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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?