Transcript Principles of Casino Marketing

Introduction to Casino
Marketing Topics
Principles of Casino Marketing
1
Abundant Expertise

How does casino marketing expertise
differ from legal or accounting expertise?
– It is far more abundant!
2
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
3
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
4
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
5
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!
6
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
7
Bottom-line Justification

What is it?
– Using summary-level financial success as
evidence of marketing success, with respect
to specific casino marketing activities
8
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
9
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
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(-)
Amenity Offerings
Las Vegas Hotel-Casinos
Importance
(+)
Casinos in New Gaming Jurisdictions
Figure 1.1. Customer Draw Power: Gaming vs.
Amenities Within The Casino Life Cycle Framework
Gaming Activities
Introduction
Growth
Maturity
Decline
Phase of the Gaming/Casino Life Cycle
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Figure 1.2. Table Game Profit Margin By Average Bet:
After Expenses (comp, labor, gaming taxes, etc.)
Profit Margin
100%
0%
$5
$25
$75
$100
$200
Average Bet
$500
$1,000
$10,000
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Figure 1.3. Table Game Profit Margin By
Average Bet: After Expenses and Discounts
Profit Margin
100%
0%
$5
$25
$75
$100
$200
Average Bet
$500
$1,000
$10,000
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Figure 1.4. Slot Profits, Bet per Spin, & Player Supply:
Before Premium Player Incentives
(High)
(Low)
(Low)
(High)
Amount Wagered Per Spin
14
The Customer Experience

In general how will this affect casino
marketing activities?
– No marketing activity can survive poor
customer experiences
15
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
16
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
17
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
18
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 costcutting adventures

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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-theboard cost-cutting story?
– This happens frequently in the gaming
industry
– Is there any defense for such actions?
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