Example Of Harrah’s Entertainment Inc. Case Study

Executive Summary:

As there was a high competition in the market that Harrah was operating, the Company knew that it had to come up with a certain set of new strategies. When it got to know that it could not compete with other giants in the industry with financials, it dropped its capital intensive expansion plans and decided to continue with the adoption and utilization of Information Technology for increasing the customer base loyalty. The Company was correct in identifying in the initial stage that customer focus was the key to a sustainable business and thus they became the first movers in the industry. All other tools used in complement and supplement will only act as the process catalyst, facilitating it. High exploitation of the IT systems by increasing the efficiency of operations and implementing it instantaneously in areas where productivity will be increased, are the ways for Harrah’s to ensure that customers are not lost to competition. The personal reach that the Company is able to provide is because of the open and learning attitude that it maintains towards the customers.
Harrah’s Entertainment has been able to maintain a successful graph through the innovation that it was able to exploit in terms of the database marketing. It is definitely a sustainable newer model for businesses and a sustainable one for Harrah too, if it is able to keep up with the pace of improvement in other aspects also.

Situation Analysis:

Strengths and Weaknesses: The Company Harrah’s Entertainment, launched in the year 1937 operates 21 casinos at various locations within the country. The Company has a renowned name as it has been awarded with a number of titles such as the Winner of the rooms and the TDQI Leadership Award for the year 2000. The Company maintains luxury casinos of space that occupy over 1000000 square feet of area. t is possibly the world’s largest provider of entertainment when it comes to branded casinos. The brands under the Company include Belly’s, Caeser’s, Harrah’s, Horseshoe, Rio and many more. The weakness however may be the limited financial resources that it can afford for expansion and diversification plans.
Opportunities and Threats: The opportunities for the Company exist in the form of a large customer base and a growing market that can be exploited. The threats exist in the competition, with big giants growing and taking away the existing as well as the potential segment of customers.

Strategic Alternatives:

Expand and Plan using Pavlovian Marketing:
The Company may simply decide to do what others have been doing; using financial means and assets to attract the attention of the visitors through aggressive asset as well as geographical expansion.

Retain and attract using Database marketing:

Database marketing is direct marketing in which there is process of gathering, building, processing, maintaining, and then using databases of customers, potential customers, products, suppliers or resellers in order to build relationship and personalize communication so that there is promotion of product or service for purpose of marketing. This includes usage of marketing media and channels such as telephone, email and other systems which are individually addressable. The database marketing is differentiated from traditional marketing by maintenance of consumer data which is processed and used in sophisticated ways and which is used to study and learn about customers and then select target markets for campaigns.
There are certain advantages of Database Marketing (DBM) over traditional methods. Like DBM acts as a good tool in building up customer relationship and raise the level of customer loyalty. In order to strengthen and to increase the level of customer loyalty, sophisticated analysis of customer profile is carried out so that the company uses right strategies to retain its customer base and increase the repetition on customer visits.
DBM also helps in predicting consumer behavior and “customer worth”. The information gathered and sorted helps to profile customers and study their preferences, their betting patterns, frequencies of visits, the way they play, and so on. These can be done through various quantitative models and once the model is known for the customers segments, incentives to customers can be send in order to build relationship for future. Hence, if DBM efforts can be focused on customer worth there is probability in exploiting potential high worth players in high numbers. If there is a highly competitive market, there would be difficulty in striving limited number of customers. Hence, proper use of DBM can discover and exploit customers with high worth in the low observed frequency market.
Similarly, in cases of one-on-one marketing, in which there are customized offerings to individual customers, there is lots of work for database marketing to show its heroic effect.

Tactical Plan:

Recommendation: The recommended system would be the proper utilization of Database marketing. This can be done in following two ways:
Giving higher importance to customer worth than observed play:
The customer worth, which is also known as the theoretical win is the amount of money that is expected for win at a time in the house. The way that the Harrah’s operates, the Company will be able to exploit more opportunities by targeting players of high worth, as compared to the situation when the Company’s DBM efforts focus more on the observed play.
The market becomes narrower in nature when the concentration of investment is limited to frequencies of high observation. This incidence is because of the nature of the market with high observed frequency, that there will only be a little number of customers where the high worth of those customers could be worked upon. This limited customer focus can be costly for any Company given the high competition in the gambling market. There will be a great opportunity for a Company as a whole if it can correctly have the discovery and exploitation of those customers that have high worth in the gambling market where the observed frequency is low. This is a market where comparatively less competition exists and the Company may tap this gap to create value for itself. The level of exploitation of opportunities for a Company is highly associated with the customer worth as compared to observed level of play. This means that higher the focus on customer worth, higher is the value of exploitation.
As would be expected of any successful player in the industry, Harrah’s also maintains its own customized and more quantitative model for the prediction of customer worth in the business. This model has been a source of possibility for the Company in the exploitation of the more valuable, wider base of customers. It additionally contributes to the better service quality that the Company may be able to provide its customers. Customer differentiation has been improved by figuring out customer segments that the Company can serve in new ways. To capture this purpose of differentiated services, Harrah’s sent out offers that were customized as per the identified varied segments. This segment represents the future customer worth of the Company as these aims to transform the customers of competitors to that of Harrah’s. No opportunity costs are involved, as the current customers are retained and the value created to them does not decrease. In fact, there is a rise in the number of visits. There is high responsiveness of the customers as they are provided with customized offers and it caters to the specific needs that they expect from the Company.
The drawback of focusing on observed level of play, taken from the above discussion may be that the Company can only analyze the customer activities that are related to the past. There cannot be indication of present or future of those activities. But, with the prediction of Company’s customer worth, there is creation of long term favorable interest for the Company. A satisfied and content customer is the one who brings long term profits. For Harrah, this customer based focus, resulting in customized offers, has increased the satisfaction of specific customer needs.

Integration of various elements of marketing strategy to deliver more than the results of DBM:

There are three main areas that can be observed in the case where the Harrah customer focused marketing seemed to concentrate. They are customer attraction i.e. new business; maintain customer loyalty and establishing customer retention. Simultaneously, in respect to these areas or phases of business operations, the DBM results were used by the Company for the execution of three main programs: new business program for customer attraction, loyalty program for customer loyalty and retention program for customer retention. The new business program was developed in such a way that instead of the observed play, customer worth was predicted, so that investments at the level of customers could be more effective. For instance, one of the experiments at Harrah’s had provisions of providing the customers with specific offers that would convert them from being customers of other casinos to that of Harrah’s.
There was a high turn around frequency as at the end of every month, after the signups, the customers that were coming back to the casino within a time frame of three months were 15%.
There was loyalty program, where the customers were offered incentives such as a visit to the properties of the Company and also on first come first serve basis. This was one of the main stimulant programs that helped in switching customers from competitors. The major spending of the customers was very carefully captured by Harrah in their first major shop. The retention program was a new concept where the customers who had a decreasing patronage were attracted to revisit by sending incentivized coupons, in an attempt to rekindle the customer relationship. For instance, when Harrah’s sent out the incentive coupons in January of 1999, seeing the adequate decline in its customers in the later quarter of 1998, the Company was able to revive the customer spending. The customers that the Company was able to pull back were then a part of the loyalty program so that utmost potential could be explored. These three programs were integrated in such a holistic manner that they formed a perfect combination of customer satisfaction and long term marketing success.
The brand was also associated with “the feeling of exuberance” in the marketing programs. This strategy worked wonders for the Company as it was able to overcome the disadvantage of having lesser differentiation in brand and helped in attract people to Harrah’s who wanted a run for their money. The Company upgraded its strategies and along with it the services that it catered to the extent that they were awarded the “best service” reputation from Casino Player, a leading magazine from the industry. This was all in line with the advertisement and quality focus that the Company was able to maintain throughout.
The emotional connection build was handled by the The Total Rewards program, where the customers were given the feel that they are special, are recognized and assured that their specific needs will be addressed. There were also numerous provisions of plays and sign-ups in the form of schemes of giving cars, houses, holiday packages, etc. All these efforts integrated to form a satisfied and larger customer profile.

Protect Innovative processes and ideas:

The Company needs to protect some of the innovation functions that have been developed by the Company by using proprietary means. This hinders the competitors from imitation on some of the aspects. Also the software may be protected using Intellectual Property and additional income may be earned. Thus, the Harrah strategy is replicable but only if the Company provided the software and copyright on its innovative processes. For now, there seem to be no imitation players for the Company in the industry.