Competitive Las Vegas casino and resort environment

World’s one of the major and leading resorts and casino company, MGM Grand, owns and operates 24 points within USA. In addition to MGM Grand’s properties in Nevada, Michigan and Missipi; the company has investments in New Jersey, UK, Illinois, Nevada and Macau. As it implies in the mission statement below, in all their resorts their main aim is to provide high quality customer service in every facility around the world in order to enhance shareholder value and sustainability.

“Our mission is to deliver our winning combination of quality entertainment, luxurious facilities and exceptional customer service to every corner of the world in order to enhance shareholder value and to sustain employee, customer and community relationships.”(MGM Mirage, 2010)

In addition, within the borders of MGM Resorts International’s 16 resorts and 165 restaurants, responsible gaming is supported. Also the company carries out “American Gaming Association’s Code of Conduct for Responsible Gaming” in its casinos and resorts.

Competition

The intensive competition in Las Vegas Resort and Casino Market has turned the market into an oligopolistic one. The major players of this oligopoly is Las Vegas Sands Corporation and Wynn Resorts. The Venetian, The Palazzo, Sands Expo Center belong to Las Vegas Sands; Encore and Wynn are owned and operated by Wynn Resorts.

Assessing Growth Opportunitis

As Fitch has outlined that demand for gaming has weakened, MGM Grand is considering to gain more market share with its current products using a market penetration strategy. For this reason, each product (resort) is diversified to meet the needs of the different market segments. MGM Grand diversifies its hotels mainly by pricing strategies, and level of luxury.

Market Positioning of Resorts

The highly competitive Las Vegas casino and resort environment can be considered as an oligopoly market structure. The intense market is mainly controlled by MGM Grand, Wynn Resorts and Las Vegas Sands. The most considerable obstacle in the market is due to the nature of oligopolistic markets that competitors try to gain market share by engaiging in price wars.

MGM Grand Bellagio with its glamorous appearance and appealing nature is positioned as one of the most high end hotels in Vegas. Following that, Aria is growing its position in the international market with high sales in convention bookings. Aria expresses its significant difference with its contemporary architecture whereas Bellagio stands out with its AAA Five Diamond Award® winning casino. The third strong player of MGM Grand, Vdara provides a non-gaming, smoke-free environment.

Mandalay Bay points out itself as “Untamed Luxury” whereas Mirage follows the slogan “Vegas Starts Here”. MGM Grand, on the other hand is “Maximum Vegas”.

4Ps of Marketing

Product

MGM Resort International has 12 hotels on Las Vegas Strip and operates 7 more hotels in US and other locations. Bellagio and Ariaare serving the needs of the high end visitors. New York, Monte Carlo, Luxor, Excalibur, Circus Circus MGM Grand , on the other hand are serving the needs of the diversified market with its diversified accommodation range. Vdara, Signature at MGM, The Hotel at Mandalay Bay are boutique hotels designed for satisfying special needs of its visitors. The Hotel at Mandalay Bay is mainly designed for business travelers as well as pleasure seekers. City Center with its luxury shops is positioned as “one of the world premiere shopping destination” attracting all visitors of Las Vegas. MGM Grand Detroit serving luxury in the center of entertainment in the city mainly attracts high end customers with its high end positioning.

Brand name is an important key factor in MGM Grand’s marketing strategy therefore establishes different brand names and implies different pricing strategies to each product in its portfolio.

Pricing

Fitch expects the exteremly competitive Las Vegas casino environment to be even more competitive in the following periods since profability will be under the threat of price wars of competitor. states that the extremely competive environment For MGM Grand pricing is a key variable in differentiating the variety of the quality and thus prices demanded from customers. Bellagio is the high end product with the highest pricing model followed by Aria. However MGM GRAND, Excalibur, Circus Circus, New York New York and others are effected by seasonal pricing, special discounts and special packages.

As seen in the graph above Bellagio has the highest price $130(for a week day), and Aria second highest with a $129 per night fee. The Hotel, Vdara, Signature at MGM are in the $110-90 price range. Circus Circus has the lowest price $38 per night on a weekday followed by Monte Carlo, Excalibur, Luxor and New York New York.

Promotion

The most considerable obstacle in the market is due to the nature of oligopolistic markets that competitors try to gain market share by engaging in price wars. Therefore the price activities realized in a market player is followed by another player. In other words when MGM Grand offers special prices, so does other players.

Promotion in Las Vegas is mainly consisted of online advertising, TV advertisings, paper and B2B advertising. Hotel companies make discounts in week days and last minute deals as a way of increasing hotel occupancy rates.

Place

Visitors coming to Vegas are the main targets also MGM Resorts attracts customers through other websites, magazine advertisings. In addition since 44% of revenues of MGM Grand are

BCG MATRIX

MGM GRAND

Relative Market Share

HIGH

LOW

Market Growth Rate

HIGH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOW

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MGM Grand’s products battle in the same oligopoly market with small number of sellers. MGM positions its product portfolio with respect to its pricing strategies and level of luxury. For that reason Aria, Bellagio are the in the luxury group whereas MGM Grand, Monte Carlo, Newyork Newyork, Luxor, Excalibur are in the middle range. Bellagio, Excalibur, MGM Grand act as cash cows because of their market share and sanity in the market.

Vdara and Aria have a relatively high market share with a high growth rate and they will be penetrating the market in the next periods. Stars, units with a high market share in a fast-growing industry are mainly the hotels with concierge tourism. MGM has been investing on boutique hotel concept for the last years. This growing market will bring much revenues and market share. For that reason Vdara, The Hotel and Signature are the stars for MGM. The hope is that stars become the next cash cows. Bellagio, MGM Grand, The Mirage, Mandalay Bay, Luxor, Excalibur, Newyork Newyork, Monte Carlo can be considered as cash cows currently since they are generating revenues.

Crystals, the shopping mall inside the city center can be positioned as a question mark since it consumes large amounts of cash with a relatively low market share. With a 70% occupancy rate currently, 5 higher end boutiques will be opening its doors in Crystals soon.

Dogs, it is thought, should be sold off; however the companies keep them for several reasons including strategic plans. For MGM Grand dogs are considered as company’s low earnings like Circus Circus, however, company keeps them in its portfolio to penetrate the Las Vegas market.

MGM Grand’s hotels do not only act as a place to accommodate in Las Vegas but they are also the advertising tools of MGM Grand. For instance Aria is advertised in the Excalibur’s room channels. From another view, Crystals shops distribute discounts for Vdara. Therefore even though some products are not bringing high amounts of cash, they act as tools to bring out the cash which might be considered as another reason to keep the dogs.

Mobile Marketing

MGM Hotels has been using the mobile channel as a tool for data acquisition and also the information gathered through acquisition is highly used to grow and improve the SMS offers.

With its SMS marketing strategy MGM aims to connect the 25-35 age group who are 64% likely to send SMS. The marketing team uses SMS to incorporate with its traditional marketing tools like TV, radio ads and print materials. (Retrieved from http://www.mobilemarketer.com/cms/news/associations/3390.html, on November, 2010)

In addition smart phone applications play an important role in mobile marketing strategies of MGM. MGM’ main aim behind the emphasis on mobile marketing strategy is to contribute the potential visitors and current customers to text and in return receive special discounts, priviliges, offers and even show tickets or upgrades. As well as texting MGM puts great emphasis on applications of its hotels for iphone and smart phones. Currently MGM has 15 applications of which 150,000 are downloaded as of November 15, 2010. (Retrieved from http://mgmresorts.investorroom.com/file.php/179/RequestMGM+060710+Goldman+Sachs.pdf on November 26,2010)

Lately, MGM has initiated a mobile display ad campaign consisted of banner advertising. The main idea behind this campaign is to attract attention of web users who are taken to MGM Grand’s page and offered special discounts, privileges and upgrades within the company. The banner advertisements, running through Yahoo mobile and other platforms, carried new customers and ended up increasing the loyalty of current customers.

Usage of CRM

MGM Mirage, one of the biggest team players of MGM Grand has launched a new branded Visa credit card that offered special discounts, offerings and brought the ability to earn gift certificates which were to be used within the participating MGM Resorts in Las Vegas.

Holders of this Visa Card will be receiving 2 rewards points for each dollar spend at MGM Mirage Resorts and Casinos. In addition each time a user reaches to 2,500 points, will be a-awarded with a $25 gift certificate The company considers loyalty cards as a key element for strengthening and advance relationship with its current and new customers.

CRM movement will bring loyalty and improved sales figures to MGM Grand although MGM is not the only company offering loyalty cards. However MGM Grand is not the initiator of this loyalty program. Caesars Entertainment has been offering began offering the Caesars Entertainment MasterCard which provided special packages, discounts at 15 entities within USA. In addition Caesars’ Loyalty program was one step a head of MGM’s in another aspects. Ceasers’s Loyalty program card was linked to the Credit card which offered casino dollars for time spend in casino.

According to Fitch report game players started to spend less time in casinos, which is a big threat for guests of hotels since the highest percentage of revenues (44%) is gathered through casinos. Therefore, Caesars’ dollar for time concept influences people to spend more time in casinos and in return rewards them with dollars to be spent in casinos and increases the time spent in casinos.

In addition to the Rewards Visa Card, MGM offers Player Club Cards that are designed to qualify for benefits and rewards at participating Players Club resorts: MGM Grand, Excalibur, The Mirage, New York New York, Mandalay Bay, Luxor, ARIA, , Beau Rivage Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, MGM Grand Detroit, Monte Carlo. Basically this card allows members to see the special offerings, promotions, communicate with Players Members Services and view tax information statement. Loyalty Card program has enhanced 60M in database and 29M current players Club customers. The new M life Player Club cards will be provided in 5 forms Gold, Pearl, Sapphire, Platinium and Noir, each offering different privileges and earning points.

Marketing the City Center

Although the taught that CityCenter was expected to be the most powerful development engine of MGM in the long run has started to disappear, CityCenter is still keeping its importance. As the CityCenter was the most serious growth project of MGM during the company’s most glorious years of 2005 and 2006, the company emerged big marketing activities for CityCenter. Many of these actions took place right before the constructions begun and continued with a constant increase. Online sales advertisements as well as one to one sales formed a big part of the marketing budget of City Center.