GROUP NO.

7: SECTION: B
GROUP MEMBERS:
SHALINI GUPTA (PGP29077),
MRINMOYEE DAS (PGP29082),
PRANAY TAMANG (PGP29095),
VARUN BANGOTRA (PGP29112)

1. Why is it important to use the customer worth in the DBM
efforts
rather than the observed level of play?

As per the case, customer worth has been coined to quantify the amount the casino
can earn out of a particular customer. A DBM provides for the information about the
expected level of play by the customer based on their past level of plays and hence
the opportunities that Harrahs have with them. But the real level of plays have
differed to the predicted levels of play. A customer who has a high worth has been
observed to have lower play levels. This difference can be of use to Harrahs as it
can let them calculate the amount of losses they are incurring due to the fact that
customers playing at other casinos. The difference in the predicted and observed
levels of plays can be factored in the DBM. These are avenues of exploration for
Harrahs by which they can increase their customer play and revenues.

In this case marketing can be targeted to customers with low play levels and high
customer worth. The play incentives can be decided based on the customer worth
so as to increase revenues. This customized targeting of customers based on their
worth can help them look towards the customers with whom they have higher
opportunities and omit lower worth customers. This would result in a better
prediction by the DBM because this would work on future worth of the customer and
not the retrospective observed play levels of the customers. Hence in order to better
the efforts of the DBM there is a need to incorporate customer worth in the system.


2. What is the sustainability of Harrah's action and strategy?

Harrahs action and strategy is sustainable because of following reasons:
1) Harrahs customer relation management is based on emotional connect and
loyalty. And that is why its business strategy based on focus on people and relationship
building is sustainable. Their competition is focusing more on flashy resorts and casinos
which in plenty across US and even in Europe and Asia pacific. But customers value
relationship more than anything else. This the reason for Harrahs continued success
even during 2000s and presently.
2) Harrahs loyalty program is considered to be the gold standard in industry even
today and it gives a competitive advantage to Harrahs till date. Its sustainability is
proved just by the fact that every other player in the industry is trying to imitate it but is
not able to because it is a closely guarded secret.
3) Harrahs has been making innovative changes to its program based on data and
research it does with its customers. This makes its program responsive to changing
customer behavior and contemporary. In year 2007 they added ability to track the non-
gambling behavior of its customers so as to treat high spending customers on non-
gaming activities like spa and food better than low spending non gambling customers.
Good customer loyalty program reduces the marketing costs for Harrahs and gives it a
cost advantage over its competitors. The company cut down its ad spending to half in
the year 2009. In 2008 the company spend $ 52 Million in first half whereas in 2009 it
spent only $ 20 Million in first half. Therefore, it gives them a sustainable marketing cost
advantage.

3. What are the ethical and privacy issues that Harrah's should be
concerned about?
PRIVACY CONCERNS:


Personal Data
Harrahs have been using tracking cards (Total Gold Cards) for their reward program
which allows them to track their customers spending patterns. However; with this they
Privacy
Concerns
Personal
information is
ones
personal right
Personal
information can be
stolen, damaged,
leaked, misused
for unlawful gain
or unlawful loss of
aesthetic, social,
financial, criminal
purposes
When personal
information is
shared, a legal
relationship and
an obligation to
keep such
information
secure is created
also have information to the customers personal data like the birth date and home
address. Possible data which could be a cause for identity theft and application
fraud.
Personally Identifiable Information (PII)
Hannahs Database Marketing (DBM) poses a serious threat to Personally Identifiable
Information (PII). PII refers to any information that identifies or can be used to identify,
contact or locate the person to whom such information pertains. This includes
information that is used in a way that is personally identifiable, including linking it with
identifiable information from other sources or from which other personally identifiable
information can be easily derived, including, but not limited to, name, address, phone
number, fax number, e-mail address, financial profiles, social security number, and
credit card information.
Possible consequences of a security breach to Hannahs:
- Direct loss of revenue The security breach would have a direct cost
associated to it which will be forgone.
- Damage to business reputation Hannah has built its business around
customer loyalty. A security breach could dampen its customer relations and
credibility.
- Indirect loss of revenue Existing customer will cease to perform transactions
on the Total Gold Cards.
- Damage to customer/investor confidence Stock prices falling could cause
devaluation of the company in the market causing Hannah to miss out on
potential investors.
- Legal consequences Violation of the Securities Act will invite lawsuits and
huge compensatory losses.
- Regulatory penalties The regulatory body of the United States, for example
the Cyber Law will penalize the company and could account for possible penalty
fees.

Ethical Concerns
The use of such a big repository of personal data instigate ethical dilemma among
employees as well as Managers. Ethical concerns arises when one finds himself
contemplating as to do what is morally correct. The uses of a huge database containing
information which can be used for Identity Theft and Application Fraud may tempt
employees or Managers to violate company privacy policies and breach the security.
Therefore; Hannahs must develop a system which not just safeguards the customers
interest but also restrains their employees from performing any unlawful transactions.
This can be done by proper implementation of Compliance and Audits.
The following procedure can be implemented:
1. People
- Security awareness
- Background screening
2. Process
- Identify security risks and treatment options
- Facilitate security implementation/ operation/ reporting
- Access control, change management, incident management etc.
3. Technology
- Security tools and products
- Dedicated Audit team
4. Implementation of Compliance.