by Sudhir H. Kalé, Ph.D.*
Frederick W. Smith, Jr., invented the concept of overnight package delivery with
the founding of Federal Express in 1971. The company thought it had a unique service
that would thrive in a then protected market. However, much to Smith's chagrin,
the airfreight industry was deregulated in 1978 and several competitors stormed
into the market and quickly established themselves by performing the core activities
of the airfreight industry-pickup, overnight transportation, and next-day delivery-just
as well as Federal Express, at a fraction of the price. FedEx soon realized that
it had to rethink its definition of service if it wanted to continue being the
market leader and charging a premium price. After considerable thought, the company
defined service as "All actions and reactions that customers perceive they
This definition underscores the concept that the service offering comprises
of a bundle of activities consisting of the core product, e.g., transporting
packages and delivering them to the addressee before a predetermined time, plus
a cluster of supplementary services like offering information, supplying
labels and packaging materials, taking phone orders, resolving occasional problems,
and tracing missing packages. Christopher Lovelock, a services marketing guru--suggests
that managers in the service industry need to first identify the various service
actions and interactions, classify them into core and supplementary service
elements, and then determine how well their organization is performing on each
one--so as to get a better understanding of their competitive advantage.
Such a classification of service offerings is of immense benefit to casino
operators. With maturing of the industry as a whole, gambling entertainment,
the core product of casinos, has become a commodity. With riverboat gaming,
gaming on reservations, and restricted gaming in parts of almost every state
in the Union, Americans can now gain access to the core gaming product with
unprecedented ease. In order to gain and preserve competitive advantage, casinos
urgently need to emphasize performance on supplementary aspects of the service
offering. As Ted Levitt, another marketing guru, observed almost three decades
ago, "It is not so much the basic, generic central thing we are selling
that counts, but the whole cluster of satisfactions with which we surround it."
So what is that 'cluster of satisfactions' when it comes to casinos? We first
need to address this question in order to have a better grasp of the supplementary
service elements in the context of the casino industry. The case of a typical
casino has been depicted in Figure 1. As can be seen from the figure, the core
service element of a casino is to offer gambling entertainment via machines,
table games, sports betting, and keno. Gambling being the raison d'être
of casinos, every full-fledged casino offers this core with little variation
in quality across competitors. For a typical Las Vegas customer, there is little
difference in satisfaction when it comes to the core -- whether she gambles
at Aladdin or whether she goes next door to Paris for a punt. The 'supplementary
service elements' is where one would expect to find considerable differences
across Aladdin and Paris. In the figure below, these supplementary service elements
have been classified according to the benefit they provide to prospective customers.
Such customer-driven classification is the key to sustaining competitive advantage.
Figure 1: Core and Supplementary Services Offered By a Typical Casino
Core: Gaming constitutes the core of the casino service offering. The
providers of this core service include dealers, pit bosses, floor supervisors,
and floor change personnel. The courtesy, efficiency, empathy, and responsiveness
of providers will determine the quality of the core element of casino service.
At the very minimum, the core element needs to be of a quality that is uniform
and consistent across shifts and providers.
Supplementary Service Elements: There are ten main clusters of supplementary
services that a typical casino provides. While most of these services are mandatory,
a casino can offer other discretionary services, which would enhance its competitive
advantage. The supplementary services normally offered include hospitality,
payment, billing, consultation, order taking, safekeeping, security, transportation,
exceptions, and order getting. Several different departments may be providing
an array of services under each cluster. Our intent here is to classify these
supplementary services from the customer's perspective.
1. Hospitality is mainly provided by the hotel and F & B side of the casino.
Casino hosts would also be involved in the hospitality function.
2. Payment would be the domain of the cashier or the casino cage. Exchanging
foreign currency and cashing of customer checks would be included under payment.
3. Billing would be a function performed by the wait staff in restaurants and
by the checkout clerk in the hotel.
4. Consultation would involve offering advice on where to eat, which shows
to see, and which other attractions to visit. This would be the job of the concierge
and, in some cases, the casino host.
5. Order taking would be performed by restaurant wait staff as well as telephone
operators involved in making hotel and show bookings.
6. Safekeeping involves taking care of customer vehicles, baggage, as well
as valuables. Parking lot attendants, bellboys, the lost property office, and
those in charge of safe deposit boxes would be involved in the safekeeping function.
7. Security would primarily be the responsibility of the security staff. Security
would also be a factor in handling markers and conducting credit card transactions.
8. Transportation will be performed by limousine drivers as well as external
agencies involved in getting customers from one place to another. These could
be public transport agencies, monorail operators, and companies with which the
casino has a contract for the transportation of guests.
9. Exceptions, as the name suggests, would be a function of 'hotline engineers,'
those involved in fixing TVs, air-conditioning, heaters, slot machines, and
10. Finally, order getting would be the critical function performed by those
proactively involved in getting guests to the casino. Agents, casino hosts,
and others involved in the casino's loyalty programs would be performing the
order getting function.
The identification of these supplementary clusters helps management better
understand its roles from a 'customer benefits purchased' standpoint. It aids
in an executive's appreciation of the service offering from an augmented product
perspective. Lynn Shostack, a services marketing researcher, argues that the
core and supplementary elements of a service are not unlike chemical formulations:
a change in one element often alters the nature of the whole entity.
French researchers Eiglier and Langeard echo Shostack's analysis. Their conclusions
contain insights that casino operators need to internalise:
The performance of each service cluster affects the perceived quality of all
others; all the supplementary services contribute to overall quality.
Market research is needed to determine how a customer's overall satisfaction
level is split between the core and the supplementary or peripheral
Date Posted: 07-Apr-2002
*Sudhir H. Kalé, Ph.D. is Associate Professor of Marketing and Head of the Marketing Department at Bond University’s School of Business. A consummate punter and an eclectic scholar, Sudhir has published extensively on issues relating to gaming, marketing, management, psychology, and spirituality. He acts as a consultant and trainer to several global organizations across a wide spectrum of industries. To contact Sudhir, write to Sudhir_Kale@Bond.edu.au or fax to (61)7-55951160.