Chapter 1 – Marketing: Creating and Capturing Customer Value

Company Case Notes

JetBlue: Delighting Customers Through Happy Jetting

Synopsis

JetBlue is relentlessly focused on making sure that every customer experience lives up to the company
slogan, “Happy Jetting.” At JetBlue, customer well-being is ingrained in the culture. The discount
airline has focused on providing niceties that are simply not the norm when it comes to commercial
air travel. Things like more legroom, comfortable leather seats, gourmet snacks, LCD entertainment at
every seat, and free e-mail onboard. These things are sure to delight customers. But JetBlue knows
that these tangible amenities are easily replicated. That’s why JetBlue’s real competitive advantage is
its culture. The goal is to provide exceptional customer service at every touch point. To accomplish
this, JetBlue starts by hiring the right employees. Then, it trains them according to the company’s core
values: safety, integrity, caring, passion, and fun. Loving customers breeds truly loyal customers who
share the brand by word-of-mouth. Thus, customers are delighted far more by how they are treated by
JetBlue’s employee’s than by what they get in a flight. As JetBlue and Southwest (the other low-fare
airline known for excellent customer service) start to overlap on routes serviced, many are watching
to see which will be victorious. In the end, the loser might just be “all other airlines.”

Discussion Questions

1. Give examples of needs, wants, and demands that JetBlue customers demonstrate,
differentiating these three concepts. What are the implications of each for JetBlue’s practices?

Needs—could be discussed in terms of Maslow types of needs like safety and affection. But
likely the most core need here is long distance transportation from point A to point B.

Wants—are shaped by culture and by personality. Customers can fly any airline. But they
want to be treated with kindness and respect. They want comfort in flight. They want to be on
time. Given the choice, they want an assortment of tasty snacks and a selection of media at
their seat.

Demands—the interesting thing about this case is that all the extras that JetBlue delivers do
not cost more. In fact, in many cases, they cost less. Thus, the wants kind of automatically
translate into demands. This isn’t a case where people are willing to pay a certain amount in
order to get the amenities. They may actually save money and still get all the good stuff.

2. Describe in detail all the facets of JetBlue’s product. What is being exchanged in a JetBlue
transaction?

People are exchanging money, the time and effort to book a flight, and the opportunity to
travel with some other airline for all the facets of JetBlue’s market offering. Thus, JetBlue’s
combination of products, services, and experiences can be listed. These include all the
features and services on the flights (more comfortable seats set further apart, gourmet snacks,
in-seat entertainment, etc.) and in the terminals (more security lanes, high-end dining, wide
array of mall stores, play zone, work space, etc.). But this also includes the customer service
that people find (phone reps that treat you like a good neighbor, gate reps that are cheerful
and accommodating, flight attendants that dole out the goodies without begging). All this gets
wrapped up in an experience that is stress-free and leaves the customer feeling pampered.
 3. Which of the five marketing management concepts best applies to JetBlue?

The marketing concept is clearly established. JetBlue does an amazing job of identifying
customer needs and wants and then delivering them better than the competition can.
However, there may be some who argue that JetBlue exhibits the societal marketing concept.
There is some evidence that JetBlue’s approach to treating customers is in society’s best
interest, in that it may just transform the entire industry. Then, all travelers are better off.
However, there is little said in this case about efforts on behalf of JetBlue that typically
characterize the societal marketing concept.

4. What value does JetBlue create for its customers?

This should be discussed in terms of the “value = benefits - costs” equation outlined in the
text. The benefits/features and costs of JetBlue have already been outlined above. What
should be noted here is that because JetBlue delivers MORE benefits than other airlines at
prices that are as lower or lower, JetBlue delivers greater customer value. Therefore, it seems
that most customers, given the choice, would choose JetBlue as long as it is available for the
route they need to travel. One thing that is not discussed in this case that makes a difference
to many air travelers is airline membership reward programs (frequent flyers). No
information is given as to how JetBlue provides such benefits. This is a benefit that many will
put a high value on, given that they get free travel or upgrades from such programs.
Especially if they accumulate points from business travel that they can redeem for personal
travel, then such programs provide a monetary incentive. Such incentives go a long way
toward balancing out the value of good snacks and LCD entertainment. This is a good
comparison to make to illustrate how value differs across customer segments.

5. Is JetBlue likely to continue being successful in building customer relationships? Why or why
not?

Corporate culture is on JetBlue’s side. The company certainly has the infrastructure to
continue to provide the service and benefits that have created such strong customer
relationships. The only issue in question is whether or not JetBlue can continue to afford to
provide all the niceties at low prices. However, the last paragraph of the case points out that
JetBlue also has the luxury of a lower cost structure than most other airlines. Its cost per
available seat mile of 8.88 cents is even lower than Southwest’s cost of 9.76 cents. Thus, from
a competitive standpoint, there is no reason that JetBlue should not be able to continue to
deliver.

Suggestions

JetBlue has a great Web site (www.jetblue.com/experience/) that illustrates the full JetBlue customer
experience. Use this Web site to illustrate the full spectrum of customer benefits that JetBlue delivers.
Chapter 2: Company and Marketing Strategy : Partnering to Build Customer Relationships

Company Case Notes

Trap-Ease America: The Big Cheese of Mousetraps

Synopsis

A group of investors has purchased, from an inventor, the U.S. rights to sell a patented, innovative
mousetrap. The group has hired Martha House to manage the company that includes assuming
responsibility for sales and marketing. This case provides details of the marketing strategy employed
by Ms. House.

Despite the innovativeness of the mousetrap and its success at gaining public attention, sales are
disappointingly slow. Martha finds herself wondering why the world is not beating a path to her door,
as Ralph Waldo Emerson would have predicted.

Discussion Questions

1. Martha and the investors in Trap-Ease seem to face a “once-in-a-lifetime opportunity.” What
information do they need to evaluate this opportunity? What do you think the investor group
would write as its “mission statement”?

The case paints a very typical picture of a group of businesspeople who believe they have an
outstanding product that will be readily accepted by the market. There is little evidence in the
case that the investors have done any real thinking about customer needs or have followed the
marketing concept as it is introduced in the chapter. The investors believe they have a
mousetrap, which will satisfy customer needs, and, therefore, customers will buy it. Students
need to realize that even though a firm may have an excellent product it needs to understand
customers’ needs and how they respond to those needs. There is no indication in the case that
the investor group has any marketing information about its potential customers or has done
any real marketing research. The investors would need to know the size of the mousetrap
market in the United States. Who buys mousetraps? What kinds do they buy? What prices are
charged for the various kinds of mousetraps? How are these mousetraps sold to consumers?
What customer needs do existing mousetraps solve, and which needs do they fail to solve
adequately? How do consumers deal with their mice and rat problems? Answers to these and
other “marketing research” types of questions would give the investors a better feel for the
challenges facing them in marketing the mousetrap.

Like many new, small businesses, however, the investors would write a mission statement that
focused on making money for themselves. Their statement might be, “Make a lot of money by
selling a patented mousetrap.” Discussing this with the class will allow the instructor to raise
the oft-repeated slogan, “maximize shareholder wealth.” Proponents of the marketing
concept might well argue that making money is not the goal of the firm. Rather, if one follows
the marketing concept, the goal of the firm must be first to satisfy the firm’s customers and to
do that better than the competition. Only then does a firm have the opportunity to “make
money.”

2. Who is identified as Trap-Ease’s target market? Are there other possible market segments that
the firm could target?
 The case indicates that Trap-Ease is targeting housewives, and implies that housewives are
reluctant to set and bait traditional spring-loaded mousetraps. They also are concerned about
the safety of children and pets that may be around the home because once the spring-loaded
trap has caught a mouse, one often has a mess resulting from its action. Besides being
unpleasant, the mess presents health concerns due to the diseases that may be carried by
mice.

There are a number of other market segments that the firm could target. The issue of disease
control suggests several other potential targets. First, the instructor might ask students where
disease control concerns would be important. Any business that handles or stores food and,
therefore, is attractive to rats and mice would be a potential target. Restaurants should come
to mind here, both because of the presence of food and food products and also because these
establishments cannot use chemicals near food. This also should suggest food wholesalers or
warehouses where large quantities of food may be stored in the channel of distribution. Food
manufacturers also need rodent protection.

Another potential market is research laboratories. Here, researchers use large numbers of
mice in research projects. It is not unreasonable to think that some of these mice occasionally
get loose. A researcher would be interested in the ability to recapture a mouse without
harming it—something that the researcher would be able to do with the Trap-Ease.

Another potential target market is exterminators. Because they must work in areas where
chemicals would not be allowed and traditional traps would have the same messiness
problem, these companies might be a target market. These exterminator companies might
also sell the traps directly to consumers with whom they deal. This possibility will allow the
instructor to talk about channels of distribution and the impact of Trap-Ease’s decision to go
directly to the end customer.

3. How is the product positioned relative to the selected target market in the case? Are there
other ways to position the product?

As suggested in the answer to question 2, Trap-Ease has been positioned from the point of
view of the customer as meeting safety and cleanliness needs. Because of its pricing and
distribution, Trap-Ease is positioned for use by the individual homeowner who has these
concerns.

The major alternative positioning for the product focuses on its ability to control disease.
Because the mouse would be trapped in a fully enclosed device and would be captured live,
there is little opportunity for disease to spread as a result of its capture. It should be noted,
however, that positioning the product this way would make substantial differences in the
entire marketing strategy. This allows the instructor to make the point that will be reinforced
throughout the semester that the full marketing mix must be coordinated to position the
product properly in the customer’s mind.

4. What marketing mix has Trap-Ease established? Do you see any problems with this mix?

In summary, Trap-Ease’s marketing mix is as follows:

Product: As noted above, Trap-Ease is a patented mousetrap that is designed to allow
consumers to avoid the safety and cleanliness problems associated with traditional
mousetraps.

Perhaps by this time in the discussion someone will have already suggested one of the
obvious problems with this product. That is, what does one do with a live mouse caught inside
the trap? The inventor had designed the product to capture the mouse alive and to suffocate it
over a period of several hours. This, however, presents a problem for the user. If the
consumer discovers the trap has worked, she must pick up a trap containing a live mouse that
may be squirming and squealing. Then, what does the consumer do with the mouse? It might
be flushed down the toilet or let out in the woods, if one lives near woods. We might wonder,
however, if the target market, housewives, will be comfortable carrying the trap containing
the live mouse and then opening the door to let it out. Later market research revealed that few
people felt comfortable in this situation.

On the other hand, if the consumer allows the mouse to simply suffocate in the trap, he will
find that mice, like most animals, do not die quietly. You can imagine the trap bouncing
around under a sink like a large Mexican jumping bean as the mouse tries to free itself.
Experience indicated that the mouse also made a lot of noise prior to suffocating. The
targeted housewife may find herself presented with the dilemma of how to handle a live mouse
or how to put up with the noise and unpleasantness of its suffocating. Thus, although the trap
works well to catch a mouse, it fails to deal with the problem of what does one do with the
mouse.

Price: The price of approximately $1.25 per trap, when sold in packages of two, also creates
a problem in that it is five to 10 times more expensive than traditional traps. This problem is
complicated by the fact that if consumers have significant mouse problems, they would need a
number of traps to address the problem. Or, if they decide to simply throw away traps that
contain mice to solve the disposal problem, the cost could again become prohibitive.

Place: Martha House has made the decision to distribute the products directly to national
chains. Although on one hand this decision makes sense given the company’s desire to
achieve rapid sales growth, it creates problems for the company due to its small size. As
noted in the example, which concludes the case, the company does not have its own truck and
distribution facilities. It must depend on outside firms to deliver its product. Because national
chains have very strict time schedules, this makes it difficult for Trap-Ease to control its
distribution.

Promotion: Trap-Ease is relying basically on appearances at trade shows and some limited
advertising. In fact, it is relying on word-of-mouth. Primarily, the firm depends on point-of-
purchase displays to sell its product. One might wonder, however, how quickly consumers
passing point-of-purchase displays for the product will understand it. Further, the firm is
dependent on whatever advertising the chains may do to generate end-customer awareness.
Even early in the semester, students should understand that generating such awareness is
extremely expensive and difficult. It is not clear that Trap-Ease has adequate resources to do
significant advertising aimed at end customers, and it is not clear that the chains will devote
sufficient resources to advertising the product.

All of these marketing mix problems should suggest that Trap-Ease has a number of
significant hurdles to address if it is going to improve its performance.
5. Who is Trap-Ease’s competition?

Even though Trap-Ease has a patent on its mousetrap, it does have competition. Students may
tend to think that a patent protects a firm from competition. Obviously, the traditional, spring-
loaded trap is competition. Although the Trap-Ease trap has significant advantages, its price
means that for many low-income consumers who probably have more mice problems, Trap-
Ease is too expensive. Consumers who have better incomes and who may not be excited about
dealing with dead or live mice will probably simply turn to exterminators to take care of their
problems. Although exterminators are more expensive, the benefits of having someone else
take care of this unpleasant problem will be attractive to many consumers. Thus, Trap-Ease
finds itself with competition both above and below its relative price. This competition
significantly reduces the size of the target market.

6. How would you change Trap-Ease marketing strategy? What kinds of control procedures
would you establish in connection with this strategy?

There are, of course, numerous possibilities that students might suggest. Many students will
focus on trying to make specific changes to elements of the established marketing mix. For
example, some students may suggest that by lowering price the Trap-Ease will become more
competitive with traditional traps and be more attractive to consumers. Any attempt to
manipulate the existing marketing mix, however, allows the instructor to make the point that
the marketing mix should flow from the target market. At this time, having discussed previous
questions, it should be clear to students that there is some question about the size and
viability of the selected target market. In fact, there may not be a real market given the
product’s positioning—at least not a market that is big enough to support the firm and reach
the investor’s goals.

To revise the firm’s marketing strategy, the firm needs to begin by thinking about its target
market selection. First, the student could suggest that the product has been positioned
improperly. Although health and cleanliness concerns are of interest to consumers, the other
aspects of the marketing mix make the product unattractive. The disease control aspects of the
product, however, are important. It would be possible to reposition the product for disease
control purposes and to select the industrial/institutional target market. Thus, the target
market would become food manufacturers, wholesalers, and others who store quantities of
food that are subject to rat infestation and also restaurants and other institutions, where food
may be handled and where poisons and other rat control measures are inappropriate.

With respect to the marketing for this new target market, the firm needs to develop larger
sizes of the trap. Some of the potential customers will have larger rats with which to deal.
These firms will often have maintenance employees who will not be squeamish about dealing
with and disposing of rats that are caught in such traps.

With respect to price for this new strategy, there is really no information in the case to allow
the instructor to figure what the price might be. We can imagine that, in connection with the
place decision, the firm might decide to deal directly with larger exterminating companies or
food wholesaling chains. The company will probably find itself in a negotiation situation as it
has with the large retail chains. This will make it important that the firm understand its costs
and be able to figure what prices it can agree to that will allow it to make an adequate profit.
With respect to place, the firm will be required to continue to sell to a limited number of
customers due to the lack of any real sales force. This would imply that it will have to sell to
food wholesalers or exterminating companies themselves unless it can find a distributor who
caters to these kinds of operations. Looking for distributors who could handle some or all of
the sales effort would be appropriate given the firm’s limited resources. This may put
additional pressures on margins, but the firm will have to evaluate accepting smaller margins
versus absorbing the cost of improving its own distribution system.

The new strategy would continue to imply a trade promotion strategy. Appearing at trade
shows for food wholesalers or exterminators would be a first step, and one with which the
firm is familiar. This strategy avoids the necessity for having to pursue expensive media
options for developing end-customer retail demand. Advertising in trade magazines should
help bring the product to the attention of targeted customers. Further, if the firm is successful
in selling to exterminators, they will become its sales force.

As to control procedures, the process of revising the marketing strategy allows one to ask the
students how they will monitor their progress. In the case, Martha has no connection with the
end-customer. She is dealing with buyers for the large retail chains. She is not sure who is
buying the mousetrap or why or how they are using it. A first control procedure for any
strategy then is to identify the target market and establish mechanisms to monitor the target’s
use of and satisfaction with the product. Chapter 4, Managing Marketing Information, will
introduce students to techniques, which might be used by Trap-Ease to evaluate the success of
the strategy.
Chapter 3 : Analyzing the marketing environment

Company Case Notes

Target: From “Expect More” to “Pay Less”

Synopsis

For many years, Target had momentum on its side. Growing at a faster rate than its much
larger rival, Walmart, Target’s chic and fashionable image seemed to resonate well with
consumers. But as the economy shifted, the tables turned. Walmart’s efforts to clean up its
stores and offer better merchandise had started taking effect. But more importantly, the
“Always low prices” image of Walmart was more relevant to consumers during hard times.
Although Target initially downplayed the magnitude of its slowing sales (and Walmart’s
growing sales), it finally recognized that the price part of the equation was something it
needed to emphasize more. This case highlights Target’s efforts to reposition itself as the chic
retailer that is every bit as cheap as the other guy.

Discussion Questions

1. What microenvironmental factors have affected Target’s performance over the past
few years?

The Company: Target has done well for years by nurturing a brand image that has
served it very well. As economic factors shifted, this same image became somewhat of
a detriment. Executives at Target did not react quickly enough in recognizing the
problems. Often, it is difficult for a company to switch gears, especially when it
involves recognizing a trend that goes counter to a core strategy.

Customers: The case indicates that Target did not carefully study consumer markets
and adapt its marketing accordingly.

Competitors: Walmart plays a huge role in Target’s reversal of fortune. The

interesting thing is that Walmart’s strength was no great secret. Target was fully
aware of this competitor and had formulated a strategy of “much nicer stuff for only
slightly more money.” This was working so well that for years Walmart tried to be
more like Target with no real success in doing so. When economic conditions shifted
from prosperity to the severe downturn, Walmart didn’t have to do anything. Its
image of “low prices” naturally drew people away from Target. It was only then that
customers may have realized, “hey, Walmart isn’t so bad. It has big clean stores now
and its merchandise is pretty much the same.”

Students may mention other competitors as well (Dollar General, Kohl’s, etc.). But it
is clear through the recession that Target’s shifting fortunes were a direct result of
customers fleeing to Walmart.

Publics: The most relevant “public” to this case is the financial public. That is, the
movement led by activist shareholder William Ackman applied pressure on Target to
make changes.
2. What macroenvironmental factors have affected Target’s performance during that
period?

Economic: Without a doubt, the biggest factor in the shifting dynamic between Target
and Walmart was the change in economic conditions. Mounting unemployment,
sliding GDP growth, and increasing mortgage payments (a significant number of
homeowners had adjustable mortgages) created an environment where more
customers had less income.

Demographic: The biggest aspect of changing demographics relates directly to the

economy. Household income was dropping while household expenses were
increasing.

Political: During the time period of the shifting economy, there was a great deal of
political activity that spotlighted the economic conditions. With the general election
runoff between Barack Obama and John McCain, a great deal of attention was paid
to the banking crisis. Bush led the charge to pass the T.A.R.P. program. All through
the latter half of 2008 and first part of 2009, the news was full of stories of bailouts
for banks, insurance companies, auto manufacturers, and the like. With all this
attention, consumers became much more aware that times were tough.

Cultural: In short, the American culture (and much of the world’s culture) shifted to
one dominated by frugality. This was evident, even among the masses whose
household income was not adversely affected. Because of the attention being given to
rising unemployment and uncertain economic times ahead, many people tightened the
purse strings in preparation for what might happen.

3. By focusing on the “Pay less” part of its slogan, has Target pursued the best strategy?
Why or why not?

This is a very risky strategy. The risk to Target was that of changing from an image of
high quality to low price. Although the shift seemed somewhat subtle on paper given
that it would merely require a different weighting of the existing tagline, “Expect
more. Pay less,” the reality was that most people did not shop at Target for the “Pay
less” part. So, if Target were able to convince the masses that it was as cheap as
Walmart, the danger was in losing its premium image. And once that happens, how
does a brand regain that edge?

On the other hand, many would argue that Target had no alternative. “Low prices”
was working. And its revenue and stock price were suffering so, that it had to react.
An extreme example of what happens to a retailer who does nothing is Abercrombie
& Fitch. During this same period, A&F refused to move to a strategy of lower prices.
It claimed that such a strategy would damage its premium image. As a result, A&F
suffered some of the worst results in the retail clothing industry.

The fact that for years, Walmart was not able to convince the masses that it was not
only cheap, but fashionable, highlights how difficult it is to reposition a highly
entrenched brand. This is also illustrated by how Target did not get the public to
budge with its initial efforts to communicate better value.
4. What alternative strategy might Target have followed in responding to the first signs
of declining revenues and profits?

This should be left up to students to generate some options. Student creativity may
come up with a “winner.” But given the suggested response for question 3, the only
other foremost option was to focus on style over price, which likely would have been
detrimental.

5. Given Target’s current situation, what recommendations would you make to CEO
Steinhafel for his company’s future?

Target has held on to its strategy of emphasizing price and value. As of the August
2009 back-to-school season, one study found that prices at Target were less than 1
percent higher than Walmart’s. Target has cut costs by reducing staff, suspending
salary increases, reducing planned store openings, etc. Nonetheless, quarterly profits
were down by 6.4 percent, its eighth consecutive quarterly profit decline. Target was
also still struggling with revenue declines.

Meanwhile, Walmart posts some of the strongest financials in retail. The question is,
does Target continue on this path and hope that the customers will “get it,” or does it
try something else?

One suggestion might be for Target to do something drastic for a few months
(especially entering the holiday season of 2009), even if it means losses. Consumers
have not realized enough that they can “have their cake and eat it too.” Thus, if some
unbelievable deals were pitched on stylish merchandise that Walmart doesn’t carry,
people might start to get the message. Once they return and find that prices aren’t any
higher than Walmart, they might just stay and Target could ease up on the loss
leaders.
Chapter 4: Managing Marketing Information to gain Customer Insights

Company Case Notes

Harah’s Entertainment: Hitting the CRM Jackpot

Synopsis

From humble beginnings, Harrah’s has become the largest gaming organization in the world
with revenues of over $10 billion. Although some of this success is due to acquisitions and
mergers, the majority of it is due to the fact that Harrah’s is an expert at customer relationship
management (CRM). And at the heart of any good CRM program is a sound marketing
information system.

Harrah’s CRM efforts are manifest in its Total Rewards program. This program is not just
another membership rewards program. It is through the CRM program that Harrah’s both
gathers customer information and delivers personalized service. The target of Harrah’s efforts
are not the high-rollers, but the low-rollers; customers who visit frequently, have time on
their hands, but spend less on each visit. Total Rewards members receive points based on the
amount they spend at Harrah’s facilities. Then, they can redeem the points for a variety of
perks, such as food, cash, merchandise, rooms, and hotel show tickets.

Harrah’s can deliver such powerful and personalized service because it has the largest
network of properties in the industry. Its properties include casinos, hotels, restaurants, gift
shops, and entertainment venues. Every time a customer swipes their Total Rewards card, the
system knows what the customer is doing. That information is then analyzed and maintained
to keep a profile on each and every customer. Harrah’s employees can determine at any given
moment what kinds of rewards are most relevant to a given customer. The culture at Harrah’s
fosters employees who are passionate about delivering personalized service. The bottom line
is that the entire Total Rewards program is about maximizing customer experience. And
Harrah’s has a system emulated by corporations around the world, regardless of industry.

Discussion Questions

1. Briefly discuss Harrah’s marketing information system, using Figure 4.1 as a guide.

This question is designed to get in to the heart of the chapter. Figure 4.1 provides a
chapter overview. Harrah’s operates in a marketing environment that consists of
target markets, marketing channels, competitors, publics, and macroenvironmental
forces. The link between that environment and the decision makers at Harrah’s
(marketing managers and other information users) is its own marketing information
system.

Assessing information needs—Loveman is a key component of the assessment efforts

since he came on board in 1998. He knew the company needed a way to consistently
gather relevant customer information. He knew that information needed to be
comprehensive and include not just data about customers gaming patterns, but their
needs, wants, and desires for a complete experience.
 Developing needed information—although this includes internal databases and
marketing intelligence, this case focuses on marketing research (original data
gathering) in order to achieve the data needs for the Total Rewards CRM program.
This effort is not a one-time effort. It is consistent and ongoing. Total Rewards
gathers data electronically every time a customer swipes their Total Rewards card,
gets online and logs in, or fills out a survey. Thus, Harrah’s monitors every move
customers make. It is notable that this program boasts 40 million users, one out of
every six adults in the United States.

Analyzing and using information—the case does not mention much about data
analysis (data is processed almost instantly in a central data warehouse). But the
insights are the powerful component that is revealed. Note the visualization software
that generates a dynamic “heat map” of the casino floor to give indications where the
action is. But more importantly is what Harrah’s knows about every customer—their
characteristics and behaviors such as who they are, how often they visit, how long
they stay, and how much they gamble and entertain. “We know if you like
gold…chardonnay, down pillows; if you like your room close to the elevator, which
properties you visit, what games you play, and which offers you redeemed.”

2. Describe the relationship between Harrah’s marketing information system and

Harrah’s managers and employees.

The introduction is a good illustration of this relationship:

Joseph, a 30-something New Yorker, was recently on a weekend trip to Atlantic City
where he hoped to stay at one of his favorite Harrah’s resorts and enjoy some gaming
and entertainment. Unfortunately for Joseph, he had picked a weekend when all the
hotels were booked solid. But after swiping his Harrah’s Total Rewards card to play
the tables, the pit boss came by and directed him to the front desk. There, he was told
that a room had become available and he could stay in it for a reduced rate of $100 a
night. When he checked out two nights later, Joseph was told that all the room
charges were on the house.” This example illustrates that managers and front-line
employees have the information that they need about any given customer at any time
and can make immediate decisions that delight customers.

The description of Marilyn Winn’s managerial efforts also provide an illustration of

the relationship between the marketing information system and employees:

Marilyn Winn, president of three Vegas Strip resorts, lives and breathes Harrah’s
CRM culture. “My job is to make money for Harrah’s Entertainment by creating a
great climate for customers and employees.” She focuses on what goes on insider her
properties. She spot-checks details on casino floors and in gift shops. She attends
weekly employee rallies that are as much a party as they are a communication tool.
Winn points out how Harrah’s motivates its employees to do their best. “Every week,
we survey our customers. Customer service is very specific at Harrah’s, systematic.”
Based on customer service scores, employees have their own system for accumulating
points and redeeming them for a wide variety of rewards, from iPads to pool
equipment. “Every property has the goal to improve service. This is just one way we
 do it. We also use mystery shoppers to verify we are getting the service we want and
we train our employees to our standards.”

3. Why does Harrah’s system work so well compared to MIS efforts by other
companies?

Harrah’s certainly has a great IT system. But that can be replicated by just about
anyone. Among competencies that are not so easily copied is Harrah’s culture. From
the CEO down, Harrah’s has a culture that fosters employee willingness to serve
customers in a personalized fashion and to truly delight them. This is truly a
customer-centric culture, not just one that professes to be so. Another competency is
Harrah’s operational structure. Its network of properties across states is
unsurpassed. This may not sound like such a big deal, but consider the fact that the
gaming industry has traditionally been comprised of individual properties with
management that oversees operations like feudal lords. Even in cases of properties
being owned by the same holding company, hotels and casinos have been
traditionally operated as individual entities, with power being localized, not
centralized. Harrah’s has overcome this better than anyone else. Lastly, Harrah’s has
succeeded at targeting a profitable segment of customers that the rest of the industry
overlooked: the low-rollers. All these competencies combined are reasons why
Harrah’s system has worked so well.

4. To what extent is Harrah’s in danger of a competitor copying its system?

The answer to the previous question pretty well covers this. There are things that
competitors can copy (like acquiring properties, building an IT system, and
developing a rewards program that gathers data at every touch point). But Harrah’s
culture, its centralized integration of properties, and its corner on the low-roller
market cannot be replicated so easily. Thus, it is likely that Harrah’s will continue to
dominate the industry in the future.