Pagcor Marketing Plan

By Gene Gregorio
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PAGCOR MARKETING PLAN

I. Situational Analysis

The world-wide gaming and entertainment industry was badly affected by the financial crisis of 2008-
2009, which hit discretionary spending among the industry’s most lucrative customer segments. Pagcor
has shown resiliency by hitting income targets (P29.78-B) in 2009 despite the financial crisis. This is
almost 1% higher than its P29.61-B total annual income in 2008. After the Pagcor casino branches in
Manila, Cebu City, Tagaytay and the provincial branches in Luzon posted the highest business incomes in
2009. Construction and completion of Pagcor City and the various tourism enterprise zones – as
stipulated in the Tourism Act of 2009 - are expected to have a significant economic impact within 5
years. Let’s look at the rest of the region:

Macau

The territory of Macau is indisputably the largest gaming center in the Asia-Pacific region and the largest
in the world by revenues, having surpassed Las Vegas in 2008. Its gaming industry currently accounts for
33 casinos, 4,610 tables, 14,175 slot machines and 43,975 employees. As at June 2009, Macau’s gaming
industry grossed total revenues of 83.91 billion Macau Patacas (MOP) or approximately $10.6-B.

Singapore

Singapore’s first casino opened its doors during Chinese New Year in 2010. The $4.7-B Resorts World
Sentosa was built by Malaysia’s Genting group. This was followed by the $5.5-B Marina Bay Sands,
operated by Las Vegas Sands, which opened for business on 27 April 2010. The casinos are intended to
create tens of thousands of new jobs, as well as attract thousands of tourists across Asia to spend
money on entertainment, hotels, shopping, and also gambling in the city-state. With gaming centers in
Singapore, Malaysia, the UK, Canada and aboard its cruise ships, the Genting conglomerate can claim to
be one of the world’s largest gaming operators. Singapore has the edge in the region because it is a city
with international appeal, considered safe, child-friendly and navigable (both geographically and
culturally) by foreigners, a strong support base in terms of hotels, retailing, catering, and transport
infrastructure. As such, Singapore is linking its Integrated Resort (IR) casinos so closely to winning a
greater share of the family entertainment and the Meetings-Incentives-Conferences-Exhibitions (MICE)
market.
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Taiwan

After repealing a ban on gambling on Taiwan’s outlying islands in early 2009, the Taiwanese
administration of President Ma has continually attempted to grow a domestic casino industry. The result
of the referendum has meant that the Taiwanese government will have to wait for three years to
conduct another referendum on the same subject.

Japan

Japanese lawmakers are keen on the IR model currently developed in Singapore. The LDP has already
formed a Casino Study Group to create the necessary legal structures. Harrah’s Entertainment, Las
Vegas Sands, Sega Sammy, Konami, and Aruze are expected to be major players. As Japan moves closer
to overhauling is strict gaming laws, new IR complexes are expected to open in Tokyo and Okinawa by
2012.

Australia

A total of 18 legal gambling facilities are available in 8 states in Australia. The gaming industry in
Australia has made significant export contributions to the economy. More that 1 million international
tourists made 2.4 million visits to Australian casinos during 2007/08. These tourists spent a total of $4.9-
B during their stays in Australia.
Pagcor Marketing Plan
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II. Objective

To maintain the compounded annual growth rate of 17.9%*.

III. Strategies

To develop Integrated Resorts (IRs) that provide the most memorable and enjoyable experience for
guests and their families.

The overall strategy is to capture increasing share of the so called MICE market. The goal of these
resorts are:

1. To attract visitors (VIPs, junket tours, business groups, tourists), from Asia and other
continents;

1. To lure current non-gamblers into the casinos through

-MICE –related marketing and other incentives

-promoting the casinos as family destinations promoting holistic entertainment; and

3. The growing Chinese middle class

Second Phase of Pagcor City

A corollary strategy to the IR concept will be the creation of tourism enterprise zones growth in other
parts of the country outside Manila to encourage the growth of other anchor hubs. The second phase of
the project should be to attract investors for the creation of other IR/ tourism hubs in places like Clark
and Subic economic zones in the North and Cebu City in the South.
Pagcor Marketing Plan
By Gene Gregorio
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More Slot Machines

A secondary strategy is to have more slot machines in the branches/properties. Traditionally, Macau,
unlike slot machine-filled Las Vegas, has more overtly targeted the high rollers rather than small stakes
bettors. Several operators in Macau are now looking to move away from this traditional strategy and
target a new mass market for Macau. Melco, one of Macau’s new operators, is introducing more slot
machines to appeal to the masses, rather than just the VIP’s.

However, it is China and the Chinese that offers the best prospects. There are literally millions of
potential bettors, who already know they want to gamble, but have to travel to do so legally. If they can
find a way to gamble they will. To attract the Chinese, concessions need to be made. Singapore has
decided to outlaw smoking in most public places this year, except at the two new IR’s. Strategies for
luring the Chinese away from Macau will be multiple, and are expected to include low coast flights and
hotel deals. Singapore is mooting a gambling venue tax of just 5% - lower than that of Las Vegas, and far
lower than Macau. This would allow Singapore’s casinos to try and entice Chinese high rollers away
from Macau with free hotels and flights, as the costs will be defrayed by the difference in gaming tax.

*Pricewaterhouse Coopers cited Pagcor as the most promising in Asia-Pacific.

IV. Action Plans

The fundamental steps of the various branches/properties are to:

 Attract VIP, Grind, Loyalty, and Junket Players to table games and slot machines through
awareness programs;

 Capture customers and include in databases; and

 Induce their return as regular players

Pagcor Marketing Plan
By Gene Gregorio
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At the level of the specific branches and properties, the following can be considered:

1. Improving guest knowledge through databases

As more casinos adopt scientific methodology to improve business, CRM and marketing automation
technologies are taking a more prominent role in an ongoing struggle for customer loyalty. In today’s
fiercely competitive environment, IT’s most important job is creating guest knowledge. Guest
knowledge is the fuel for resort marketing, and marketing is the heart of a successful resort operation.
The more you know about your guests, the more likely you are to develop cost-effective marketing
campaigns that boost revenue, increase market share, and improve margins. The focus is on keeping the
small percentage of clients that bet the most money. Specifically, this is the 20% of gaming customers
that typically account for 80% of profits.

Make sure that the information we collect is analyzed and presented in the form of actionable business
intelligence. It empowers casinos to create and execute highly targeted marketing campaigns based on
what the marketing department really knows about the preferences and habits of guests.

Not all high-value guests are the same. Properties could easily miss opportunities to increase revenue by
assuming that all high-value guests are interested solely in gaming. If you approach your marketing
strategy from a guest knowledge perspective, you’ll know precisely which of your guests love to play
golf, which love to shop, which want an appointment at the spa, and which want to visit the theme park.
Before they even arrive, the staff can schedule them for a round of golf or a soothing massage.

Knowledge makes it easier to deliver the kind of memorable guest experiences that will keep them
coming back year after year. Guest knowledge is the cornerstone of all marketing strategy. Having a data
warehouse enables the casino to gather guest information in a central location and provide fast,
consistent reporting and analysis. Marketing automation software helps the casino target marketing
campaigns with greater accuracy. Data mining and predictive modeling capabilities can create a steady
stream of new knowledge that be leveraged to improve guest loyalty.
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1. Raising Customer Service Levels (CSLs) and maintaining these

Today, casinos track millions of customers, as many as 40 million for the largest gaming corporations
with many properties throughout the US and around the world. It would be physically impossible for
human beings to manage those kinds of numbers. As the sheer number of customers in the casino’s
database grows each year, more and more advanced computer systems are needed to process the data.

We are so often focused on marketing strategy in the gaming industry, that we often forget about how
we will execute against that strategy. Marketing executives spend their days (and sleepless nights)
coming with ways to fight the latest dip in revenue, or how to compete against the neighbors newest
promotion. But too often, little or no time is spent focused on the people, process and technology that
will allow this strategy to be executed.

Specifically, the call center that will be the customer’s first interaction with the casino, the promotions
staff that will run the tournament, or the player’s club representative that must explain the latest
changes in the reward structure. Providing instructions to these and other groups is not enough; a
thorough review and updating of business models is in order. Training is always a prominent talking
point in these areas, but is also often left to the devices of people outside marketing to design, conduct
and review. The marketing department needs to be an integral part of all customer-facing employee
training. This is the only way to provide a consistent level of customer service that is carried throughout
the customer experience life-cycle.

Other key items that are critical to the execution of the marketing strategy and tie-in to customer
service and training are service levels and standards. A good number of casinos either have no formal
customer service levels and standards, or have them but they are so simplistic that they are basically
useless.

In a competitive environment in which each casino property offers similar rooms, casino games, and
dining options, customer service is one variable that can set properties apart and provide a competitive
advantage. It is imperative to define customer expectations and develop products and services to meet
or exceed those expectations.

To facilitate an initiative such as this, the casino must establish service levels for each identified key
customer contact area. This will provide a service infrastructure and feedback mechanism to assess its
performance in servicing its customers. Service levels are essential for defining customer expectations,
establishing delivery expectations, and defining employee responsibilities. Specifically, standards
enable:
Pagcor Marketing Plan
By Gene Gregorio
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 Customers to know what to expect (e.g., customers expect a consistent level of service for each
identified area)

 Employees to know what is expected (e.g., employees deliver consistent levels of service
appropriate to the customer interaction)

 Management to effectively motivate, measure and manage (e.g., managers use tools to
measure and score service levels and to maintain appropriate service levels by adjusting up or
down)

Casino management, individual departments and outlets must work together to further define any
service levels already developed for each key customer contact area identified. For each area identified,
the team needs to finalize service levels, determine measurement criteria and define scoring ranges
(numeric and/or yes/no). This is an excellent way to manage execution and clearly focuses on the
tactics of marketing in support of the overall strategy.

The success of consistent service delivery requires an ongoing measurement tool that accurately
informs management about the results of the program and whether the execution is exceeding,
meeting, or not meeting customer expectations. It also identifies areas that may require improvements
or recovery. The key to a successful program is the continuous commitment to improvement through
constant measurement and monitoring of service quality.

3. Reach a wider audience

In order to be a destination for international gamblers, or for domestic gamblers that would have to
travel a great distance, it is important to give the impression that casinos cater to as many nationalities
as possible. Be certain that the signs in casinos display as many languages as realistically possible. It is
understood that not every language can be represented, but decide on major languages and be certain
your signs include them all. Extend this multi-lingual approach to all marketing material as well.

The menus in restaurants need to cater to a diverse crowd as well, so offer foods from all over the
world. Give people a choice and they will appreciate the variety. Open up casinos to an international
audience by giving it an international feel to widen the marketing reach.
Pagcor Marketing Plan
By Gene Gregorio
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4. Keep regular players happy

It is critical to identify the small percentage of gamblers that make up a large percentage of revenue,
and make sure those big money gamblers want to continue to gamble in casino branches. Focus on
making current big money gamblers happy with promotions, comps, and other giveaways before
pursuing new customers. If marketing efforts do not keep the current big gamblers coming back, then
there will always be a need to replace them with new clients. The percentage of big money gamblers is
small, so make sure the focus is on a significant portion of marketing efforts on keeping them happy.

5. Casinos employ many promotions

Given that most casinos offer nearly identical products, marketing is incredibly fierce. To attract new
clientele, almost every casino will run many promotions designed to promote customer loyalty and
increase the frequency of their visits. The kinds of promotions vary greatly, but almost all involve
offering players some form of money or prizes.

6. Debit Card for VIP, Grind, Loyalty, and Junket Players and Club Members

The target is players clubs, which are free to join and track a player's amount of play if the club card is
used with all slot and table game play. Casinos are eager to sign up customers for these clubs to have
more names for their databases - a source for direct mail promotions, which sometimes are not
publicized to, the general public, In addition, these loadable cards can be used for international junket
players to get around the $10,000 currency limit at Customs.

7. Introduce the Digi Playcard to have players return to casinos

That new innovative product was developed by Allan Howard and his partner in China. It’s ‘game-play’
features has great casino marketing potential. The Digi Playcard looks like a credit card, only thicker, but
upon closer examination one can see that it is quite unique and appealing. It is fully electronic and at
first glance it immediately reminds you of a mini-slot machine with its miniature LCD screen, PLAY and
HOLD buttons and vibrant graphics. It is also often described as an electronic scratch card or Instant
Ticket. Allan Howard states, “Over the past thirty years billions of scratch cards have been sold, but
printing technology has reached its limits. The public’s appetite for paper tickets has become jaded”. It is
for this reason that the innovative Digi Playcard was developed.

It has various options for developing some really great casino marketing promotions that specifically
target mass market customers that may have an interest in playing branches’ slot machines. The card is
high quality and fun and enjoyable to play. It offers the same level of excitement as found from playing
on a real slot machine.
Pagcor Marketing Plan
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Most importantly for casino marketing executives it contains two games – The Accumulator game and
the Bonus game. This means that for the first time they have the chance of giving their customers two
opportunities to respond to a promotion. The LCD will flash a message that states “Claim your prize” and
“Your bonus icons” and three new icon symbols will flash onto the screen. The icons represent the
second game on the Digi Playcard. This is the Bonus Game where the patron receives a second chance to
win a prize.

The real incentive to the casino or racino is that the winners must visit the property to claim either prize.
The casino or the racino sets the odds in advance which enable them to develop a promotion that will fit
whatever budget they want to dedicate to this clever marketing promotion. It is a win-win promotion
for everyone. In addition, it is also possible to develop local partners to co-participate in the promotion
and offer additional prizes associated with the icon symbol combinations.

Digi Playcards advise that they will help you to personalize your promotion. You can custom print the
packaging for direct mail and include additional advertising or marketing promotional discounts or other
incentive offers to bring players into your property. We all know that the first challenge in casino
marketing is to get the customers through the doors and the Digi Playcard will definitely help do that.
Once inside the doors, most players will almost always take an additional chance on the real slot
machines. Therefore, the Digi Playcard as a casino marketing promotion is extremely cost effective since
the actual cost of the cards is less than $2.50 each.

8. Slot Tournaments

Slot players normally play in isolation, but in tournaments they are pitted against each in other in a
bracket-style format. The players making the most money advance to the next round until a winner
emerges. The winner then receives a grand prize.

9. Random Drawings

Many casinos feature drawings in which players, usually identified by a number on their player's club
card, are awarded cash or prizes. Drawings are held at designated times, maybe every hour, and the
player must be present to claim the prize. This keeps players in the casino.

10. Scratch Cards

Many casinos offer scratch cards. However, the smart ones guarantee that everyone wins something,
even if only a pack of cards, to encourage brand loyalty.
Pagcor Marketing Plan
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11. Senior Specials

Many casinos will offer discounts or special prizes to seniors, who account for a large percentage of
casino earnings.

12. Live Music and Shows

Many casinos feature live music and shows, often from famous artists. Sometimes they will charge only
nominal fees for these performances to attract more patrons. Other times they will give concert tickets
as complimentary prizes to frequent players.

13. Cheap Buffet

Many casinos will offer a buffet at so low a cost, they lose money on each meal served. That is designed
to draw more gamblers inside, where the casino will recoup its investment.

14. Free Drinks

Free cocktails are such a popular promotion, it has become standard at most casinos. Waitresses will
usually take their time bringing the drinks to keep patrons waiting and playing.

15. Free Bus Rides

To attract players from long distances, many casinos offer free bus rides from other cities. For example,
junket tours can be given complimentary service from Pagcor City to Subic.

16. The Cash Grab

In the cash grab, a single player is selected at random and placed in a closet-sized enclosure containing
many dollar bills. As the audience watches, fans are activated, causing the cash to billow all around the
player, whose task is to catch as much cash as possible in a given time frame. The player is generally
allowed to keep whatever is caught.
Pagcor Marketing Plan
By Gene Gregorio
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17. Match Play

In match play, the casino will reward players with coupons for additional play, up to a certain dollar
limit, like P100.

18. Newsletter and Direct Mail

Distributing a casino customer newsletter that is entirely paid for by advertising from local and regional
businesses wanting to reach a casino’s juicy consumer data base.

19. Calendar of Yearly, Monthly, and Weekly Events

Get promotional ideas from holidays, local happenings, sporting events, t.v. programs and other pop
culture icons. The trick is to generate interest among players and the public. Strategically plan events
that fit the branches’ customer base. With that, the players club is important with the use of direct mail
and invitations to repeat customers.

20. Establish the “Casino Store” concept

A customized retail operation in which casinos sell all aspects of their products (cards, dice, chips,
hurricane glasses, dealer aprons, etc.) in a specially designed retail kiosk on the casino floor.

21. Organize a traveling, packaged New Slot Game Party

Sponsored by the major slot manufacturers, where all of the latest and greatest new games are brought
to a casino in a mega-event so a property’s best customers can try them and tell management which
ones to buy.

22. Make an effective template for a Customer Advisory Board for casinos

So executives can systematically sit down with their best customers and find out how they want these
executives to run their casino.

23. Develop a “Selling the Casino” training program for all employees
Pagcor Marketing Plan
By Gene Gregorio
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Designed specifically to give them the skills to show guests how they can enjoyably spend more
entertainment dollars at a casino hotel’s various cash registers.

V. Promotional Plans and Budget

The appropriate institutional and branch promotional plans and budgets for advertising, tri-media &
online, Public Relations, direct mail, events/ shows will be determined after the Management
Committee concludes its 2011 Corporate Planning session.

VI. Conclusion

Will Pagcor City’s new casinos enable Pagcor to reach its objectives?

In the long-term, yes. The Las Vegas model of IRs is, far-sightedly, the more sustainable one and the one
that Macau and the proposed new developments are all following- build high quality hotels, resorts,
entertainment and conference facilities as well as improving the mix of retailing, tourist attractions and
catering facilities and any shortfall in gambling revenues will be made up by additional business from the
MICE sector, tourism and families.

There are revenues to be gained from customers and gambling taxes. In addition, there will be
investments and operators bring in with them the positive effects for the cities that host the casinos,
and the wider area through more socio-civic projects. Ultimately, it is marketing’s job to make sure that
the casinos are filled by its target market.