Rating Research

Why market research should be one of the first things considered when a new management team takes over

The turnover in management among the top casinos these days is becoming greater and greater as the recession deepens. But what should the first steps be when a new team enters a property?
 

Because they are often charged with cutting costs first, it’s counterintuitive to consider spending more money on an outside consulting firm. But that’s exactly what I’m suggesting when it comes to market research.

Benefits of Market Research
For those executives (still a minority) who actively engage in marketing research, it is not an understatement to say that at the margin—the 20 percent to 30 percent of the consumer marketplace which is at issue (vs. the 70 percent to 80 percent which is usually not)—research findings usually and effectively fill in the gap.

Why the gap is not filled has less to do with the research findings, but more to do with selling the results to others—whether higher or at the same level within the organization.

As has been repeated numerous times, research success (as defined by the client) provides the impetus for more research going forward. This, of course, is good for the professional market researcher, but more importantly, leads to changes in the organizational learning system, which can be profound over time.

Also, whether the research is tactical short-term, strategic longer-term or in between, if all interested parties are at minimum operating from the same fact base, then in the final analysis the right set of decisions is the more likely (not a perfect correlation) outcome.

Furthermore, from a “big picture” perspective, it has been my experience that those organizations (yes, still a minority) that are information-seekers vs. opinion-dominated leadership use the information-gathering platform as a template for continuing and even expanding the marketing research function.

Importantly, and implied within the comments above, is the idea of a “marketing research champion,” the higher in the organization the better. Alas, this is often a challenge for smaller and regional operators. Nevertheless, things are changing for the positive.

On the positive side of the equation, it is professionally rewarding (for both parties) when the case is proven that research results have modified, changed, altered or in some cases stopped a fatal decision from being executed. The evidence is simply part of the numbers.

Proof Positive
Take the case of a recent strategic and tactical consulting assignment for a large Midwest
operator with annual revenues in excess of $250 million and a $20 million annual marketing budget. A by-product of the comprehensive evaluation was the fact that there was no line item for property marketing research, and of course, no marketing research position in an organization with 1,400-plus full-time
employees.

So, when it was suggested that just maybe this was a small organizational issue that should be fixed—and it should be funded in the neighborhood of 1.5 percent of 1 percent of the property’s annual gross revenue—there was only little pushback. Only a year earlier, when executives received a recommendation for a $300,000-plus commitment to fund a marketing research position and support the investment with a research budget, the pushback was substantial. So, once again, just maybe it’s a sales challenge. But for 2011, the research position has been filled, and a $240,000 research budget for the calendar year is being put in place.

The Challenges
There are many challenges to the subject of gaming research that sadly haven’t changed much in the past 20 years. Some examples:

• The lack of senior management belief and commitment. This attitude often trickles down and across the organization. Interestingly, over the 2007-2009 time frame, a dramatic economic challenge for the legalized gaming industry, research budgets were cut (a reasonably prudent decision in some cases) while some operators simply killed the line item (not a very prudent decision). And for 2010 and 2011, most have reinstated the line item and organizational position, but real commitment is still lacking.

  • And what about using the information once analyzed, collected and discussed? Still less than half of all casino organizations are effective users of marketing research—marketing science for many still takes a back-seat position in the organization; there is simply a lack of personal belief.
  • In many casino organizations, marketing is seen as a weak discipline. This translates to some degree into a situation where everyone within the highest levels of the organization always has a marketing opinion. And of course, as a by-product, marketing research suffers—in application and influence.
  • Preparation. The research is completed, the appropriate folks are asked to read, attend and put the plan in place (either reinforced or revised or discarded), but only a few really come prepared, and it is obvious to those few who actually did their homework. Sometimes, marketing research is actually blamed for not providing the findings that people want to hear. Yes, sounds surprising, but for those with an agenda, conflicting research results are often challenged at the emotional, non-objective level.

 

Finally, a lifetime of lessons learned reinforces the conclusion that effective and continual use of market research findings will almost always be problematic. And yes, still worth fighting the good analysis fight. But be prepared for the wrong outcome. A thick skin helps!

Dr. Jeffrey Lowenhar is president of Gaming Research, Inc., a boutique marketing research firm in Las Vegas focused on serving the worldwide gaming industry. As an executive, researcher and consultant, Lowenhar has been responsible for completing almost 300 major research gaming assignments worldwide over the last 20 years. He can be contacted at 702-889-3100, GamResInc@aol.com, or visit the website www.GamingResearchInc.com.

Dr. Jeffrey Lowenhar is president of Gaming Research, Inc., a boutique marketing research firm in Las Vegas focused on serving the worldwide gaming industry. As an executive, researcher and consultant, Lowenhar has been responsible for completing almost 300 major gaming research assignments worldwide over the past 20 years. He can be contacted at 702-889-3100, GamResInc@aol.com, or visit the website GamingResearchInc.com.