GROUP 13

Yeswanth Balasada
Chaitanya Avasarala
FT173023
Ruchir Thakkar
FT173074
Amar Karam Chandani
FT173011

FT173105

Gambling in the United States:

Gambling started in United States during the 1950s. Benjamin Bugsy Siegel, a known gangster
built a luxury Caribbean-style hotel and casino in Las Vegas. To attract gamblers Las Vegas began
offering inexpensive hotel rooms, food, free drinks and well known entertainers. Performers such
as Frank Sinatra and Elvis Presley played to full houses there. In 1978 casinos spread to Atlantic
City, Colorado, Louisiana and South Dakota. Casino gambling was approved in Iowa, Illinois,
Mississippi, and Missouri and on many Native American reservations. In 1980s, Stephen Wynn
built the mirage resort. Till late 1990s Las Vegas became the largest U.S gaming market.
Vacationers could easily spend a week visiting all of the major casinos and other attractions in
Las Vegas. Las Vegas visitors in 2000 were expected to spend $1328 during a 3.7 day stay.
By 1999, riverboat-type casinos were operating in six states and Native American Owned
facilities were in business in over 12 states.

Company Background:
William Fisk Harrah 26 year old charmer, pathological car lover and bingo car entrepreneur commenced his casino operations in 1937.

1939 Harrah opened a bingo parlor.

1942 Harrah opened a casino.
1946 the company expanded and added roulette to the card and dice tables and began
serving liquor.
1959 he relocated his southern shore casino across the highway to create the worlds
largest single structure devoted to gambling.
2000 Harrahs had 21 casinos in 17 different cities. The company also owned and operated
casinos in multiple cities.
Harrahs presence across US in 2004 can be seen in the below picture

Early Strategy:
Mr. Satre CEO of Harrahs focused on people more than anything else. This strategy helped
Harrah to lead the way in many states, provided with explosive growth and a highly profitable
business.
He also started analyzing the amount of cross-market visitation. At the same time he also
focused on developing rewards programs based on tracking cards.
Customer Loyalty as a Core Competency:
By the mid-1990s many competitors entered in the market with much flashier properties. Soon
the company realized that only people strategy could not be useful. Developing core
competencies in terms of innovations of the product, cost structure and customer intimacy was
important.
By early 1998they also realized that Harrahs did not have the marketing horsepower to
implement the strategy across all properties in the consistent manner. The company decided to
appoint a COO who is a marketer who can implement marketing without any interruption
between the corporate strategy and what is implemented at the property level.
The new COO Gary Loveman launched The Total Gold Program in 1997 with the intention to
increase customer loyalty in a variety of ways. His first priority was to build the new organization
structure. His next focus was on developing a brand that had a gaming orientation and was
centered on what is called as the most profound emotion of gaming The feeling and
anticipations and exuberance.
Harrahs research showed that casino provides consumers a momentary escape from the
problems and pressure of daily lives. Hence Harrah focused their advertising efforts around the
feeling of exuberance.

Loveman also believed that Harrahs service was good but not distinguished. Casino environment
is very tricky because most of the guests end up losing while playing in a casino. Casino
employees were not trained to deal with these kinds of situations. The aim was to deliver a world
class service experience that would transcend this issue. To achieve this Harrahs put in place a
variety of interventions at the employee level- service process design, reward and recognition,
measurement of executives etc to improve service. After implementing these best practices
Harrahs won the award for best service from casino player for three consecutive years.
Customer Relationship Management:
With the help of Richard Mirman, Loveman was able to disband the existing marketing function
and developed a new template to be followed by all the businesses at Harrahs. The CRM
consisted of two different sections, the first being the database marketing (DBM) and the total
gold program. The biggest insight that was generated from this was the prediction of customer
worth accurately. This was revelation as the casinos, initially looked only at observed play as a
parameter.

Database management (DBM)

DBM was a revelation as it changed the way Harrahs looked at customers. Using analysis that
would be done by the system it was able to look through the person and look at them via
numbers. This used to give them greater insights such as how much business does a customer
give Harrahs competitior. This helped them program personalized initiatives specifically for
people who invested money elsewhere, so as to convert them.
Harrahs was also able to develop extremely sophisticated customer profile by means of the total
gold cards. As soon as the customer purchase the card and uses it in the casino, Harrah was able
to track their movement and develop insights such as table preference, amount they spent on
which table, which room they preferred to stay in and the average amount the spent per visit.
Using this and the details they got from check in details, like DOB, address etc, Harrah was able
to figure out that 26% of the players generated 82% of the revenues, with who they called AVID
players, generating $2000 annually. These customers with their propensity to be in multiple
markets became Harrahs target customers.
With the ability to predict customer behavior, Harrah was able to develop personalized marketing
strategies to achieve organizational objectives. Harrah was the first to eliminate the same day
cash, which was initially met with organizational dissonance, but when implemented it showed to
be extremely fruitful.
Harrahs had a very customer centric approach to direct marketing. It had developed three
phases to a customer relationship.
1. New business
2. Loyalty
3. Retention
New business:
This phase is designed to improve the effectiveness at converting new total gold member into
loyal customer. This program uses customer worth in order to make effective investment

decisions.

Inference:

From Exhibit 2b, it can be seen that when offers (as part of marketing) were given to new
customers, almost 50% customers returned in next three months.

Loyalty:
Frequency upside and Budget upside
This program was designed to identify customers that were giving Harrah only a small share of
their total spending. Using the new technology Harrah was able to develop programs to
incentivize these customers to visit Harrahs properties again.

Inference:

From exhibit 2c, the loyal customer visited more frequently after receiving offers in June
1999.
From exhibit 2d, the loyal customers spent more hours and spent more amounts after
receiving offers.

Retention program:
This was the program that was expected to reinvigorate interest in customers who had shown
signs of attrition and broken predicted data. Harrah tested a variety of offers with customer
segment to determine how much to reinvest in the strategies to retain loyal customers.

Inference:

From exhibit 2e, the customers who were distancing themselves from Harrahs increased
their visits and became loyal customers after receiving offers.

The total rewards program:

Through market research Harrahs was able to realize that they were losing up to 100 million
dollars in revenues because of customers looking elsewhere when they visited destination
markets. This program was designed to make them earn and redeem rewards easily across the

country. To execute this an integrated information technology network was developed. It allowed
for customer level information across various casinos. The program is designed to encourage
customer loyalty or consolidation of play both within a particular trip and across multiple trips or
over the course of a calendar year. To promote the consolidation of play over the course of a trip,
The Total Reward program provides a Reward Menu that translates reward credits to the various
complimentary offerings.
Competition:
Park place
entertainment
corporation
With revenues of $2.5
billion was the
industry leader
Owned 18 casinos,
23000 hotel rooms

Acquisitions are an
integral part of this
firms strategy along
with providing diverse
customer base

Mirage Resorts

Circus enterprise

Trump Hotels

Revenues of $1.52
billion dollars

Revenue of $1.47
billion dollars.

Revenues of $1.4
billion dollars.

Leader in Las Vegas

strip gaming market
targeting upper middle
and premium market.
Handsome investment
in properties to
provide customers
with an experience of
a lifetime

10 casino resorts

Large number of
casinos in Las Vegas
and Atlantic city.

Creating work of art

casinos. Aim to own
20000 rooms in Vegas.

Targets the young

affluent customers and
lucrative high end
drive in slot
customers.

Conclusion:
Looking at the exhibits and analyzing data, we can safely conclude that Harrahs database
marketing system was a success. It has helped Harrahs develop an enviable position in the
global market without having to sacrifice its core competencies. With clever use of CRM Harrahs
can improve on its position in the global entertainment segment.