MBB Final Round Case – Non-Profit Museum Revenue Increase

Information to be share upon request:

Success criteria – Ensuring breakeven at annual level. Annual cost of operating the Muse 19 is $7m

Implications of being non-profit – The museum cannot sell the artifacts, they can only display them. Being non-profit allows them to attract donations, grants, endowments etc.

Ask clarifying questions

A good candidate should include the following revenue areas in his analysis:

Sales

Tickets

Students

Volume

Price

Tourists

Volume

Price

Memberships (Mostly Art Enthusiasts)

Purchases in gift shops

Donations

Donor base

Donation frequency

Average donation size

Grants

A good candidate will lay out the structure above and will communicate his hypothesis viz.

Grants by the government are distributed to all non-profit museums. Given the other museums are doing fine, I would not look into this as first priority. I would rather look into:

Whether visitor demographics or ticket pricings have changed

Whether we are not able to attract donors that we used to

Do we have any data on visitors e.g. tickets/gifts purchased etc.?

What insights can you draw out of this exhibit?

Information to be share upon request:

Ticket Pricing – Has remained constant over the last 3 years. $1/student $3/Tourist

Art Enthusiasts – Art enthusiasts buy annual membership pass at $20/year. Every year 50,000 memberships are sold. Once the membership is purchased, the member can visit the museum any number of times

Gift purchases – Students and art enthusiasts do not purchase anything. Tourists purchase on an average $5 worth of gifts/services per visit

Grants and donations – Grants and donations amount to $1m. They have remained constant over the last 3 years

Analysing this information, a good candidate should make the following revenue table

A good candidate should state:

The revenue decline can be predominantly attributed to reduction in tourist visits

Client should explore possibilities to attract more tourists or increase spending per tourist

Other area that can be explored is annual membership pricing. The pricing should be in such a way that we are able to sell maximum memberships.

In 2019, on an average every art enthusiast has visited the museum 16 times, making their per visit fees almost equal to the student pricing.

What should be the membership price for optimal revenue?

What should be done to increase the revenue from the tourists?

Information to be share upon request:

• No. of tourists in Paris have declined significantly in last 3 years due to various reasons. Drop in number of tourists is consistent with that at other tourists attractions
• Entry ticket price point is consistent with other museums in Paris

What ideas can you think of that can be implemented in Muse 19 using latest technologies?

A good candidate should put together the thinking framework like this:

Our preliminary analysis suggests that Muse 19 has not kept pace with technological innovations. The Museum operations, features and services are low tech. Implementation of high tech features can help in 2 ways. It will justify the price increase and it will also enable launching a few more paid services for the visitors.

A good candidate can come up with several ideas. Some of the ideas can be:

• Introducing ‘Virtual Reality’ goggles and creating theme-wise tours of the museum. These VR tours can be sold separately and at a premium.
• Creating 19th century landscapes in different museum rooms using laser beams. Laser shows can be conducted at particular hours in a day and can have a separate ticket.
• Using AR/VR cameras to make the tourists see themselves wearing 19th century clothes/weapons etc. This feature can be sold as a separate attraction. Visitors can see how they would look in say ‘Gladiator’ outfit. Pictures/videos of visitors in these outfits can be sold to them.

In order to increase the Muse 19 revenue and achieve breakeven, we would recommend decreasing the annual membership fees to $18 and implementing features and services using the latest technology. We say so, because:

• Annual membership decrease from $20 to $18 will attract 40,000 more memberships, as a result adding $0.6m to the revenue
• Technological innovations can help the museum increase its entry fee, and at the same time add several new services that can be sold at premium

We suggest the following next steps:

• Put together a detailed business case for the technological features and services implementation
• Conduct a deep stick analysis to understand whether we can get more grants and donations