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Casino Branding in Macau – Key to Sustainability
by Desmond Lam

Macau is going through a rough time right now. With the City of Dreams recently opened for business, Macau now has 32 casinos over an area of just under 30 square km. In the months ahead, there will be more competition among operators who will be seeking to further strengthen their positions and boost their individuals’ market share. In the past, we saw a number of operators increase their junket commission rates in order to gain higher share in the VIP market. Such battle highlights the importance of brand building in the face of increasingly intense competition and cut-throat battles using aggressive trade promotion (i.e. increasing junket commission rate) in order to gain more customers. Casinos need to resist the temptation of such value destruction tactics that focus on trade pricing. They should turn to effective branding strategies that focus on long-term shareholders’ value creation over short-term gains.

Branding is a very important part of the overall business strategy of any successful business, not to say casinos. Unlike the Americans, Asians generally do not have many big international brands that they can be proud of. In Macau, the battle of Asian brands of SJM and Galaxy versus American brands of Sands and Wynn has barely started. The latter have a strong advantage over the Asian brands as they have a better brand management strategy that aligns their brand delivery closer to their brand promise. Still, everyone in this market is at risk because the foundations of developing strong truly-Asian casino brands are still weak. Branding is more than logo and advertisement - it is a long-term commitment to excellence.

In fact, few casinos in Macau have strong brand images in the eyes of the Chinese customers. Venetian and Wynn appear to be leading the way in brand recognition. Venetian’s brand seems to be the clearest – Asia’s Las Vegas, while Wynn Macau focuses on luxury. But successful brand must delivery its promises. Can Venetian Macao deliver its promises without staff endorsement of its brand identity? Can Wynn Macau develop into a successful brand in Asia without its staff recognizing and understanding (of) its brand values and how to deliver these values to their patrons? The answer to these questions is NO!

Branding a casino is not an easy task as the gaming industry is frequently looked upon as a sleazy business that can potentially inflict high social costs to the community. In Macau, casino gaming used to be an almost untouchable industry that parents would discourage their children from joining. There were tales of triad involvements, gang fights, murders, and how casinos cheated their gamblers into gambling and losing more. In more recent years, there was extensive media coverage of “isolated incidents” that portrayed casinos as the ‘bad guys’. For example, media covered Sands Macao for not paying a winner of her jackpot and for letting in a minor into its facility. Top-level casino managers must look to more effective brand management to propel their Macau businesses toward a more sustainable development.

A well-branded casino is beneficial to all of its stakeholders - patrons, employees, channel members (i.e. junket operators and representatives), local community, and shareholders. A strong and well-recognized brand reduces the perceived risk on the side of the patrons. Patrons often use brand as a rule of thumb to help them to select their alternatives. There are more choices in Macau nowadays. Any VIP or mass market player can choose to play in one of the six existing casino licensees’ gaming facilities. These players are bombarded with extended choices and relentless promotions from some junket representatives. Successful branding attracts new players to a gaming facility and retains existing ones. Besides increasing customer volume, it enables successfully-branded casinos to charge a premium over other competitors. Instead of increasing junket commission rates, well-branded casinos can even reduce these rates because its brand is so in demand by all. The result is a strong brand equity that enhances shareholders’ value. A strong brand also helps to retain existing staff and attract new ones. Who does not want to work for a Fortune 100 company? A strong brand promotes staff loyalty and makes employees proud of whom they work for. This reduction in staff turnover helps to reduce costs. Better motivated staff further enhances customer value by delivering superior services and helping to generate valuable positive word-of-mouth. Finally, a casino with a well-defined and social-acceptable strong brand has a better community image than others.

Good branding matches a casino’s brand delivery to its promises. A casino must first identify its stakeholders’ (not just its customers’) perceptions of its brand. It then decides on its brand objective and identity. Generally, a casino can define its brand into tangibles (e.g. functional assets like facilities) and intangibles (emotional assets like customer experience). Obviously, the intangibles are stronger assets that are harder to imitate. Any promises of this identity must be effectively delivered to its stakeholders through sound branding strategy and implementation like using integrated marketing communications to convey brand values within and outside of the casino. For any branding strategy to be effective, the casino MUST deliver its promises. This is important. Otherwise, any branding exercises will be useless and can dilute one’s brand strength. It is important to note that modern customers are becoming increasingly sophisticated about the relationship between brand promise (what the brand claims to deliver – e.g. six-star customer experience) and brand performance (what the brand actually delivers). Lastly, constant measurement, monitoring and adjustment (i.e. in small steps) to brand implementation are needed for successful branding.

Many Asian companies, let alone casinos in Macau, often see branding as just a task for their marketing or public relations department. They tend to focus a lot more on their tangible assets like building nice facilities and recruiting local talents. They often forget about the intangibles like building an emotional bonding with staff and patrons. In the past few years, casinos in Macau have been so busy filling demands that they ignore (and/or postpone) long-term development of their brands.

Research worldwide has shown that the most important factor to successful branding is the commitment of CEO and top management. The endorsement of brand promises from the top gets filtered down to all levels below. Also, a key part of brand strategy and implementation is the training of all employees to recognize and understand the meaning of the corporate brand. The delivery of brand promises does not solely depend on marketing communication programs developed by the marketing department. It depends on effective communication of brand advantages to customers and public at all contact points. Hence, successful branding involves every department and every employee. Truly successful brands turn their employees into brand advocates, just like they do with their customers. Casinos in Macau have much to learn from top international brands like IBM, Nike, Coca Cola and Singapore Airline.

An effective branding strategy promotes values that are essential for sustainable casino business in Macau – a long-term vision that engages the customers, trade partners, employees, and community.


NB: The original article was published in Macau Daily Times, 10th May 2008.

Date Posted: 04-Jul-2009

Desmond Lam was a former assistant professor of marketing at the University of Macau. He is now a visiting senior research fellow at the School of Marketing/Ehrenberg-Bass Institute for Marketing Science, University of South Australia. He can be contacted at DesmondL@hotmail.com.

 
 
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