Tuesday, May 27, 2008

USTA's Marketing Committee

There has been much talk in the harness racing blogosphere about the USTA's marketing initiative set up in part by Mr. Axelrod, Chairman of the USTA. Andrew Cohen at harnessracing.com's blog has been chatting about this and offering some insights and opinions.

The definition of the word specious from dictionary.com is: Apparently good or right though lacking real merit; superficially pleasing or plausible. I hope that this committee does not fall into the trap of many before them, who hope to do well, but make the wrong assumption for their focus.

Racing has two types of fans, or potential fans. We have seen this for generations, and racing has been told who they are, and what they are for years. But I rarely hear the business speak of them in those terms. Hambletonian Day brings out 30,000 people. The on track bet is under $2M for those 30,000. Offtrack, the bigger bettors, playing online and in simulcast bet upwards of 250% more. At the Little Brown Jug the handles were around $1M on Jug Day, with over 50,000 people in the stands. That number is now much more than that with simulcasting and web betting. Harness racing, and to some extent thoroughbred racing caters to most of these fans like they are the same thing. I sincerely hope that this committee, right from the start, decides who they are speaking to. Are they there to get on track attendance up? Or are they there to speak to the bettor? Lord help us if they try to do both.

Bettors have been speaking loud and clear on what they want: Lower prices, free information, easy to use internet sites, ability to bet all tracks in one account, rewards programs, perks, decent racing and a larger pool size. This has very little - some would say nothing - to do with marketing. Conversely, the casual fan, or perhaps new fan, or even the slots player across the way mindlessly placing money in a negative expectation game are completely different. They want the Kelly Spencer Grand River experiment. Give them contests, give them a free T shirt, give them a free $2 bet, give them a juggler. But go into this with a solid pre-conceived notion and goal: you will not raise your handles with this, you will try to raise attendance and possibly brand the live harness racing experience as 'fun'.

Mercedes knows that the elasticity of demand for their product is "x", while KIA knows it is "y". Their marketing speaks to this very point and it is the life-blood of their existence. In Japan in the late 1980's Honda was planning to make cars. The Japanese market did not want their cars because to them Honda meant 'motorcycle'. They had to move their marketing to the US, where North American buyers did not have that entrenched notion. The examples from marketing are endless. If they went into a marketing meeting with a goal of "let's market to everyone" it would have never succeeded. It never can succeed frankly.

The bottom line is this: The elasticity of demand for casual players is zero. Price does not matter, the experience they have at an entertainment venue does. The only cost they see is opportunity cost. The elasticity of demand for an every day player is anywhere from -2.5 to 4 or perhaps 5 - meaning that if you drop their price a percent handle will go up by a factor of 2.5 or more. I highly doubt there is another business out there which has this wide a range of customer. Try it with online stock trading. The casual guy trading at home is there because Etrade offers $9 trades. Raise it to $100 a trade he leaves. Same with the larger trader. Charge him more he leaves. You can make similar arguments with virtually every good.

So, I sincerely hope that this committee is not specious. I hope they are tackling one thing and one thing only - growing the sport through new customers and making the on track experience a focus. If they try to speak to both ends of our customer spectrum, in my opinion, it is a waste of time and effort as it is doomed to fail before it starts.

4 comments:

Cangamble said...

The problem with committees, racing execs, and racing marketing people in harness and thoroughbred racing is that us degenerate gamblers are not in those positions. They are filled by casual fans, and there is no prerequisite that they have ever made a bet in their life, though most would fall under the "I bring $30 to the track" category.

Anonymous said...

Cangamble,

I remember bringing 30 bucks to the track, I think I was 8.

best regards,

Louis

Pull the Pocket said...

Oh man that is too funny, Lou.

Back in the day, poor and sturggling at school, I would scrape up $1.50 for the streetcar ride to Greenwood and have around $15 to spend. I would hook up with a friend and we'd pool our money for those "new fangled vouchers". Start with $30, sometimes $40.

Looking back, $2WPS was about 20% bankroll bet. Ouch, no wonder I was broke all the time.

Later on when I got the first job for I think it was $22k a year to start, I upped the vouchers. I think I would start with $50, sometimes $75.

How different is it today, when you are somewhat serious about playing. We all started somewhere. I think $15 or $20 was my bank each time at the track for about four or five years.

I wrote that story on harnesslink about going to the track with $12 to try and make a score. One sec, it is here:

http://harnessracingblog.com/hidden-positives-1989-style/

Totally true, and encapsulates perfectly how freaking broke I was :)

Cangamble said...

Lou, when you were 8, you probably would have been racing exec material:)

PTP, when I was in my teens, if I didn't have at least $80 in my wallet, I had no interest in going to the track.
But I do know that if I wanted to get a lift to the track I had a couple of buddies who would go as long as they 20 bucks plus parking and admission. We all split the gas usually.
It usually meant for a short excursion though if the driver ran out of dough by the second, and nobody had extra to lend him.
I had no interest in going to Mohawk unless the driver had at least 40 bucks in his wallet. Too far a drive for two or three races.