Harrah's Case

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Background
Harrah’s Entertainment Inc.’s primary objective is to continue their growth in the gambling industry by differentiating themselves from competitors and focusing on a customer-oriented strategy. Harrah’s wants to determine how much of their recent growth can be attributed to their marketing efforts and how to continue growth in an industry of rising competition. Recommendation

My recommendation for Harrah’s Entertainment Inc. begins by investing about $1M to expand Harrah’s Database Marketing program. Next, focus on brand differentiation and advertising the core of gambling – the exuberance of “gambler’s high”. Last, expand the Total Reward program to provide more incentives and rewards to maintain a loyal, high-spending customer base. Basis for Recommendation

Database Marketing. Investing about $1M in this area of the company’s marketing strategy will hone in on the customer relationship management strategy that separates Harrah’s from competitors. Also, database marketing within Harrah’s has proved to be profitable. Once Loveman launched the Total Gold program and began DBM in 1998, Harrah’s net income more than doubled in 1999, increasing from $102,024 to $208,470, while the increase from the previous year was significantly smaller: an increase from $99,388 in 1997 to the $102,024 in 1998 (Exhibit 1). The investment in expanding DBM will also allow Harrah’s to be more effective in customer investments. With even more detailed customer profiles on hand, Harrah’s will be able to analyze profitability and efficiency of customer rewards. As the accompanying financial analysis shows, Harrah’s can segment customer types and attach proper customer goals and rewards. This reduces money wasted on ineffective services, justifying the increased investment in DBM (Exhibit 5). Brand Differentiation and Advertising. Brand differentiation will help Harrah’s distinguish themselves from competitors and thus, reel in more customers. While competitors specialize...
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