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The New Normal

Marketing research in tough economic times

For the worldwide legalized casino gaming industry, the economic crisis of the past 18 months or so has been particularly painful.

For the United States and the major international operators on the famous Las Vegas Strip, all levels of revenue generating business are down significantly. And for the balance of 2009 into 2010, only at the margin do things look slightly better. Regional and local operators from the Northeast to the far West are suffering as well—albeit local operators outside of Las Vegas are doing a little better.

As would be expected, senior management throughout the system has engaged in substantive cost-cutting, hiring freezes, faster attrition programs, benefit cutbacks, contracting, and in effect stopping of all but the most necessary programs needed to run the business. Moreover, the whole budgeting process has been put in disarray.

Aggressive and costly promotion-driven programs designed to maintain a certain level of activity are the new business mantra. At the same time, advertising budgets have been slashed, long-term investments in branding and equity building reduced and even terminated, and the development and execution of effective and necessary market research postponed, put on hold and in some cases abandoned.

The Question

From a marketing research perspective, in these tough economic times and with significant changing patterns of consumer behavior (perhaps permanent), should not senior management be engaging in more (and maybe different) marketing research interventions vs. less? Interestingly, during the rather robust economic period of 2003-2007, it was research, research, research all the time, almost independent of the value-added contribution to the business.

The Challenge
So what research ideas (programs) should enlightened managements consider in tough times? And what research programs should be jettisoned, and why? What new and potentially incremental revenue-building research programs should be invented?

Interestingly, and in a sense disappointingly, there is scant evidence in the marketplace that such judgments are being or have been made. And for the most part, most casino organizations do not have in place either a strategic research program or even a tactical day-in, day-out research program that provides a reasonable set of scientific, defensible and actionable answers to business questions.

Using the very cost-effective internet as a substitute to capture scattered, often unreliable and by definition not valid consumer insight is not (even in tough economic times) the path to effective decision-making.

So, what is the correct or at least a better series of questions to ask?
• Why did we engage in marketing research in the first place? And what were the coverage areas?
• What information do we believe is most valuable and needs to be monitored on an ongoing basis, vs. what areas within the full range of potential consumer behavior issues should we keep on our radar screen? A target list.
• Given the dramatic change in business climate over the past 12-18 months, what customer behavior interventions should we have engaged in—and as a post mortem, why didn’t we? Finally, what should we be doing today?

Some Suggestions
On the various financial news networks, we are constantly informed about the state of consumer confidence, consumer sentiment, and consumer well-being—useful leading indicators for the economy. So why don’t casino operators do this for themselves—the analysis and monitoring of their patron database?

There are 10-12 areas one would want to measure on an ongoing basis. And in the spirit of full disclosure, when it has been suggested to senior management that this is worth doing, the all-too-frequent response is (to paraphrase): “It’s a significant dollar investment; I’m not sure I want to spend investment dollars this way.”

Given the absolute decline in visitations, the absolute decline in individual budgets (fairly easy to track) and overall leisure spending retrenchment, it is critical for management to assess the permanence of this consumer behavior trend. As the economy improves in 2010, will this “new normal” remain, or will prior levels of product interest return?

Implied here are a number of business investment and eventual financial performance expectations for individual property performance—and for larger casino organizations, significant, system-wide implications.

In proposing the question to senior gaming executives about “thinking strategically” vs. “short term,” even in this very challenging economic environment, most cannot get by the very near-term financial imperatives facing their organization. However, and paradoxically, a strategic research initiative that examines in great detail the strength and potential longevity of the “new normal” can pay substantial dividends for those management teams attempting to not only secure and maintain patron loyalty, but critically, to steal share over time from the competition.

In thinking about this complex “big picture” question, managers should consider several significant areas of investigation, all designed to leverage brand-building and customer-capturing, whether as an individual operator or a multi-property operator in a number of gaming jurisdictions.

In the final analysis, the challenge for all operators, whether large or small, is to think strategically longer-term. Casino operators need to concentrate on what they need to know now, and that given the full range of behavioral/demographic dimensions involved, how their customer base (and those of the competition) will come out of this economic tsunami… and whether a “new normal” will require a revised and perhaps different level of research and changing knowledge as it applies to business decision-making.

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, [email protected], or through the website

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, [email protected], or visit the website

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