Harrah’s Entertainment, Inc. Case Study Essay

Why is it important to use theoretical hit instead of detect win in order to access the receipts generated by customers? This straits is in close relations to potential outcome and probability quite an than actual figures generated by customers. First of all, the definition of theoretical win mustiness be made clear from that of observed win. Observed win is the actual summation that is won physically over a certain(a) detail of time (e.g. per month) while theoretical win entails the potential amount to be won over a longer term period given that the player is consistent with his/her gambling habits. By calculating revenues generated by customers development the observed win method, Harrahs will be hapless pottyed in its approach and the results for the revenues generated will be inaccurate.For example, new customers who be just starting out to play in Harrahs casinos king initially generate low amount of observed win for the alliance as they have little or no obedi ence to Harrahs. However, these players competency actually have huge potential to generate large amount of wins for the company in the future once they be successfully bought over by the companys program. Under the observed win method, these players whitethorn non be detected by the radar and often neglected. lean marketing efforts and rewards will be directed at them to develop their truth to Harrahs. Furthermore, one more point to note is that past behavior is not always indicative of future behavior and thus by using observed win, we are missing out on opportunities that are not observed in the past.As a result, it may wind to the loss of potential revenues generated by this group of people and an undervaluation of the realizable revenue of the company. On the other hand, if the theoretical win approach is used, the company would be able to predict the long term revenue generated from customers based on the assumption that they are loyal to the company using their average bids and command frequency at the casinos. This projection provides the company with a goal or rather unfulfilled yet accomplishable revenue in sight to strive for. By targeting these individuals with high potential and doing their best to induce loyalty in them, the company will be able to boost tot up revenues generated. In the long run, this method provides a more realistic extrapolation of the revenues achievable by the company if they target the right people.