Case Study - Akron Zoological Park

During the late 1980s, the decline in Akron’s tire industry, inflation, and changes in
governmental priorities almost resulted in the permanent closing of the Akron
Children’s Zoo. Lagging attendance and a low level of memberships did not help
matters. Faced with uncertain prospects of continuing, the city of Akron opted out of
the zoo business. In response, the Akron Zoological Park was organized as a
corporation to contract with the city to operate the zoo.

The Akron Zoological Park is an independent organization that manages the Akron
Children’s Zoo for the city. To be successful, the zoo must maintain its image as a
high-quality place for its visitors to spend their time. Its animal exhibits are clean and
neat. The animals, birds, and reptiles look well cared for. As resources become
available for construction and continuing operations, the zoo keeps adding new
exhibits and activities. Efforts seem to be working, because attendance increased
from 53,353 in 1989 to an all-time record of 133,762 in 1994.

Due to its northern climate, the zoo conducts its open season from mid-April until
mid-October. It reopens for 1 week at Halloween and for the month of December.
Zoo attendance depends largely on the weather. For example, attendance was down
during the month of December 1995, which established many local records for the
coldest temperature and the most snow. Variations in weather also affect crop yields
and prices of fresh animal foods, thereby influencing the costs of animal
maintenance.

In normal circumstances, the zoo may be able to achieve its target goal and attract an
annual attendance equal to 40% of its community. Akron has not grown appreciably
during the past decade. But the zoo became known as an innovative community
resource, and as indicated in the table, annual paid attendance has doubled.
Approximately 35% of all visitors are adults. Children accounted for one-half of the
paid attendance. Group admissions remain a constant 15% of zoo attendance.

The zoo does not have an advertising budget. To gain exposure in its market, then,
the zoo depends on public service announcements, the zoo’s public television series,
and local press coverage of its activities and social happenings. Many of these
activities are but a few years old. They are a strong reason that annual zoo
attendance has increased. Although the zoo is a nonprofit organization, it must
ensure that its sources of income equal or exceed its operating and physical plant
costs. Its continued existence remains totally dependent on its ability to generate
revenues and to reduce its expenses.
Source: Professor F. Bruce Simmons III, University of Akron.

ADMISSION FEE ($)

YEAR ATTENDANCE ADULT CHILD GROUP

1998 117,874 4.00 2.50 1.50

1997 125,363 3.00 2.00 1.00

1996 126,853 3.00 2.00 1.50

1995 108,363 2.50 1.50 1.00

1994 133,762 2.50 1.50 1.00

1993 95,504 2.00 1.00 0.50

1992 63,034 1.50 0.75 0.50

1991 63,853 1.50 0.75 0.50

1990 61,417 1.50 0.75 0.50

1989 53,353 1.50 0.75 0.50

Answer the following questions.

1. The president of the Akron Zoo asked you to calculate the expected gate
admittance figures and revenues for both 1999 and 2000. You can use at least
three forecasting methods to estimate the forecast values and compare the
results. Recommend the best method to the president of Akron Zoo.

2. What factors other than admission price influence annual attendance and thus
should be considered in the forecast?
ANSWERS

1. Based on what I've learnt on Quantitative Analysis class I suggest two

Quantitative and Qualitative Methods.

Quantitative Methods:


Moving average or weighted moving average are probably the best approaches to
predicting attendance. I've made these choices base on KISS principle, which is an
abbreviation of "Keep It Simple Stupid" meaning the simple answer is usually the
best.

Forecast using weighted-moving average:

Year 1999:
[(3*117874) + (2*125,363) + 126853)] /6 = 121866

Year 2000

[(3*121866) + (2*117874) + 125363] /6 = 121118

Moving Averages
TOTAL PERSONS Sales Sales(childre Sales TOTAL
Year (adults) n) (groups) SALES
1995 108,363
1996 126,853
1997 125,363
1998 117,874
1999 119,613 $ 167,459 $ 149,517 $ 26,913 $ 343,888
2000 122,426 $ 171,396 $ 153,032 $ 27,546 $ 351,974


Simple linear regression analysis would be suitable if we were given by the
management team or we could develop independent variables as like the number
of new animals, number of active exhibits and etc. For example, we could use
weather to predict attendance, but we would have to find a prediction of the
weather to use in our prediction model. The

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 Independent variable chosen for simple linear regression would have to form a
straight line.


Trend analysis could be used. Here, as with moving average and weighed
moving average, we are using past historical data to predict future values of
attendance.


If multiple regression was used with the independent variables that I
mentioned before, we would still have to determine the future values of the
independent variables. We would need to develop methods of estimating our
independent variables in order to predict Annual Attendance. As with simple
linear regression, we are using other variable to predict annual attendance. We
would have to meet many assumptions in order to proceed with a multiple
regression analysis.

To see how I calculated and figured out the number please go to

Appendix 1, 2, 3, and 4.

years x y y*y xy
1994 1 133,762 1 133,762
1995 2 108,363 4 216,726
1996 3 126,853 9 380,559
1997 4 125,363 16 501,452
1998 5 117,874 25 589,370
SUM 15 612,215 55 1,821,869

x 3
y 122,443
b -1,478
a=y-bx 126,876

y=126,875.8+1,477.6*x
GATES
ATTENDANCE SALES
1999 2000 1999 2000
135,741 137,219 Adults $190,038 $192,107
Children $169,677 $171,524
Groups $30,542 $30,874
TOTAL $390,257 $394,505

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TREND PROJECTION

Qualitative Methods:

Another method could be qualitative methods where we can ask people what they
think. We can use Comment cards, Surveys, Questionnaires for data gathering. From
our fundamental economic studies, we know that if we increase the entry fees we
would experience a decline of people attending the zoo. We would need to determine
how much of the variation in attendance is caused by variation in fees. Using the
methods above can help us finding the right answer and evaluate past predictions and
determine which approach was previously the most accurate.

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2) Other factors that may influence the annual attendance and worth to be considered
are as bellow:

 Marketing plan focusing on online advertising and providing online resources,

maps, and pictures about the zoo.
 Tour guides (to give background information on animals)
 Number of new animals
 Number of active exhibits
 Discount rates for groups and promotional events
 Coverage on local and online news (for instance the announcement of new born
animals or new arrivals or events)
 Cleanliness and facilities
 The weather and climate
 Renovations on older exhibits
 Advertising - public service advertising
 area population shifts, Area’s birth rate
 Quality of service
 Zoo Working hours
 employment trends
 Gasoline price
 Rate of tourism growth in the area

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