Coleman Art Museum

Case

MAR 499: Advanced Advertising

The Coleman Art Museum

What is the Coleman Art Museum?

Located in Western United States

Special Exhibitions Recruiting Techniques

Non-for-profit corporation Founded in 1925

Formerly known as Fannel County

Museum of Fine Arts 15,000 Pieces of Art

Museum Association

CAM’s Organization CAM is organized by function:

Collections & Exhibitions Headed by: Thomas Crane

●  Oversees art collections

●  Arranges special exhibits

●  Educational programming

●  Provides personnel and administrative support

Financial Administration

Headed by: Donald Smith

●  Daily operations

●  Manages Skyline Buffet, gift shop, parking, and special events

Development & Community Affairs

Headed by: Ashley Mercer

●  Marketing and PR

●  Membership

●  Grants and endowments

●  Fundraising

All functions employ 185 employees and 475 volunteers

SWOT Analysis Strengths Weaknesses

●  Location

●  Various membership options

●  15,000 works of art

●  Free admission and parking

●  Convenient parking and public transportation access

●  Limited space

●  Lacks brand image (“Marble Box”)

●  Decrease in membership and renewal

●  Membership renewal efforts by museum (mail, telephone, and Internet solicitation)

Opportunities Threats ●  Increase membership benefits

●  Increase brand awareness

●  Establish and project a brand image

●  Explore other marketing tactics

●  Mail solicitation alternative

●  Decrease in grants, endowments, and investments

●  Poor reviews and negative critic writ-ups

●  Need approval for future changes by the Board of Trustees

Membership Categories Personal Memberships

Regular $50 | 13,672 members

Associate $100 | 2,596 members

Collector $250 | 364 members

Patron $500 | 102 members

Partner $1,500 | 604 members

Director’s Club $5,000 | 91 members

Corporate Memberships

Divided into 4 categories

Membership prices range from

$1,000 to

$10,000

Total personal members (2004) = 17,429 Total corporate members (2004) = 205

Marketing Efforts CAM’s Marketing Efforts consist of:

Press Releases

Promotes special exhibitions and

activities

Maintains a close relationship with the

media

Education & Outreach

Programs to educate

the public

School and adult tours, lectures, art and

featured films

Local Advertising

Public service announcements

Advertise in local radio and newspapers to

inform nearby areas of upcoming special

exhibitions

Problem Statement

No Image Memberships Finance Problems

Alternatives Alternative #1

Implement a $30

membership category for seniors and students

Increase Gift Shop and Skyline Buffet discount

to 20%

Alternative #2 Remove 15% discount

at Gift Shop and Skyline

Charge $2 admission fee for non-members

Install parking fee of $5

Alternative #3

Do not make any changes to the Coleman

Art Museum

Evaluation of Alternative #1: Implement a $30 membership category for

seniors and students Increase Gift Shop and Skyline Buffet discount to 20%

Pros

●  Increase in traffic and transactions in gift shop and buffet

●  Could improve museum image

Cons ●  Students and senior citizens may not

be willing to purchase a $30 membership

●  Break-even or decrease in revenue at gift shop and Skyline Buffet

$30 Membership for Seniors and Students The ‘Regular’ Membership Category is the cheapest at $50

Contribution Margin:

$639,664 - $631,016

$639,664

= 1.35%

Despite the fact that the ‘Regular’ membership category has the largest

amount of members,

Higher valued membership categories = Higher margin

Therefore, offering a membership that is lower than $50 could possibly

generate

More cost than revenue

2004 Income = $1,596,775

$1,596,775 ( 20% - 15% ) = $1,516,936

Raising Gift Shop & Skyline Buffet Discount to 20%

If discount was eliminated, the museum gift shop would be making:

$262,999 less

2004 Income = $515,843

$1,596,775 ( 20% - 15% ) = $490,051

If discount was eliminated, the museum gift shop would be making:

$84,962 less

Museum Gift Shop Skyline Buffet

Evaluation of Alternative #2: Remove 15% discount at Gift Shop and Skyline Buffet

Charge $2 admission fee for non-members Install $5 parking fee

Pros

●  Encourages membership for non-members

●  Potential increase in total revenue without altering membership prices

●  Potential increase in full priced sales at gift shop and Skyline Buffet

Cons

●  Decrease in gift shop and Skyline Buffet traffic and sales

●  Decrease in attendance of membership holders due to $5 parking fee

●  Counters what the museum prides itself on: free admission

Museum Gift Shop | Removing 15% discount Step #1 Gift Shop Income (2004) = $1,596,775

65% of the gift shop is already discounted -- 65% x $1,596,775 = $1,037,904

35% of the gift shop is not discounted -- 35% x $1,596,775 = $558,871

Step #2

A 15% discount is included in membership benefits. Therefore, 85% is not discounted.

.85x = $1,037,904

x = $1,221,064

If the 15% discount was removed the gift shop would make:

$1,221,064 + $558,871 = $1,779,935

Skyline Buffet | Removing 15% discount Step #1 Skyline Buffet Income (2004) = $515,843

65% of the gift shop is already discounted -- 65% x $515,843 = $335,298

35% of the gift shop is not discounted -- 35% x $515,843 = $180,545

Step #2

A 15% discount is included in membership benefits. Therefore, 85% is not discounted.

.85x = $335,298

x = $394,468

If the 15% discount was removed the Skyline Buffet would make:

$394,468 + $180,545 = $575,013

$2 Admission Fee and $5 Parking Fee

$2 Admission Fee Total Museum Attendance = 628,472

85% of museum attendance is made up of non-members:

628,472 x 85% = 534,201

534,201 x $2 admission fee = $1,068,402

$5 Parking Fee

Total Museum Attendance = 628,472

Estimate 3 people/ car = 209,491

Charge $5/ car $1,047,445

Total = $1,047,445

Evaluation of Alternative #3:

Do not make any changes to the Coleman Art Museum

Pros

-  Current membership holders will remain content

Cons

-  Continuous financial loss -  Museum image will not be addressed -  Eventual business termination

Recommendations

Remove 15% discount at Gift Shop and Skyline Buffet Charge $2 admission fee for non-members

Install $5 parking fee

Operations | Income ‘Appropriations - Fannel County, Contributions, Grants, Investment Income, Earnings from Endowment, and Other’:

15% below 2004 levels

Operations | Expenses 10% decrease in Personnel and Administration Education budget of $500,000 was deemed realistic

Auxiliary-Activities | Income Estimated Special Exhibitions revenue = $1.2MM

Auxiliary-Activities | Expenses Estimated Special Exhibitions cost = $675,000

Given

Membership Recruiting and Renewal

Total Mail Solicitations: $148,530 ( x 2 ) = $297,060

Total Membership Attained: $1,532 ( x 2 ) = $3,064

Total Membership Revenue: $84,280 ( x 2 ) = $168,560

Total Direct Mail Costs: $66,488.80 ( x 2 ) = $132,978

* ( x 2 ) because mail solicitations are done twice a year

Total Membership ($) = $2,917,325

Personal Mem. Revenue = $2,298,449

Corporate Mem. Revenue =$618,876

Corporate Membership Renewal

However,

75% renew their corporate membership

$618,876 * 75% = $464,157

Total Corporate Memberships Renewal Revenue =

$299,999

Personal Membership Renewal Category Names Membership ($) Members Revenue Cost Contribution

Margin Membership

Renewal Income from Renewals****

Regular $50 13,672 $639,664 $631,016 $8,648 2,051* $102,550

Associate $100 2,596 $234,871 $81,903 $152,968 1,558** $155,900

Collector $250 364 $81,415 $64,135 $17,280 218** $54,500

Patron $500 102 $48,100 $39,628 $8,472 61** $30,500

Partner $1,500 604 $815,666 $99,567 $716,099 513*** $769,500

Director’s Club

$5,000 910 $406,673 $15,975 $390,698 77*** $385,000

Total $1,497,900 * 70% of ‘Regular’ members do not renew their membership ** ‘Associate’, ‘Collector’, & ‘Patron’ memberships have a renewal rate of 60% *** ’Partner’, & ‘Director’s Club’ memberships have a renewal rate of 85% **** ’Membership ($) x Membership Renewal

Total Membership Income and Expenses

Total Membership Income Personal Mem. Renewal Revenue = $1,497,950

Corporate Mem. Renewal Revenue = $464,157

Mailing Solicitations Revenue = $168,560

Non-Member $2 Admission Fee = $1,068,402

Total = $3,199,069

*Without $2 admission fee = $2,130,667

Total Membership Expenses

2004 Expense = $854,461

Mail Solicitations Cost = $132,978

Total = $987,439

Rationale Remove 15% discount at Gift Shop and Skyline Buffet

Charge $2 admission fee for non-members Install $5 parking fee

Why?

Addresses museums financial problem

More sources of revenue

Turns a profit

Addressing Museum Image Develop and launch a marketing campaign

defining their image and what they offer

Develop social media sites to stress their image and existence

Put a sign outside of the building to tell people what it is

Thank You