Harrahs Entertainment Inc.

Ankur Dey Tarafder | PGP15/204 | CRM Case Submission 3

Harrahs Entertainment Inc. : The Company

Founded in 1937 by William Fisk Harrah at Reno, Nevada, Philip G. Satre became the CEO of the company in 1984 In 2000 Harrahs had 21 casinos in 17 different cities, low roller segment(middle-marketpatrons who gambled away a few hundred dollars per visit on a repeat basis) was the target market In December 1999 the stock price and profits grew by 100% and revenue grew by 50%,

$100mn investment in IT, Customer loyalty was the core competency of Harrahs

Park Place Entertainment Corporation, Mirage resorts, Circus Enterprises & Trump hotels were the major competitors Winners Information Network and the Total Gold Program were initiatives to centralize the loyalty program

Key Questions and Analysis

How have the marketing efforts led to Harrahs success and whether it was sustainable Should Harrah focus on investing in facilities or continue growing profits by investing in IT How to counter the threat of copycat marketing possibly limiting the return on future investments in business intelligence

Strengths
100% growth in profits Organizational structure emphasizing players Advertising campaign based on research Quantitative models to predict future worth of players Experimental/ measurement based approach to marketing

Weakness
Way behind competitors in facilities 50 year old company making facility upgrades difficult & expensive Customers spending a large part of their money in other casinos

SWOT
Opportunities
Continue investments in IT and separate itself from the competitors Use a part of the profits to refurbish some facilities in key markets

Alternatives
Divert funds to remodel properties in key markets Continue aggressive investment in information technology as it provides core competency

Threats
Competitors way ahead in facilities Copy cat marketing by competitors Indulgence of US people in internet gambling

Initiatives at Harrahs
New Organization Structure
Divisions would report to Loveman instead of CEOs Customers belonged to Harrahs and not one of the casinos

Brand & Service

Brand developed to give a feeling of anticipation and exuberance

Database Marketing

CRM
Database marketing and Total Gold Program Proactive marketing and marketing experiments

Quantitative models to predict customers worth Total Gold card launched in 1997, transaction data collected to build predictive models Opportunity segments identified, customized marketing campaigns and offers Marketing experiments to discover right marketing instruments for right behavior identification for right customer

Service training to provide world class experience

New Business Program

Results of Database Marketing

Phases of CRM new business, loyalty and retention

Loyalty Program Frequency upside

Loyalty Program- budget upside Retention program

Total Rewards Program & Marketing efforts

Program features
To facilitate and encourage cross market visitations of Harrahs customers To capture lost business by letting consumers earn and redeem points seamlessly Integrated Information Technology network that linked all properties Tiered structure- Gold, Platinum & Diamond to make it more coveted Emotional connect with the customers that superseded security and privacy issues Give-away events to increase enrollment in the program

Competition Study
Geographic diversity to cut risk and steady incomes Clustered properties to cut Opex, reduce overhead and cross marketing Acquisition strategy and diverse customer base

Park Place Mirage Resorts Circus Enterprise Trump Hotels

Targeted at high-roller markets Strategy is to develop high profile mustsee attractions Huge investment in facilities

Strategy to develop fully integrated gaming complex

Target customers: lucrative high-end dive-in slot customers & young affluent customers Increase profitability by cost controls and better margin businesses

Road Ahead
Diverting funds to key markets can be risky because competitors are already investing heavily in this field Harrahs core competency lies in its IT. It should continue investing in this field because its target segment is low-rollers who might not provide sufficient ROI on extravagant properties The first mover advantage in database marketing can be copied by the competitors. They should look to translate the advantage into a strong customer relationship before it gets copied by the competitors