Mgm Market Strategy Case Study Analysis

Market Strategy Group 5

Q1.) Do you think treating each property (MGM, Grand, Bellagio, Treasure Island, etc. as an independent profit center is the right approach to manage the MGM mirage group? Why?

Ans)Yes, treating each property as an independent profit center is the right approach to the MGM Mirage group. The amount of Data collected at MGM is huge, MGM strongly relies on analytics, operations and marketing to get a deeper understanding of their customer base, track profitability from each and every customer that visits their property, providing them top class experience based on the calculated profitability and use effective promotional techniques to keep luring these customers back to MGM resorts. MGM resorts is truly customer centric. They have catered to attract a particular customer segment. Profitability was a function of both gaming and non-gaming revenue drivers and thus while each resort had a different mix of revenue generators it would have been difficult to have had a consolidated approach towards understanding customer behavior. The operations involved with each resort is quite different from each other and this is clearly suggested by the organizational hierarchy of MGM resorts where there is a separate operations team for each resort tackling the challenges that each resort proposes. To quote Steve Vanella, VP of slots, “Operations and marketing are intrinsically connected in our business. When we design a machine or plan the floor layout around games, themes and denominations, we cater to different customer segments and try to facilitate our operating processes. Each of these resorts had its own mix of non-gaming attractions and entertainment venues. Also, just to give an analogy, in a string of pearls it is not important for every pearl to be of the same fabric or properties for it to look good. Similarly, there could be different pearls working closely together at MGM as well, where each manages and is accountable for its own profits. These would eventually lead to better efficiency and better profits for the whole group.

However, if at all it is decided to treat it as a single profit center there could be several disadvantages, such as Brand Cannibalization – where in the customers are not able to differentiate one brand from the other because of similar strategies promotional campaigns followed by MGM under the umbrella branding policy. Second, if there are any financial irregularities, the reputation of entire brand portfolio is at stake and it would malign the brand equity of all the group. It will be extremely difficult to bring in efficiency and implement changes when individual brands are striped of their names and roped in under a common brand. There would be no incentive left to outperform the other brands.

Therefore, even though these resorts were all owned by the same company, it was the right decision