Research Library

Mass Mail Versus Smart Mail

As a gaming consultant, I often find myself traveling to casino properties located great distances from my home. During these trips I also find myself shopping competitors’ casinos. Like many others who visit their competition, I make it a point to dine in one of the casino’s restaurants, ask employees basic questions, inspect the public areas, join the competitor’s player rewards program and spend a few dollars in the casino.

My purpose for such visits is to gain an understanding of competitors’ service levels, identify their strengths and weaknesses, understand how competitors’ slot clubs work, what they return in visible rewards and how well the club staff explains reward benefits- I had long ago given up hope that competitors would acknowledge my modest gaming activity with any meaningful offer. Most casinos have long ago figured out that visitors whose mailing addresses are 2,000 miles away and whose daily theoretical is very low are not prime candidates for direct marketing. Nevertheless, some casinos still attempt to entice me to return.

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Choosing a Competitive Business Strategy

When it comes to identifying an appropriate competitive strategy, casinos are no different than any other business. All businesses compete using one of two basic strategies: they employ a pricing strategy or a differentiation strategy.

Businesses that compete on price strive to offer the lowest possible price. They do so by reducing the costs of production in order to deliver a product or service at a price that is lower
than the competition. This strategy works well for commodities in which the products sold are undifferentiated. Wheat and oil are commodities and producers compete solely on price. Products that are clearly differentiated, through features or other unique elements, can command a higher price.

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Bus Programs and the Abandonment of Common Sense

Few areas in the casino receive more scrutiny from senior managers for their business practices than the casino marketing and advertising department. Direct mail campaigns are carefully tracked by redemption rate, average daily spend and trip frequency. Print advertisements routinely contain coded coupons and each publication is evaluated based on d1eir effectiveness.
Player reward programs are evaluated using a variety of measures. Casino executives pride themselves on being able to measure the efficacy of every marketing program. That is, with the exception of bus programs.

Bus programs are an anomaly in casino marketing. They are expensive and, in many casinos, represent the second largest marketing expense behind player reward program costs. Yet despite their high costs they manage to defy measurmement. Bus programs satisfy casino management’s lust for bodies in the casino. They deliver customers in waves but few casinos are able to justify the expenses associated with acquiring those customers.

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Understanding the Marketing Mix

As competition among Native American gaming properties grows, there is increased pressure on casino marketing and operations managers to grow market share. This is normally achieved by either stealing share from other properties or identifying and attracting new market segments. Tales abound in the industry of half-hearted attempts to grow business. An aging casino, eager to attract high end play, hires a senior host from a newer property with the hopes of using his list of premium players. A local oriented casino, recognizing the importance of Asian garners, enters into an agreement with a junket rep who promises to deliver Asian players. Invariably such efforts fall short of their intended goals because these gaming operators fail to develop the proper marketing mix prior to servicing these new market segments.

While originally developed for the hospitality industry, the principles of the marketing mix are readily adaptable to business issues facing Native American gaming. First developed by Leo M. Renaghan of Cornell University’s School of Hotel Administration and later refined by Robert Lewis and Richard Chambers, the marketing mix is comprised of four distinct components: the product/service mix, the distribution

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Understanding Your Customers Through Market Research

When was the last time you withdrew $1,000 from your ATM with the sole purpose of visiting a nearby casino for an evening of gambling? Have you ever gambled in a casino six times in one month and lost $250 per visit? Have you ever drawn a marker for $5,000? If the answer is “no” then you are like most gaming executives. In fact most people in the general population do not gamble at these levels or frequencies yet the core customers that make up the most profitable segments of a typical casino most certainly do. There is no better example of the 80/20 rule than a basic segmentation analysis of an average casino. 80% of the gaming revenue comes from 20% of the database.

Many casino marketing executives devise promotions, design advertising campaigns and mail customer incentives without ever truly understanding what it is that motivates their core customers,
what the reasons are for their visiting a casino and what it is they seek in terms of rewards and recognition. Some executives will state that they “talk to their customers on the Boor” and through that process have an understanding of their customers’ desires.

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Building a Successful Organization

The passage of Proposition lA in 2000 allowed many Indian gaming casinos in California to rapidly grow from small local oriented properties to regional gaming and entertainment destinations. Casinos that were once little more than bingo halls with class n gaming devices quickly became fullservice casinos offering guests a multitude of dining and entertainment options. Most significant to marketers was the addition of sophisticated player tracking systems that allowed Indian casinos to employ database marketing programs and analytical tools that were once only available to non-Native American casinos.

Unfortunately the staffing needs of marketing departments for many of these rapidly growing casinos often did not keep up with these hurried expansions. As such many casinos now find themselves marketing larger properties, promoting multiple dining options, expensive headliner entertainment, hotel, meeting space and greatly expanded gaming operations with virtually the same sized staff that they had prior to this period of growth.

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The Allure and Loathing of the Big Promotion

I t happens to every marketing director. It may be precipitated by an unexpected downturn in business, an aggressive advertising campaign or promotional offer by a competitor or the realization that revenues are falling below plan. Regardless of the cause, the chain of events starts with a visit from a senior official of the casino, most often the casino manager, to the marketing director’s office.

The casino manager will suggest the implementation of a big promotion to stimulate business. “We need something really big to get the gamblers in … we should give away lots of cash and a hot car or SUV” It makes no difference that such a promotion was not part of the casino’s strategy or the budget was created without such a planned promotion. The allure is just too great. The casino manager assures the marketer that “we’ll find the money for it. Just make it happen.” And so begins the saga of the big· promotion.

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And The Reason You Gave Me This Shirt Was…?

Recently I was asked to conduct a competitive profile of gaming properties in California. In addition to reviewing data on media expenditures, I made a point of spending three days in-market. I read through the newspapers, watched local television and listened to several radio channels. I then drove to each of the casino properties and made note of each competitor’s billboards, their theme and messages.

After walking through the first casino and reading the various posters and slot toppers that displayed the current promotions, I waited in line and joined the casino’s slot club. Upon completing my enrollment ti1e club rep handed me my card and asked, “What size t-shirt do you wear?” Perplexed, I answered “large” and was told all that was available was extra large and was handed a t-shirt. Without being given an explanation of how the club worked, I rolled the shirt up and completed my evaluation of the property.

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The Dangers of Marketing Cheap

Native American gaming operations have often looked to Nevada for insights into how to market their casinos. The general belief is that the marketing practices of Nevada casinos are based on sound research and experience, and have demonstrated themselves to be the best way of attracting and retaining qualified gaming prospects.

One of these marketing practices is the concept of attracting garners by discounting food, drinks and room rate to ridiculously low levels. Cheap meals, cheap drinks and low room rates have always been associated with Nevada casinos. The logic behind these practices is that by generating traffic through the property, a certain percentage of those people will stop and gamble. The exact percentage that do stop to gamble or their gaming budgets has never been determined.

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The Casino Marketing Plan: Objectives, Strategies and Action Plans

Last month this column focused on the first part of the casino marketing plan: conducting a thorough situation analysis in order to understand current and anticipated market conditions, the competition and the customer. Having performed this analysis, a casino marketing team can now focus on the development of realistic goals and objectives, a strategy that will achieve them and the specific action plans that become the marketing department’s “to do” list.

Too often the marketing team loses sight of the property’s mission. Operating a tribal gaming enterprise is more than about making money. It is about improving the quality of life for tribal members, providing security for future generations, offering employees opportunities for growth, and being a responsible member of the community. The marketing mission statement flows from the tribal mission but is also based on current market conditions. Once the team has prepared its situation analysis it is ready to develop the marketing mission d1at will guide the department’s efforts through the next year.

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