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Introduction to Casino Introduction to Casino Marketing TopicsMarketing Topics

Principles of Casino MarketingPrinciples of Casino Marketing

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Abundant ExpertiseAbundant Expertise

How does casino marketing expertise How does casino marketing expertise differ from legal or accounting differ from legal or accounting expertise?expertise?– It is far more abundant!It is far more abundant!

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Success: The Burden of Success: The Burden of ProofProof

Where does this burden lie?Where does this burden lie?– With the marketing activityWith the marketing activity

That is, the activity is a failure, until “proven” That is, the activity is a failure, until “proven” successfulsuccessful

A declaration of success, it just that - a A declaration of success, it just that - a declarationdeclaration

– Such declarations are common, but are usually Such declarations are common, but are usually poorly supportedpoorly supported

Why are such claims of success poorly Why are such claims of success poorly supported?supported?

There are considerable measurement There are considerable measurement challengeschallenges

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Measurement ChallengesMeasurement Challenges

What are the sources of these What are the sources of these challenges?challenges?– Failure to develop a measurement plan Failure to develop a measurement plan

in the proposal/planning processin the proposal/planning process– Unrecorded transactionsUnrecorded transactions– The complex casino environmentThe complex casino environment

i.e., many factors influence gaming volumesi.e., many factors influence gaming volumes

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Unrecorded TransactionsUnrecorded Transactions

What are the sources of unrecorded What are the sources of unrecorded transactions?transactions?– Many table game players go unratedMany table game players go unrated

Plus, many observed ratings lack integrityPlus, many observed ratings lack integrity Few reliable automated tracking systems for Few reliable automated tracking systems for

table gamestable games

– Many slot players do not insert tracking Many slot players do not insert tracking cardscards Many gaming venues throughout world do Many gaming venues throughout world do

not have an online slot systemnot have an online slot system

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Complex Casino Complex Casino EnvironmentEnvironment

Besides the marketing activity of Besides the marketing activity of interest, what other factors could interest, what other factors could affect gaming volumes?affect gaming volumes?– Day of the weekDay of the week– Hotel occupancyHotel occupancy– Food offersFood offers– Holiday periodsHoliday periods– Special eventsSpecial events– Direct mail offers, & many more!Direct mail offers, & many more!

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Casino Marketing HistoryCasino Marketing History

How has historical performance How has historical performance influenced modern casino marketing influenced modern casino marketing practices?practices?– Many executives believe that the Many executives believe that the

marketing activities of historically marketing activities of historically profitable times led to the success of profitable times led to the success of those timesthose times In reality, it was favorable supply-demand In reality, it was favorable supply-demand

conditions that fueled the successconditions that fueled the success

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Bottom-line JustificationBottom-line Justification

What is it?What is it?– Using summary-level financial success Using summary-level financial success

as evidence of marketing success, with as evidence of marketing success, with respect to specific casino marketing respect to specific casino marketing activitiesactivities

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Activity vs. SuccessActivity vs. Success

What is the issue here?What is the issue here?– In short, it is quantity over qualityIn short, it is quantity over quality– However, the opposite condition is However, the opposite condition is

recommendedrecommended i.e., quality over quantityi.e., quality over quantity

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From Innovation to FailureFrom Innovation to Failure

Can you describe the troubling Can you describe the troubling pattern of many successful casino pattern of many successful casino marketing efforts?marketing efforts?– A successful activity is createdA successful activity is created– It is replicated too oftenIt is replicated too often– Excessive replication = diminished resultsExcessive replication = diminished results– Marketers work accounting magicMarketers work accounting magic– Creative accounting is exposed, & activity Creative accounting is exposed, & activity

diesdies

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Figure 1.1. Customer Draw Power: Gaming vs. Figure 1.1. Customer Draw Power: Gaming vs. Amenities Within The Casino Life Cycle FrameworkAmenities Within The Casino Life Cycle Framework

Introduction Decline Maturity Growth

Amenity Offerings

Gaming Activities

Impo

rtan

ce

( + )

( - ) Cas

inos

in N

ew G

amin

g Ju

risd

icti

ons

Las

Veg

as H

otel

-Cas

inos

Phase of the Gaming/Casino Life Cycle

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Figure 1.2. Table Game Profit Margin By Average Figure 1.2. Table Game Profit Margin By Average Bet: After Expenses (comp, labor, gaming taxes, etc.)Bet: After Expenses (comp, labor, gaming taxes, etc.)

Pro

fit M

argi

n

0%

100%

Average Bet$5 $25 $75 $100 $200 $500 $10,000$1,000

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Figure 1.3. Table Game Profit Margin By Figure 1.3. Table Game Profit Margin By Average Bet: After Expenses and DiscountsAverage Bet: After Expenses and Discounts

Pro

fit M

argi

n

0%

100%

Average Bet$5 $25 $75 $100 $200 $500 $10,000$1,000

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Figure 1.4. Slot Profits, Bet per Spin, & Player Supply: Figure 1.4. Slot Profits, Bet per Spin, & Player Supply: Before Premium Player IncentivesBefore Premium Player Incentives

(Low)

# of PlayersProfit Per Player

(High)

(Low)

Amount Wagered Per Spin(High)

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The Customer ExperienceThe Customer Experience

In general how will this affect casino In general how will this affect casino marketing activities?marketing activities?– No marketing activity can survive poor No marketing activity can survive poor

customer experiencescustomer experiences

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Home of the Smiling DealersHome of the Smiling Dealers

What was the moral of this story?What was the moral of this story?– Management must understand that the Management must understand that the

treatment of employees affects how treatment of employees affects how they treat customersthey treat customers A desired customer experience cannot be A desired customer experience cannot be

produced by putting a slogan on a t-shirtproduced by putting a slogan on a t-shirt

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Line-item ManagementLine-item Management

What is it?What is it?– Assumes that each line of the income Assumes that each line of the income

statement is independent, specifically…statement is independent, specifically… Revenues and expenses are unrelatedRevenues and expenses are unrelated

– Typically occurs as part of an Typically occurs as part of an unimaginative cost-cutting effortunimaginative cost-cutting effort Such cost-cutting leads to unfavorable Such cost-cutting leads to unfavorable

customer experiences, which…customer experiences, which… Leads to decreased repatronage intentions, Leads to decreased repatronage intentions,

and, ultimately, decreased L-T profit and, ultimately, decreased L-T profit

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Line-item ManagementLine-item Management

What are some of the common causes?What are some of the common causes?– Difficult economic conditionsDifficult economic conditions– Austerity programsAusterity programs– S-T profit focusS-T profit focus– Newly hired CEO, w/ a cost-cutting focusNewly hired CEO, w/ a cost-cutting focus– Also, Wall Street analysts can pressure public Also, Wall Street analysts can pressure public

gaming companies into line-item gaming companies into line-item managementmanagement Usually in the form of ill-advised cost cutting, over Usually in the form of ill-advised cost cutting, over

concern for quarterly earnings – i.e., S-T focusconcern for quarterly earnings – i.e., S-T focus

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Customer Service: Value v. Customer Service: Value v. CostCost

The value of customer service can be The value of customer service can be difficult to quantifydifficult to quantify

Unfortunately, the cost of customer Unfortunately, the cost of customer is much easier to quantifyis much easier to quantify

These conditions fuel short-sighted These conditions fuel short-sighted cost-cutting adventurescost-cutting adventures

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Discussion ItemsDiscussion Items

In your view, what was the moral of In your view, what was the moral of the free-bottled-water story?the free-bottled-water story?– What action would you have taken?What action would you have taken?

What was your take on the across-What was your take on the across-the-board cost-cutting story?the-board cost-cutting story?– This happens frequently in the gaming This happens frequently in the gaming

industryindustry– Is there any defense for such actions?Is there any defense for such actions?