 8 9 42 7.0% 7.0% 5 36 39 3 33 34 6.5% 195 33 33 6.0% 1.110 142

3.3% 214 195 190 194 197 201 205 210 142

2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020

Risks associated with recommendation Degree of risk How to mitigate risk Zoo mitigating risk 1 Economic risk Niche value proposition ü 2 Macro economic factors Diversify customer base ü 3 Capacity risk Create seasonal balance ü 4 Impact of price increase Hire pricing experts (Simon-Kucher) û 5 Increased competition Better positioning û 6 Partnership risk (University of Copenhagen) Set up advisory board û 7 Implementation Risk Detailed implementation plan ü Sources: Annual Reports, Case Material, Case team analysis

Introduction Situation Complication Recommendation Implementation 12 Execution risk can be reduced by a thorough implementation plan

Strategy 2014 2015 2016 2017 2018

Customers • Add four busses to • Open last of six • Start pilot project pilot project • Open two more restaurants with three busses • Initiate indoor restaurants • Continuous focus • Optimize operations in Copenhagen initiatives • Initiate marketing on marketing • Evaluate bus service • Convert old • Open two more campaign for campaign Elephant House to restaurants busses and indoor • Optimize seasonal a restaurant activities balance

Pricing • Increase average • Increase average • Adjust prices if card holder price card holder price • Increase average necessary to DKK 438 to DKK 518 card holder price • Re-evaluate pricing • Investigate to DKK 600 benchmark to potential for • Hire Simon-Kucher determine additional pricing to evaluate pricing whether prices are methods scheme still competitive

Science • Initiate contact to • Launch of Nordic • Send experts to relevant preservation • Finalize Master’s foreign countries • Utilize knowledge partnership centre (e.g. polar degree and open and initiate a from foreign organizations in bears) up for applications media campaign countries to improve the Nordic • Initiate contact to • Focus on further based on their link between science • Contact Skåne University of partnerships for findings and business Djurspark Copenhagen preservations • First Master’s batch centre graduating

Successful implementation of the strategy will enable CPH Zoo to realize its full potential

Sources: Annual Reports, Case Material, Case team analysis

Introduction Situation Complication Recommendation Implementation 13 By offering an improved value proposition combining innovation, business and science CPH Zoo will by 2020 be able to attract 1.67m customers and yield a margin of 8.5%

Introduction Situation Complication Recommendation Implementation

Customers Pricing Science

Existing customers • Benchmarking with competitors shows that • Collaborative Masters degree in Sustainable • CPH Zoo has significant potential for CHP Zoo significantly underprices its relative Wildlife with University of Copenhagen increasing share of customer wallet value of annual card compared to single • Create a regional preservation hub for Nordic tickets animals • Seasonal balance can be improved with few • Offer expert experience in animals’ natural and focused alterations • Thus significant revenue potential can be environment realized by minimizing consumer surplus by New customers optimizing pricing strategy • CPH Zoo can tap into a lucrative tourist customer segment • Increase customer traction by easing access to CPH Zoo

By conducting the three recommended strategies, CPH Zoo will be able to survive in an increasingly fierce market and enter a long-run path on which it can sprint like a gazelle

Finale Finale.pptx Draft—for discussion only 15 Welcome Team 2

Team members: • Alexander Bitzow Pedersen, Finance, AU • Thyge Ryom Enggaard, Oecon, AU • Peter Aagard Nielsen, Business Adm., AU • Oskar Hamsen, Oecon, AU Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 16 Growing profitably by targeting tourists and redistributing visitors in off-peak seasons

FCG1

Alexander Bitzow Pedersen Thyge Ryom Enggaard Peter Aagaard Nielsen Oskar Harmsen MSc. Finance BSc. Oecon BSc. Business Administration BSc. Oecon Aarhus Universitet Aarhus Universitet Aarhus Universitet Aarhus Universitet Copenhagen Zoo will ensure profitable growth by attracting tourists and increasing off-peak visitors.

Current Situation Goals Complications

• Copenhagen Zoo is positioned • Secure an international presence • Capacity is severely for growth after a good year of for Copenhagen Zoo. constrained during peak- Copenhagen Zoo can reach visitors • Attract 1.6M visitors in 2018 days their goals by rebranding • Accidental worldwide media • Retain an 8 percent profit margin • Costs are high during non- themselves as an educational exposure without government subsidies peak days zoo to attract more tourists • Focus has been on research rather than the business side

Getting more people to come Targeting the Tourists Spreading out Demand

The key challenge will be to increase the Tourists should be the main channel of new More visitors will have to come in off-peak number of visitors to 1.6M. Then margins visitors. The biggest barrier to attracting them hours if Copenhagen Zoo is to will follow. is the lack of a clear branding focus – accommodate1.6M visitors. The current contribution margin per Copenhagen Zoo should focus on education. customer is 53.3 DKK Annual card should be restricted to non-peak Copenhagen Zoo should leverage its world- summer months. The annual card holders take Even with unchanged cost structure, five class focus on education and conservation to up valuable capacity on peak-days while adding hundred thousand new visitors will bring enrich the experiences of the users, and stand little marginal value. profit margins above 8 percent in 2018. out in international comparisons, bringing it up the list of Copenhagen tourist attractions. Ticket prices should be differentiated during With ZFS boost margins will reach 12 winter months. percent in 2018. Slides 5, 6 and 7

Slide 3, 4 and 9 Slides 8 and 9

Situation Analysis Branding Capacity Financeial 18 Getting 500,000 more visitors will ensure an 8.6 % profit margin, even at current earnings per visitor Contribution margin per visitor

DKK Assumptions: 156.7 109.4 67.9 Fixed cost assumed constant. Private funding increases with number of visitors. 30 % of staff costs are assumed fixed. The mix between card holders and non card holders stays constant. The gross profit margin of the ZFS business is assumed to be 50% yielding 30.1 a ZFS revenue of DKK 66.9M.

11.4 53.3

Every extra customer adds 53 DKK corresponding to a gross margin of 34 %.

Revenue Variable Cost Staff COGS Other CM

Total Profits with 1.1M visitors Total Profits with 1.6M visitors DKKm DKKm

24.7 109.1 21.6 34.3 93.5 5.2 88.3 88.3 85.3 59.5

1.1M 1.6M Revenue= 250.7M DKK Revenue= 174.1M DK vis. vis. Margin = 3.3 % Margin = 8.6 %

Total CM Gross Profit Total Profit Total CM Gross Profit Total Profit Funding Fixed cost Funding Fixed cost

Total CM = Number of visitors * CM per visitor = Number of visitors * 53.3 DKK

Situation Analysis Branding Capacity Financeial 19 Attracting tourists while spreading out visitors during the year is the key to reaching 1.6M visitors per year

Tourists alone can drive 500K new visitors … … but capacity constraints require better spread.

Share of group visiting local zoo, per year Allocation of 500K new visitors New visitors Current visitors Residents 350

Singapore ~18%

300 Monthly capacity limit

Tourists 250

6% Thousand visitors 200 Residents

Copenhagen 150 ~30%

Copenhagen Zoo is above benchmark 100 regarding attracting local visitors Tourists

0.8% 50

- Potential increase 5,2%. Winter Spring Summer Fall We only need an increase of 4% Copenhagen Tourists ~ 500K visitors / year Even if operating at full capacity during summer months, Reaching towards the level of Singapore Zoo and attracting 1 smoothing is still needed to ensure sufficient capacity. out of 20 (4.8 %) of all CPH tourists, will be enough to reach 1.6 The Excess capacity and thus potential is greatest during M visitors per year. winter and fall.

Source: Singapore Zoo 2011. Note: not including Night or River Safari. Situation Analysis Branding Capacity Financeial 20 A key issue for Copenhagen Zoo is that it doesn’t stand out as a top-attraction in Copenhagen

“Do I get value for money?” “Can I get there?” “Is Copenhagen Zoo even special?”

Quality of Transportation Branding experience Price

• To attract tourists, it is not enough • Customer ratings: 4.6/5 • Travel time from city centre: 16 that the zoo stands out to other min with public transport. attractions – it has to stand out as • Average annual cardholder visits: a special zoo internationally, a 5 times. • Location close to Copenhagen must-see for Copenhagen visitors. central station. • Price level comparable with • In guidebooks Copenhagen Zoo is th industry benchmark. • Bus departs every 6 minute not known for something special. directly to the Zoo. • High service level even on rainy • Successful Zoos like Singapore Zoo days. and San Diego Zoo have a specific selling proposition.

Visitors are very satisfied and the Transportation is not the major issue. Copenhagen Zoo needs an angle, to price is affordable. put it on the international Zoo map, and thereby in Copenhagen attractions.

Situation Analysis Branding Capacity Financeial 21 Copenhagen Zoo has a unique moment for rebranding itself as the world’s best zoo for learning

Learning is at the core of Copenhagen Zoo … … but it needs to be more visible, both in branding …

Despite its small size, Copenhagen Zoo has long • No guidebooks mention learning as a specific been on the forefront of research and education.. differentiation point of Copenhagen Zoo.

• Ranked 4th in education and conservation of 80 • On the international homepage, uk.zoo.dk has no real European Zoos (source: Sheridan et.al 2009) story to tell, or what makes Copenhagen Zoo special.

• Learning has to become an integral part of every marketing strategy through e.g. • Quiz-questions (”did you know that?”, ”how can it … and the recent Giraffe euthanasia has proven a be that”, etc.) unique global show of Copenhagen Zoo’s • Informational ads dedication to teaching and research. • Social Media Campaigns • Google-searches for ’Copenhagen Zoo’ have gone up a hundred times … and in the zoo visitors’ experiences

• Copenhagen Zoo needs to leverage this exposure! • Increase professional lecturing during visits • Utilise flat employer structure to ensure motivated and captivating guides. • Utilise audioguides on peak-days to ensure similar learning for all visitors

• Expand ZooLab • Changing exhibitions • In-door educational center in the old elephant cage (like Experimentarium)

Situation Analysis Branding Capacity Financeial 22 Tourists arrive mainly from Scandinavia and UK/US and it is crucial to target these immediately at arrival

Tourist allocation Copenhagen Focus Change marketing strategy

Norway & Marketing campaigns need to Current strategy targets Sweden be targeted the most important customers at metro and bus 26% US&UK customers stations, targeting mainly locals. 46% Asia From customer breakdown We need to target tourists 19% Copenhagen Zoo should focus already at their arrival destination Rest of world on Norway & Sweden and Us & 9% UK.

How to target Scandinavians at arrival How to target US/UK tourists at arrival

Ferry Bridge Airport Cruise liners Sponsor ferry-play areas with Offer discounts for Advertisement on baggage Direct advertisement and animal toys etc. by partnering customers with family-ticket pick up stations at Kastrup discount offers to cruise with StenaLine. ColorLine and by partnering with Airport. liner companies. Effort to DFDS. Øresundsbron. include the Zoo in visitor programs.

Situation Analysis Branding Capacity Financeial 23 Demand should be drawn towards off-peak periods, through price incentives and more special events

Changes are driven through price incentives .. .. and best-practice off-season activities…

50 percent of all current visitors are annual • Special Halloween cardholders. activities in October • In peak-periods, especially during the summer months, they take up much capacity without • Ice theme with polar adding much value animals

• Christmas in the zoo

• Magic Winter Wonderland

… while utilising current strengths of an educational focus Copenhagen Zoo should abolish the annual card in favor of a cheaper seasonal card, which • The old Elephanthouse should serve as a gives free access, only in off-peak season, interactive educational outside of June – August, and otherwise provides center a sizable discount. • This would in turn increase This would make room for more tourists in the the indoor-activities, much needed to attract visitors peak-season and help move popular demand on rainy days towards off-season.

Situation Analysis Branding Capacity Financeial 24 The souvenir shop presents ample opportunity for strengthening margins

Current Souvenir store Opportunity Solution

• Low Margin: 1,17% • Average spending per visitor who enters the souvenir store is 100 kr., which is approximately • Low penetration: 1/10 is Focus on increased penetration currently using the shop the same as the average income from entre tickets by implementing (1) and (2). Thus • Overcapacity à High Fixed improve the topline and decline cost • Fixed cost accounts for fixed cost pr. visitor approximately 40% of gross • Average visitor spending: 10 kr. profit.

Profit DKKm 1 2 7 6,1 6 Target penetration level Attract visitors to the shop. Bring the shop to the visitors. 5 3,6 To attract visitors to the shop We bring small souvenir outlets to 4 Copenhagen Zoo should: the 3 most visited attractions and 3 sell animal specific souvenirs: 1) One piece of candy and a 2 free balloon for all children to 1,1 be collected in the souvenir 1) Elephants 1 shop. 2) Polar bears 3) Lions 0 2) Collection of park photos with 1/10 2/10 3/10 animals Profit from ZFS

Situation Analysis Branding Capacity Finance 25 Copenhagen Zoo will reach its target of 1.6M visitors and a margin of +8% by the end of 2018

Projected revenue and number of visitores Projected profit and profit margin

400 Revenue (DKKm) Visitors (M) 2,0 40 Profit (DKKm) Profit margin 14% 350 35 12% 300 1,5 30 CAGR: 5.3% 10% 250 25 8% 200 1,0 20 6% 150 15 100 0,5 10 4% 50 5 2% 0 0,0 0 0% 2012 2013 2014E 2015E 2016E 2017E 2018E 2012 2013 2014E 2015E 2016E 2017E 2018E Direct Private funding Profit Profit Margin Government funding Number of visitors

Risk Likelihood Impact Low penetration in the tourism segment 2 3 Loss of visitors due to changing price structure 2 2 Capacity problems due to low smoothing 3 2 Failure in seasonality events 1 1

Finale Finale.pptx Draft—for discussion only 27 Welcome Team 3

Team members: • Andreas Orebo Hansen, Economics, KU • Frederik Sandager, Economics, KU • Anders Videbæk, Economics, KU • Kristoffer Juhl, Economics, KU Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 28 SECURING SUSTAINABILITY IN A GROWING MARKET A structural, modern, and innovative strategy

February 28, 2014

Andreas Orebro Hansen Frederik Sandager Rasmussen Anders Videbæk Kristoffer Windall Juhl MSc Economics MSc Economics MSc Economics MSc Economics University of Copenhagen University of Copenhagen University of Copenhagen University of Copenhagen To secure a sustainable growth Cph Zoo needs to implement an intelligent pricing strategy, a remodelling of the food offerings, and a streamlined marketing strategy

Issue Complication Solution

…and its current business model is not Copenhagen ZOO will achieve its 2020- Copenhagen Zoo is not exploiting its leveraged to engage with the challenges target by adapting to the patterns and commercial potential… ahead desires of their audience

• Visitor fluctuations due to one-off events • Intelligent pricing structure to reallocate • Lack of continual growth in visitors and and seasonal-contingent weather seasonal visitor patterns and increase earnings. conditions. revenue.

• Outsource ZFS activities to embrace the • Lack of international penetration (too few • Suboptimal pricing structure. Nordic-food brand to attract more tourists international visitors). and new customer segments. • Unstructured and passive branding • Decreasing government funding, and strategy. • Streamlined and innovative marketing & therefore desire of independency by social media strategy to increase 2020. • Direct earnings and private funding not international position and brand. leveraged to long term targets

INDSÆT BILLEDE INDSÆT BILLEDE INDSÆT BILLEDE

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

30 There is a huge market potential for Copenhagen Zoo – and the local competitors are gearing up

Copenhagen is growing… …and more tourists are visiting… Inhabitants in the Greater Copenhagen area Number of nights spend at hotels in Greater CPH (‘000.000 (CAGR)) (‘000.000 (CAGR)) +1.4% +7.3% 1.23 7.19 7.53 Overall market for leisure activities 1.20 1.21 6.78 1.18 6.09 is expanding • The urbanization in Denmark continues, Copenhagen is 2010 2011 2012 2013 2010 2011 2012 2013 growing • The tourism of Copenhagen is ... while consumer spending on zoos is rising… … in Denmark and internationally booming Spending pr. Household in DK on zoos and museums Global theme park industry market forecast • Both the Danes and tourists (indexed w.r.t. 2008 (CAGR)) (USD ‘000.000.000 (CAGR)) spend more money on leisure +3.8% +4.4% activities 1.18 1.14 31.80 1.00 0.96 29.50

2008 2009 2010 2011 2015 2017

Tivoli The Blue Planet • Constant brand development • New competitor with huge initial success Tivoli • Hotel and conference facilities Zoo • Indoor activities to reduce seasonal fluctuations • High-end food offerings The Blue • High quality branded food offerings • Off-season initiatives to attract more visitors Planet • Location logistically convenient for customers • Pre and after dinner evening activities • High-end architecture

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

31 Source: Danmarks Statistik, tables FU5, BEF44, HOTEL1; PRWeb; Google Maps; Tivoli & The Blue Planet company websites; Case material Three key initiatives will shape the 5 year strategic plan for Cph Zoo

Intelligent pricing strategy

Remodelling of food offerings

Revitalization of brand and marketing strategy

Setting the stage Market outlook Strategic initiatives Implementation Conclusion * Understøttende initiativer omfatter KPI, CLV, CRM, Kampagner 32 Kilde: More Value teamanalyse Boosting profits by increasing attendance and smoothing seasonal 1 effects using a 2-pronged intelligent pricing strategy

Raising price on annual cards Introducing winter-season cards

Price increases on annual cards will increase profits due to historical Winter-season cards will change loyalty structure to even out capacity inelastic demand during the year

Key results/benefits Key results/benefits • Increasing the price on annual cards by 27% to 36% the demand will only • 7% of visitors will move from peak-season to off-season decrease by up to 22%... • Winter-season cards will help accommodate the fall in annual card • … thereby effectively increasing direct income due to inelastic demand holders by exploiting differences in visitors willingness to pay and substitution effects. • Easier cost management, and higher service levels all year Price of annual card Change in visitor shares over the course of the year DKK (change in %) % change 3.6% +27% +36% 3.3%

275 DKK 350 DKK 440 DKK 600 DKK -3.2% -3.7% Before After Before After Kids Adults Winter Spring Summer Fall

Description of investment and effects Cost of initiative Effect of initiative DKK ‘000.000 Extra revenue ‘000.000 • One time investment of 0.5 mil. DKK 3.4 22.2 • Yearly off-season cost increases 5% 2.7 17.8 2.2 14.4 • In 2020 direct income have increased 21% 1.7 11.1 1.0 1.2 7.8 • Price on entrance tickets unchanged. 0.9 3.3 5.6 • Annual card prices increased heavily • Overall change in number of visitors of -4% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

33 ”Eat with the beasts”: A revitalization of the old elephant house will 2 generate a permanent increase in direct income of 4.2 mil. DKK

Phasing out ZFS activities, phasing in Develop complementary products Re-inventing the old elephant house external operators such as…

Huge potential since opening hours are not Pilot project with a high-profile restaurant in restricted by legislation the old elephant house

A new restaurant operated by an external partner on Comparable projects have been a success and If the pilot project proves a success Cph Zoo should a lease contract will raise direct income without integrating fine-dining in amusement parks have phase out other ZFS activities and phase in external raising costs. Effects can be amplified by bundling proven successful. operators. reduced-price entrance tickets with restaurant visits.

Key results/benefits Key results/benefits Key results/benefits • Increasing visitors and attract tourists. • Share of 12-15% of restaurant’s revenue. • Further penetrate new markets and attract new • Attract new customer segments. • Complementarities with peak-season activities customer segments and tourists. • Lowering risk related to fluctuating income from such as jazz festival etc. • Increase overall customer satisfaction for ZFS activities. • Potential host of conferences and corporate existing customers. • Low cost, large potential. arrangements in off-season.

Description of investment and effects Cost of initiative Effect of initiative DKK ‘000.000 Extra revenue ‘000.000 • Initial investment of 10.0 mil. DKK. 10.0 4.3 4.3 4.3 4.3 4.3 4.3 • Increase in operating costs of 0.5 mil. DKK. due to longer opening hours • Increase in direct income of 2.6 mil. DKK from 0.5 0.5 0.5 0.5 0.5 0.5 0.0 entrance tickets. • Increase in direct income of 1.6 mil. DKK from 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 12% profit-share from restaurant.

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

34 “Jump the Bengt-Wagon”… increase brand value & awareness via targeted 3 investments and detailed restructuring of the social media platforms.

Basic upgrade (21st century) Internationalization Radical innovation

1) Upgrade the identity of Cph Zoo 1) Increase and expand social media activity 1) Reinvent the Zoo-TV online channel 2) Hire qualified marketing staff and train existing 2) Enable international usage of platforms 2) Rebuild Zoo-arena to record shows with 3) Develop smartphone application 3) Invest in content creating hardware audience 3) Cast original characters among staff to host

Key results/benefits Key results/benefits Key results/benefits • Quality of brand increases heavily • Commercial brand awareness increases • Scientific and commercial brand increases • Content quality increases • Target new potential audience • Increase after-visit value of Cph Zoo • Value of visit increases • Increase quality of platform content • Strengthening brand of employers • Awareness increases (Total Brand Value) • Value of visit via new attractions

Description of investment and effects Cost of initiative Effect of initiative DKK ‘000.000 Extra revenue ‘000.000 • One time investment of 2.85 mil. DKK 4.3 5.9 6.2 • Yearly cost increases 1.4 mil. DKK 4.7 5.0 5.2 5.4 5.7 • Cost Increases 2% yearly after 2014 1.4 1.4 1.5 1.5 1.5 1.5 • 6% yearly growth in tourist visits • 3% yearly increase in local visits • 95 DKK direct income per extra visit 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

35 Source: Case material Implementation of the 5-year strategic plan will yield a 5% annual growth rate in visitors and a 10% profit margin in 2020, thereby more than satisfying the strategic targets

1 2 3 Remodelling of food offerings: Revitalization of brand and marketing Intelligent pricing strategy: a complete embracing the value of quality food and strategy: social media makeover and restructuring of annual card system high-end dining innovative broadcasting service

Profit contribution from initiative 1, 2 & 3 Visitor contribution from initiative 1, 2 & 3 DKK ‘000.000 Amount ‘000 27.3 76.4 79.4 23.3 63.4 66.4 68.4 70.4 73.4 1 20.2 17.2 1 2 14.2 12.1 2 3 3

-7.2 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

The three presented strategic initiatives will secure that 2020-targets are reached. • In total, 1.61 mil. yearly visitors • In total, Revenue increases to 138 mil. DKK to cover reduction in government funding. • In total, 10% profit margin in 2020.

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

36 Source: Case material Step-by-step implementation of the initiatives will ensure an optimal execution and stable development towards 2020-growth targets

Implementation Involved departments Success criteria / KPIs 1 2014 2015 2016 • Administration • More people during winter Planning of new price structure • Events & months Pricing Communication • Higher share of one-time initiative Implementation of new prices in system • ZFS customers • Amount of winter-season Education of sales personal and execution cards sold

2014 2015 2016 2 • Administration • Pre-dinner tickets sold Partner selection • Technical dept. • Revenue from food • Events & initiatives Food Rebuilding of the old elephant house initiative Communication • Higher customer Continuous outsourcing of ZFS • ZFS satisfaction

2014 2015 2016 3 • Administration • Followers on social Complete renewal of visual identity • Animal & Pres. platforms Branding • Events & Comm. • Brand awareness – initiative Staff hiring and training • Technical dept. international & domestic Zoo-TV project • Scientific dept. • Higher share of tourists

All initiatives are easy to implement and provide rapid effects on revenue through a higher number of visitors and higher income per visitor • By 2015 all initiatives will be well under way – but 2 and 3 need continuous development and attention. • All initiatives provide easy to measure KPI’s which will enforce the execution and development of each.

Setting the stage Market outlook Strategic initiatives Implementation Conclusion

37 Source: Case material A holistic and practical plan towards a greater Zoo experience

Finale Finale.pptx Draft—for discussion only 39 Welcome Team 4

Team members: • Katharine Bendt, IB, CBS • Anders Valentin, FSM, CBS • Joachim Satchwell, FIR, CBS • Adam Meyer, Economics, KU Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 40 Beat the Copenhagen Zoo Elite ‘14 key question How can Copenhagen Zoo profitably grow, via a holistic and practical 5-year plan…

situation & strategic action & company 1 complication 2 opportunities 3 implementation 4 impact Need for holistic strategy to Operational opportunities Current loyalty program Revenue growth of 14% profitably and sustainably are few, although strong priced below peers, CAGR ‘12-19 and profit grow while satisfying diverse possibilities for experiencial allowing new profitable margin of 8.4% increases stakeholder interests positioning for locals exist membership program international profile and allows independence of Focus on revenue by UK tourists comprise a key Target UK tourists through gov. funding by 2019 competing for the leisure untapped segment, with airport-purchased entrance time of ”locals” & ”tourists” high spend and low CPH tickets, creating a lock in to sustainably finance core Zoo awareness focus as costs are seasonal Invest in iBeacons, creating a digitalised platform for educating the public

suggested solution …by introducing a new membership program, targeting high-spend UK consumers, and investing in digitalization utilizing iBeacons to eradicate dependency on gov. funding by 2019

Katharine Bendt Adam Harlang Meyer Joachim Brejnholt Satchwell Anders Skovsgaard Valentin B.Sc. IB (EngAGE), CBS M.Sc. Economics, KU M.Sc. EBA (FIR), CBS M.Sc. EBA (FSM), CBS situation & strategic action & company complicatio opportuniti implementa CPH Zoo requires a holistic strategy for profitable and sustainable growth to satisfy core 1 n 2 es 3 tion 4 impact 1 situation & focus and the broad, diverse stakeholder interests complication STAKEHOLDER STRATEGY CORPORATE STRATEGY FINANCIAL STRATEGY

Education and animal conservation is core Government subsidy independence Zoo attractions finance the core focus focus necessitates higher commercial revenue

Interest areas (1 = low/5 = high)

1 2 3 4 5 üFinancing core activities through Animal commercial revenue conservation • Revenue from local visitors • Revenue from tourist visitors Animal welfare

Education

Entertainment Commercial Service ûFinancing core focus through funding and contributions Facilities • Private and governmental ,Average, ,Average, • Locals funding is decreasing • Tourists • Community • CPH Zoo is aiming to decrease • Contributors reliability to zero on government Image • Other Zoo’s • Research funding particularly institutions • NGO’s • Staff Profit • Board

Stakeholders Stakeholders (CPH Zoo) Note Source Case material; Annual report 2012; Rådet for zooligiske anlæg 42 situation & strategic action & company complicatio opportuniti implementa Focus on implementing 5-year plan rooted in CPH Zoo revenue, derived by competing for the 1 n 2 es 3 tion 4 impact 1 situation & leisure time of ”locals” & ”tourists”, as costs are driven by seasonality and high uncertainty complication

Tourist and local share of visitors Net Income for CPH Zoo and ZFS % th. DKK ZFS ü Share of • 90-95% of visitors Local and tourist visitors come from locals. 15.000 visitors CPH Zoo are main revenue sources, • 60% of vistors come and are highly disparate. from within a radius 10.000 Meanwhile, net income Locals of 30 km over the past 5 years for 5.000 ZFS has been sluggish, Only 5-10 % of suggesting that focus

Revenue sources Revenue visitors comes from 0 should be placed on CPH tourists despite Zoo’s Zoo and the visitors 2008 2009 2010 2011 2012 Locals proximity to Tourists Tourists Copenhagen centre -5.000

Weather and number of visitors Breakdown of costs by type (2008- Mio. DKK 2012) Mio. DKK û 300 Costs are mainly driven by 150 141 the only variable cost, staff 250 140 134 128 expenses, which are 200 Staff and expenses subject to forecasted 91 Direct animal expenses 84 84 71 demand. This is heavily 150 71 Visitor-related expenses Construction expenses dependent on weather and 100 5 Maintenance, service seasonality which are 5 5 5 5 7 9 8 7 5 Other expenses exogenous factors and 50 21 22 14 20 20 thereby hard to 0 23 24 21 23 26 strategically alleviate 5 2 4 3 3 Temperature in C Rain in mm Visitors (thousands) Hours of sunshine 2008 2009 2010 2011 2012 Cost drivers & sources drivers Cost

Note This is a note Source Case material; Bisnode 43 situation & strategic action & company complicatio opportuniti implementa Strong operational utilization compared to urbanized Zoo peers, while CPH Zoo is well 1 n 2 es 3 tion 4 impact 2 strategic positioned to leverage entertaining learning compared to indirect competitors opportunities

Visitors per surrounding urban population by urban population for Revenue per Zoo Revenue per Visitors per Zoo CPH Zoo in line with CPH Zoo and 10 peers space* (2012) visitor* (2012) space (2012) peers on acquiring # visitors/people, mio. people th. € / ha € / visitor # th. visitors / ha local visitors, and above on utilization of Copenhagen 1.293 12 105 +24 Zoo area on both 12 Berlin 537 6 87 Vienna 805 6 129 revenue and visits, 10 Peers CPH Zoo Leipzig 777 10 82 +30 while still having 8 Zürich 791 9 90 room to grow number 6 Basel 640 5 135 of visitors in the Köln 511 6 80 4 space available Rotterdam 809 15 54 compared to top 2 Arnhem 399 12 32 Munchen 285 6 51 peers 0 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 Ø 685 Ø 9 Ø 84

CPH Zoo consumers …and an experience …where CPH Zoo is well positioned in the seek local half-day driven by learning and local market compared to substitute offerings excursions… entertainment… Visitors Outdoor Indoor CPH Zoo • 60% of visitors travel Learning differentiates them- less than 30 km selves from the Learning Experimentarium CPH Zoo market competitors • 75% of visitors spend 3 or more hours at Planitarium by having a high level attraction Experience of learning as well as Museums Den Blå Planet entertainment • Weather drives consumer choices, Entertainment Dyrehavs- distinguishing outdoor Tivoli from indoor offerings bakken Experience

Note *| Revenue is excluding contributions, and converted at yearly average exchange rates from 1. of months Source Zoo annual reports, 2012; Orbis;Anthony D. Sheridan 2010; Kundetilfredshedsanalyse 2009, CPH Zoo 44 situation & strategic action & company complicatio opportuniti implementa Untapped potential among UK ”fun and learning” tourists, driven by spend, Capital Region 1 n 2 es 3 tion 4 impact 2 strategic share of visits and an implied lower acquisition cost while being theme park-oriented opportunities

UK Tourists should be targeted due to high spend and share of the Capital regions UK “fun & learning “ tourist segment tourist share. Furthermore, UK tourists have a low CPH Zoo awareness which have the highest chance of going to the suggest a lower marginal customer acquisition cost Zoo, and should hence be targeted

Tourism expenditure spent on culture and Percent tourists aware of attractions, Criteria for travel destination choice, top 5 amusement per day of stay by country and by country for CPH Zoo (2012) and theme parks (2012) (2011)* % % DKK/day Fun and learning (family holiday w/ kids) 26% Legoland 54% 65% Avg. DK 62% 59% 52% 48% spend on 1. for money value Good 2. accommodation 3. Good opportunities Beach/bathing 4. destination safe A 5. parks Theme 13. culture/day The little 40% Familyfriendly mermaid 70 54 45 20,2 Tivoli Gardens 31% 20 17 H.C. Andersen’s 27% NL 17% House Modern urban (City break w/ or w/o children) NL NO DE UK SE UK 18% Copenhagen 66% 11% 25% DE 26% 58% 56% 55% 44% Zoo Share of foreign tourists in Capital Region NO 57% cities 1. for money value Good 2. accommodation 3. Good attractions Historical/cultural 4. restaurants and food local Good 5. parks Theme 21. Copenhagen Interesting by country (2011) 17% SE 62% % Operahouse Frederiksborg 16% Castle

Amalienborg 16% The good life (Couples/friends on holiday w/o kids)

64% 60% 52% 51% 48% 10% 15 Christiania 14% for money value Good accommodation Good landscape and Nature people hospitable and Friendly restaurants and food local Good parks Theme 21. 11 10 10

3 None of these 19%

NL NO DE UK SE

Note *| Share of expenditure tourism = 2% for all countries, based on avg. holiday expenditure. DK spend = consumer leisure expenditure/population/day Source Statistics Danmark; VisitDenmark BrandSurvey 2013 45 situation & strategic action & company complicatio opportuniti implementa Substituting annual cards for a membership program allows CPH Zoo to reap a larger share 1 n 2 es 3 tion 4 impact 3 action & of customer value, as current program priced significantly below peers implementation

CPH Zoo loses value from relatively low price of Initiating a membership strategy* …beneficial on numerous its annual passes compared to other European captures value even when allowing levels compared to current peers: for visits / year to drops to 4… structure

6,0 6,0 Data Equity

5,0 5,0 Research grants Peer average 4,0 4,0 Free schools Additional Revenue Airport 3,0 CPH Zoo 3,0 tickets for tourists (lock-in) Cost / day pass Cost / day pass 2,0 2,0 Low up- Customer front events investment (payback) for 1,0 CPH Zoo avg 1,0 customers nr. of visits per = value we gain A.C holder Green from higher price point Marketing 0,0 - Loyalty base (newsletter) 1 2 3 4 5 6 = customer gain Köln Blue Basel Berlin Trips per year Zürich Vienna Leipzig relative to peers (still Arnhem Munchen profitable deal) Rotterdam* Annual Membership Copenhagen Data shown is for Adult tickets, but financial impact includes pensioners and children. Same ratio is assumed. Note *(80 DKR down payment + 25% discount on entry tickets) Source Annual reports for peers; Case Material; 46 situation & strategic action & company complicatio opportuniti implementa Gain foothold among UK tourists through three step plan towards increasing awareness for 1 n 2 es 3 tion 4 impact 3 action & tourists and esteem of peers, subject to non-severe risks implementation

Capture tourists as soon as they Leverage efforts to further improve arrive in Denmark through a lock-in Adapt to suit UK target segment brand image for other zoos, effect community and interest groups

• Airport marketing campaign by re- • Ensure all material – online and launching as ‘ Nordic Urban Zoo’ – printed – is available in English • Other zoos: Increase reputation High Value Brand • Ensure successful re-launch by and hence improve relationships to • “Visit the city by visiting the zoo” changing all signs and logos to ‘ Nordic Urban Zoo’ foreign zoos • Implement a diversified pricing • Change product mix of ZFS and • Increased awareness from strategy by offering a relative scientifically interested people inexpensive price at airport at a 40% increase the sale of Nordic products discount – ‘open sandwich café’ • Ensure immediate customer lock-in upon tourist arrival

Probability Risks Mitigation

Cannibalization: Revenues from 1 Cannibalization: Some tourists would already have visited the Zoo, and cheaper tickets will tourists are only 10%, so cannibalization cannibalize on sales will undoubtedly be offset by the 3 increased traffic. 2 Lack of appeal: The Zoo does not cater to Lack of appeal: Lack of familiarity is 2 everyone’s taste, and British visitors do not have many Zoos at home not necessarily bad, because of CPH Zoo’s accessible style 3 Volatility: Tourism is largest in the periods, 1 4 where the Zoo already has capacity issues Volatility: The flexible ticket prices in the airport will allow for adjustment of 4 Low spend, high volume: Visitors do not this and hence mitigate the risk Severity always spend a lot of money, and there is a risk that they contribute to crowding and not be very Low spend, high volume: UK tourists profitable have one of the highest spend on culture in the world

Note Source 47 situation & strategic action & company complicatio opportuniti implementa Engage locals by investing in iBeacons, allowing the digitalised conveying of educational 1 n 2 es 3 tion 4 impact 3 action & information and targeted, interactive engagement with visitors with mitigatable risks implementation

What? How? Why? - Large amounts of data from visitors iBeacon is a Bluetooth based - CPH Zoo buys the physical devices at DKK allow for improved targeted offering positioning system that 199 per unit, as well as leases the software transmits messages or content to for approx. 700 DKK per month - Individual offers based on prior interests nearby mobile devices / habitats / purchase behaviour - CPH Zoo must also develop a mobile platform on which they upload information, - Tracking users in the park, allowing for price discount deals, etc. real time management - Users then download an app to their phone - Interactive engagement with visitor at with which CPH Zoo can push messages to various habitats / suggestive further their customers. information based on habitat interests - San Diego Zoo has had strong success - Synergies from membership program to with its mobile app, with over 65.000* increase recurring purchases downloads in 2012, with digital purchases and live webcam streaming

Probability Risks Mitigation

1 Adoption: loosing customers in transition Adoption: Educate customers through phase newsletter and ensure workshops 3 2 Privacy concerns: In alignment with Privacy concerns: Transparency through push notification shortly after instalment 2 gathering consumer, data privacy concerns could potentially become an issue Alienation of elder visitors: Ensure elderlies 3 Alienation of elder visitors: Potential loss get ‘master account’ which include three logins 1 of elderly segment for grandchildren who can ‘use’ their account 4 with limited options 4 Technology risk: Mobile devices already software compatible and required Technology risk: Initiate testing prior full Severity equipment cost is negligible implementation and transmission of customers

Note Source http://www.mobilemarketer.com/cms/news/content/13412.html 48 situation & strategic action & company complicatio opportuniti implementa Revenue growth of 14% CAGR attained from strong focus on increasing visitors, however 1 n 2 es 3 tion 4 impact 4 company asset light investments and focused strategy on spend boosts profit margin to 8.4% impact

Suggestion results in an estimated revenue increase of 72 mio Margins develop sustainably during the period, by utilizing DKK towards 2019 (14% CAGR) driven by marketing, scale and a new pricing strategy membership pricing, general price lift and market expansion

Breakdown of revenue increase by source (2012-2019) Margin development (2012-2019E) DKKm Pct.

12% 214 8 1 1

27 10%

55 8% 142 17 6%

0% 2012 Loss from Revenue 2013 price Value Immediate Retention 2019E EBITD EBI Profit margin revenue contribution increase increase increase loss in rate loss revenue 2012 2019E with lift from annual market + membership card marketing holders (4,8% p.a.)

- 2008 og 2009 bruger gennemsnitlige månedsvægte fra 2010-2013 Note - Ticket prices ‘10-’12 are assumed to be 130 (110 winter, 140 summer) for adults and 70 (50/80) for kids Source - Same renewal discount before 2012 as in 2014 and pensioners price is unchanged in 2011-13 - Spend is 10 kr per person (for children and adults) *- Cagr based on market growth + marketing effort, based on experiences from Fårup sommerland 49 - Annual cards are measured from Annual Report 2012 Beat the Copenhagen Zoo Elite ‘14 key question How can Copenhagen Zoo profitably grow, via a holistic and practical 5-year plan…

suggested solution …by introducing a new membership program, targeting high-spend UK consumers, and investing in digitalization utilizing iBeacons to eradicate dependency on gov. funding by 2019

Katharine Bendt Adam Harlang Meyer Joachim Brejnholt Satchwell Anders Skovsgaard Valentin B.Sc. IB (EngAGE), CBS M.Sc. Economics, KU M.Sc. EBA (FIR), CBS M.Sc. EBA (FSM), CBS Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 51 Welcome Team 5

Team members: • Benjamin Leth Andersen, Finance, AU • Casper Bech Christensen, Finance, AU • Søren Kristensen, Intl. Economics, AU • Jacob Lund, Finance, AU Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 52 “Creating the Complete Zoo Experience”

Beat the Elite 2014

CALK Consulting

Benjamin Leth Andersen, MSc Finance Casper Christensen, MSc Finance Søren Kristensen, MSc International Economic Constulting Jacob Lund, MSc Finance

Aarhus University Business and Social Sciences Situation Recommendation Risks Positioning Impact Implementation

”The Zoo Experience” – building a sustainable foundation for the Zoo of the future..

Situation of an experience economy:

1. Revenues are highly dependent on seasonal fluctuations. Copenhagen Zoo should.. 2. During peak periods bottlenecks are formed in the park (capacity 10.000) 1. Increase its international profile. The solution..

1. Reach a profit margin of min. 8 %. 3. Impact in number of visitors after “By implementing the new “Complete Zoo previous new initiatives had only Experience” with the Zoo Hotel as part of temporary effects. 2. Increase yearly number of visitors from 1.1 (2012) to 1.6 million (2020). the primary business, The Copenhagen 4. 90 % of the visitors are people who live Zoo will flatten out the effects of within a radius of 100 km. from the zoo. 3. Become independent of government seasonality on the revenue streams, while subsidies, by building a strong sustainable combining creativity, science and business 1. In 2012, direct revenue pr. visitor was business model. into one unique experience for the 42% lower than Tivoli. customers.”

The new all year science amusement in one central innovative solution 2 Situation Recommendation Risks Positioning Impact Implementation

..Introducing the first integrated Zoo Hotel in the World..

Booked hotel nights in Copenhagen pr. year “The Zoo Hotel” 5.000.000

4.000.000 Increase in foreign tourist bookings 3.000.000

2.000.000

1.000.000

0 Marketpotential 2007 2008 2009 2010 2011 2012 2013

All other countries Denmark Lineær (All other countries)

Hotel prices in CPH up 7 % in 2012

Booked hotel nights in Copenhagen 2013 700.000 600.000 500.000 400.000 300.000 • 8 floors 200.000 • 250 themed rooms 100.000 • 20 suites - • 1 educational floor Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • 1 conference floor • Integrated zoo theme Denmark All other countries Lineær (Denmark)

3 Data source: DST, Hotels.com Situation Recommendation Risks Positioning Impact Implementation

..Creating “The Complete Zoo Experience” to attract more lucrative customer segments

Current segmentation of visitors (of 1.1 m) ”The Zoo Hotel”

Th 60% e 8th floor – Suites 10% • Exclusive(premium segment) 30% Zo 3rd – 7th floor – Rooms Source: Case material o • Incredible views of the park Foreign tourists Travel between 30 and 100 km Travel less than 30 km • 24/7 lives stream of animals Ex • Access to after hours activities in the Zoo Current segment of visitors does not spend much per visit, thus we p • “Sleeping with animals”- experience should tap in to new segments.. e • Still easy access to the rest of the city r (central location) • Theme rooms(Savannah etc.) i Adding new segments – tapping into more pro-spending visitors e - The Zoo Hotel will attract foreign tourist - The “experience the Zoo at night”-feature of the hotel will help attract n families from the rest of Denmark c 1st & 2nd floor e - Hi-tech Conference facilities - Lush dining facilities Foreign tourists and Danish families looking for the complete Zoo overnight Ground floor experience will add a segment to the customer base, which spend more money - Animal facilities per visitor on average thus increasing both volume and profit margin. - Restaurant 4 Situation Recommendation Risks Positioning Impact Implementation

Coping with the seasonal fluctuations for a large effect on the top and bottom line

Using price discrimination to regulate the economic attractiveness of The Zoo Hotel features large-scale high-tech conference rooms and lush visiting the Zoo and the Zoo Hotel especially, in peak and off peak periods dining facilities, with the potential to feature both corporate festivities

Additionalimplementations ZooHotel the with along will help smooth the visitor curve and increase profits in periods with and important meetings in adventurous and exciting sett-ings in the excess demand (summer months)” midst of exotic animals.

Price discrimination Business segment

2018 isolated seasonal effects of initiatives 100.000 90.000 80.000 70.000

pr. month 60.000 50.000 40.000

vistors 30.000 20.000 10.000 0 Additional Additional April May June July January March August February October September November December Hotel Bundling Price discrimination Business segment Extra Events

Events Bundling The indoor animal facilities on the ground floor of the Zoo Hotel Building the world’s first in-zoo-hotel will create a lot of internatio-nal combined with the conference rooms makes for a perfect spot for buzz, which will serve as the foundation for forming bundle deals for hosting special leisure and educational events – with a focus espe-cially tourists visiting Denmark for other direct reasons than vi-siting the zoo. on the colder months, which will smooth the visitor curve so-lely by Segments especially in mind here are cruise-ship guests – as they come in increasing the number of visitors in off-peak months and thereby to town in a rather stable flow (770.000 guests in 2011)* increase profits. 5 Data source: cmport.dk Situation Recommendation Risks Positioning Impact Implementation

The potential for increased international awareness and associated revenue outweighs risks..

Potential for international awareness The Zoo Hotel - The synergy effects from the rebranding of the Copenhagen Zoo builds the foundation for future Mapping of the isolated effects of the different initiatives growth in the different costumer segments. Events New animal attractions - By offering the uniqueness of “The Bundling Complete Zoo Experience”, Copenhagen Zoo creates the potential

Potential for international awareness for international Potential Price Decrimination for international recognition and Cost cutting increased bookings from foreign tourists. Risk of failure *The size reflects potential for a sustainable impact on visitor contribution - The establishment of seasonal events to attract visitors in off peak periods Risk factors can potentially create the foundation - Reversals of the trend in the hotel industry could cause a lower occupancy of a new emerging business segment of hotel rooms than first anticipated. as the by merging science and experience. - General market stagnation can decrease willingness to spend mo-ney on attractions and sleepovers. - Through more regulatory price discrimination, the smoothed revenue - Failure of seasonal smoothing by not introducing price discrimina-tion and fluctuations creates potential for a off season can result in a lower quality for the visitors, which eventually quality experience for the visitors can lower the satisfaction and willingness to revi-sit the zoo. though out off peak periods.

6 Situation Recommendation Risks Positioning Impact Implementation

..As it puts Copenhagen Zoo into a BLUE Ocean..

Repositioning relative to competitors

By introducing “The Complete Zoo Experience”, the repositioning of the target segments differentiates Copenhagen Zoo from other nearby competitors, while creating possibilities for increased synergy effects from new alliances. Copenhagen Zoo cannot replicate the strategy of its most successful competitors (high amusement parks such as Tivoli), which is why the rebranding of the perception of “the classic zoo experience” must be redefined by making a new more holistic approach.

7 Situation Recommendation Risks Positioning Impact Implementation

..Increasing overall visitor rate and smoothing the visitor curve by focusing on off-peak periods..

Seasonal fluctuations in visitors in year 2016-2018 Base case 250000 200000 150000 100000 50000 0 Jan ‘16 Jan ‘17 Jan ‘18

Differences "The Zoo Experience" Status Qou

Assumptions New distribution of tourists (of 1.8 m) - Growth in visitors from base of 1.1 million Old dist. of tourists (of 1.1 m) - Level 2018 is sustainable 40% - 2014-2015 will see small decline due to 60% 10% 30% construction of Hotel 30% 30% - Added costumer base is primarily tourists

CAGR - Worst case: 4,3 % - Base case: 7,7 % Foreign tourists Travel between 30 and 100 km Travel less than 30 km - Best case: 12,4 %

8 Situation Recommendation Risks Positioning Impact Implementation

… by adding a more pro-spending segment to the customer base.. Making it possible to reach the financial targets

Revenue forecast (base case) Profit forecast (base case) 27,0 350,0 Hotel 22,0 300,0 Synergy 250,0 17,0 Org. revenue 200,0 12,0 150,0 7,0 100,0 *Year 2014-2015 negative profit is 2,0 50,0 due to the construction of the Hotel has influence on the park 0,0 -3,0 20102011201220132014201520162017201820192020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Profit margin (base case) Notes: Financing:

12% Scenarios - total 2020 profit margin: • The original The investment of the hotel is assumed to be 10% revenue declines 350 million DKK. This investment generates a -Best case 13,4 % due to lack of slightly positive NPV – even in the worst case 8% -Base case 8,1 % -Worst case 4,8 % subsidies. calculation. The invest-ment size of the 6% • Purpose of hotel is building is valuated re-lative to current 4% not solely profits, projects by “Building Supply”. The but synergies, calculations regarding the hotel are based on 2% which create a industry averages for revenue (room rent pr. 0% Zoo larger profit margin. night etc.) and profit margins. The • Note the higher investment is expected to be financed by Hotel -2% profit margin from issuing of new debt, private funds, private Total synergies. investors and potential venture partners. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

9 Situation Recommendation Risks Positioning Impact Implementation

Implementation - Reaching the strategic targets, creating a sustainable future..

2014 2015 2016 2017 2018 …2020 S Planning U Funding Continuous improvement of scientific features to The Zoo Hotel the Zoo Experience S Building process

Opening T A Research Implement price on best discrimination for hotel I Price practices discrimination N Launch of new Continuous evaluation program A A Planning of events B In Zoo Conference for L Events grand opening (1 week)

Off season events E

Promotion F Business • s Increased focus on business U segment segment T Conference offers U Forming alliances with cruise-ships R Bundling Bundling conference offers with complete packages with focus on off peak periods E

Finale Finale.pptx Draft—for discussion only 64 Thanks for now... See you next year! Busses are leaving from Zoo entrance back to CBS at 12.15 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Finale Finale.pptx Draft—for discussion only 65