Introduction to Casino Marketing Topics

1
Introduction to Casino Marketing Topics

• Principles of Casino Marketing

2
Abundant Expertise

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

3
Success The Burden of Proof

• Where does this burden lie?
• With the marketing activity
• That is, the activity is a failure, until
  proven successful
• A declaration of success, it just that - a
  declaration
• Such declarations are common, but are usually
  poorly supported
• Why are such claims of success poorly supported?
• There are considerable measurement challenges

4
Measurement Challenges

• What are the sources of these challenges?
• Failure to develop a measurement plan in the
  proposal/planning process
• Unrecorded transactions
• The complex casino environment
• i.e., many factors influence gaming volumes

5
Unrecorded Transactions

• What are the sources of unrecorded transactions?
• Many table game players go unrated
• Plus, many observed ratings lack integrity
• Few reliable automated tracking systems for table
  games
• Many slot players do not insert tracking cards
• Many gaming venues throughout world do not have
  an online slot system

6
Complex Casino Environment

• Besides the marketing activity of interest, what
  other factors could affect gaming volumes?
• Day of the week
• Hotel occupancy
• Food offers
• Holiday periods
• Special events
• Direct mail offers, many more!

7
Casino Marketing History

• How has historical performance influenced modern
  casino marketing practices?
• Many executives believe that the marketing
  activities of historically profitable times led
  to the success of those times
• In reality, it was favorable supply-demand
  conditions that fueled the success

8
Bottom-line Justification

• What is it?
• Using summary-level financial success as evidence
  of marketing success, with respect to specific
  casino marketing activities

9
Activity vs. Success

• What is the issue here?
• In short, it is quantity over quality
• However, the opposite condition is recommended
• i.e., quality over quantity

10
From Innovation to Failure

• Can you describe the troubling pattern of many
  successful casino marketing efforts?
• A successful activity is created
• It is replicated too often
• Excessive replication diminished results
• Marketers work accounting magic
• Creative accounting is exposed, activity dies

11
Figure 1.1. Customer Draw Power Gaming vs.
Amenities Within The Casino Life Cycle Framework
( )
Amenity Offerings
Importance
Casinos in New Gaming Jurisdictions
Las Vegas Hotel-Casinos
Gaming Activities
( - )
Introduction
Decline
Maturity
Growth
Phase of the Gaming/Casino Life Cycle
12
Figure 1.2. Table Game Profit Margin By Average
Bet After Expenses (comp, labor, gaming taxes,
etc.)
100
Profit Margin
0
5
25
75
100
200
500
10,000
1,000
Average Bet
13
Figure 1.3. Table Game Profit Margin By Average
Bet After Expenses and Discounts
100
Profit Margin
0
5
25
75
100
200
500
10,000
1,000
Average Bet
14
Figure 1.4. Slot Profits, Bet per Spin, Player
Supply Before Premium Player Incentives
(High)
Profit Per Player
of Players
(Low)
(Low)
(High)
Amount Wagered Per Spin
15
The Customer Experience

• In general how will this affect casino marketing
  activities?
• No marketing activity can survive poor customer
  experiences

16
Home of the Smiling Dealers

• What was the moral of this story?
• Management must understand that the treatment of
  employees affects how they treat customers
• A desired customer experience cannot be produced
  by putting a slogan on a t-shirt

17
Line-item Management

• What is it?
• Assumes that each line of the income statement is
  independent, specifically
• Revenues and expenses are unrelated
• Typically occurs as part of an unimaginative
  cost-cutting effort
• Such cost-cutting leads to unfavorable customer
  experiences, which
• Leads to decreased repatronage intentions, and,
  ultimately, decreased L-T profit

18
Line-item Management

• What are some of the common causes?
• Difficult economic conditions
• Austerity programs
• S-T profit focus
• Newly hired CEO, w/ a cost-cutting focus
• Also, Wall Street analysts can pressure public
  gaming companies into line-item management
• Usually in the form of ill-advised cost cutting,
  over concern for quarterly earnings i.e., S-T
  focus

19
Customer Service Value v. Cost

• The value of customer service can be difficult to
  quantify
• Unfortunately, the cost of customer is much
  easier to quantify
• These conditions fuel short-sighted cost-cutting
  adventures

20
Discussion Items

• In your view, what was the moral of the
  free-bottled-water story?
• What action would you have taken?
• What was your take on the across-the-board
  cost-cutting story?
• This happens frequently in the gaming industry
• Is there any defense for such actions?