Casino Marketing Distribution and Products

In industries that produce tangible goods, distribution channels move the product from the factory to the customer.

In the gaming industry, distribution channels move the customer to the casino. The distribution can be either internal, or external.

Casino hosts and branch offices are examples of internal channels; those controlled by the casino. Both types are aimed at the upper end of the market.

External channels include junket and tour operators, travel agents, and alliances with airlines. Junket operators are aimed at the upper end of the market, while travel agents cover a board spectrum of customers, and tour operators and airlines are aimed at a mass market.

Three key factors with distribution channels are cost, control, and communication. First, distribution channels must be cost effective.

Atlantic City casinos compensate reps between 8 percent and 30 percent of the casino's theoretical win; the average is between 16 percent and 20 percent.

Some casinos have gone out of business because the compensation they paid their junket operators was too high--- above their theoretical win. Junket operators give the casino little control over the players.

Occasionally, the junket operator will not give the names of the players to the casino. Unfortunately, this is also the case with some casino hosts--- hosts have the player's loyalty.

Casinos should get management involved in greeting and entertaining players to build up player loyalty, and they must communicate with their distribution systems. For example, casinos may set up a package and promote it t travel agents.

These packages will often include a meal, show tickets, breakfast, and lodging.

When the package changes, the changes have to be communicated effectively to hundreds of travel agents. Some agents will lose or misfile the message, and as a result still sell the old package, which may include a show instead of a dinner.

Thus, the guest arrives expecting a show and is disappointed when he or she receives a dinner. The guest has been dealing with the travel agent for years, so he or she blames the error on the casino.

This is not a good way to start with a guest. To prevent it from occurring, casinos should reduce product changes and send several notices of product changes.

Now, a product is everything the guest receives in the transaction.

It includes the level of service provided by the employees, the food and beverage outlets, the type and variety of slot machines, the gaming facilities, and the casino atmosphere.

To some segments, entertainment will be important; to others it will be important.

Some segments may prefer singers, while others will prefer a show. Thus, when developing the product, the casino must understand customers and know what creates value for them.

However, casinos must make their products seem more tangible, via promotional material, employee's appearance, and the casino's physical environment.

A casino's promotional material may provide the potential players with their first views of the casino.