‘xwfium’uaui .Nxafirnugq v E III: .. . . 2 d.» . ~ .. . - . i {finami n... 1. . 3. _ nan!!! KW»)? t .‘fimuf » .. k fit... .1 , .1. try ‘ .a: ’35.; .3 .1 .. 1.4%?! 1:... ...:. a... 11H¥.7L,..en.vrvrk._irsil .33‘3‘5 l!“.‘lflt¢- 1:5 .551. 31.8.." I'. ‘3 u . ‘9‘ h LIBRARY * in Michigan State I, :0 3 University This is to certify that the dissertation entitled THE INFLUENCE OF PERCEIVED LOYALTY PROGRAM VALUE ON SATISFACTION, SWITCHING COSTS, AND ATTITUDINAL AND BEHAVIOAL LOYALTY: AN EMPIRICAL INVESTIGATION OF A CASINO LOYALTY presented by SANG Ml JEON has been accepted towards fulfillment of the requirements for the Ph.D. degree in Community, Agriculture, Recreation and Resource Studies Mafor Profe or’s Signature ’ X23/59K Date MSU is an affinnative-action, equal—opportunity employer —l—.-.-.-.—.-.-.-.-.u-o-.---.-.—-.‘n-An---n-n-g_-a--.—.—t-.-.-.-o----.-.-.-.---.-o-n---.-u-.-.‘n--.-n- PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES return on or before date due. MAY BE RECALLED with earlier due date if requested. DATE DUE DATE DUE DATE DUE 5/08 K'lProj/Acc8-PrelelRC/DaleDue.indd THE INFLUENCE OF PERCEIVED LOYALTY PROGRAM VALUE ON SATISFACTION, SWITCHING COSTS, AND ATTITUDINAL AND BEHAVIORAL LOYALTY: AN EMPRICAL INVESTIGATION OF A CASINO LOYALTY By Sang Mi Jeon A DISSERTATION Submitted to Michigan State University In partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Community, Agriculture, Recreation, and Resources Studies 2008 ABSTRACT THE INFLUENCE OF PERCEIVED LOYALTY PROGRAM VALUE ON SATISFACTION, SWITCHING COSTS, ATTITUDINAL AND BEHAVIORAL LOYALTY: AN EMPRICAL INVESTIGATION OF A CASINO LOYALTY By Sang Mi Jeon Due to the rapid expansion in casinos and other gaming opportunities (e.g., web- based gaming, lotteries, racino, etc), almost every casino is using loyalty programs as a key component of their marketing strategies. However, the value of customer loyalty programs has been questioned in part because empirical research on the effects of loyalty schemes has been inconclusive. The purposes of this study are to aid understanding of the effectiveness of casino loyalty programs, to segment loyalty program members based on the number of casino loyalty programs to which casino patrons belong, and to compare these segments’ socio-demographic characteristics, gaming behaviors, perceived value of loyalty program, as well as their attitudinal and behavioral loyalty. In addition, this study developed and tested an integrated casino loyalty model to examine the influence of loyalty program value on customer satisfaction, switching cost, and attitudinal and behavioral loyalty. A data driven web-based survey system was utilized to collect data from loyalty program members of a major casino gaming company. The finding suggests that the majority of respondents are multiple casino loyalty program members. In addition, customers who are multiple loyalty program members tend to exhibit lower perceived value of loyalty program, perceive switching cost, satisfaction, attitudinal and behavioral loyalty compared to those with one loyalty program membership. Structural equation modeling was utilized to examine the influence of loyalty program value (e.g., economic value, special treatment/services, communications) on customer satisfaction, switching cost, and attitudinal and behavioral loyalty. The results suggest that all components of the casino loyalty program directly or indirectly influence the perceived switching cost, satisfaction, attitudinal and behavioral loyalty. This study is one of only a few empirical studies of customer loyalty programs and is perhaps the most comprehensive study of customer loyalty programs in the casino industry. This study resulted in a number of findings that shed light on loyalty, designing loyalty programs, and even casino management. This empirical validation of customer loyalty will improve the understanding of the value of these programs and will lead to suggestions for their use by the gaming industry. Cepyn'ght by SANG MI JEON 2008 This dissertation is dedicated to my parents for their endless love, support, and encouragement. ACKNOWLEDGEMENTS In accomplishing this first step toward my further studies, I had a lot of guidance and assistance from great people around me. I wish to thank the members of my committee. I would like to thank my chairman, Dr. Edward M. Mahoney, my academic advisor and dissertation chairman for providing extensive guidance and encouragement during all stages of my doctor study. I am also wish to thank Dr. Knutson, Dr. Witten, and Dr. Paulsen for their valuable assistance, not only in my dissertation, but also in other aspects of my doctoral program as well. I would like to thank my friends who were willing to give advice, smiles, and happiness. I will never forget the happy moments that they shared with me and the tough times that they helped me through. I would like to extend my gratitude to my family, especially Dad and Mom, for their endless love, encouragement, patience and trust, without which I could not have started my studies and achieve my goals. Vi TABLE OF CONTENTS LIST OF TABLES ........................................................................... LIST OF FIGURE ........................................................................... CHAPTER 1 INTRODUCTION ............................................................................ The Gaming Industry in the United States ................................................ Loyalty Program and Their Role in Casino Marketing ................................... Statement of Problem ........................................................................ Objective of the Study ........................................................................ Significance of the Study .................................................................... Definition of Terms ........................................................................... CHAPTER 2 LITERATURE REVIEW .................................................................... Literature Review ............................................................................. Customer Loyalty: Behavioral, Attitudinal, and Both Perspectives .............. Behavioral Loyalty .................................................................. Attitudinal Loyalty ................................................................... Both Perspectives ..................................................................... Satisfaction ................................................................................ Loyalty Program .......................................................................... Components of Loyalty Program ................................................... Switching Cost ............................................................................ Proposed Research Model ................................................................... Perceived Loyalty Program Value ..................................................... Customer Satisfaction .................................................................. Switching Cost and Loyalty ............................................................ Attitudinal and Behavioral Loyalty ................................................... CHAPTER 3 METHODS ................................................................................... Population and Sample ....................................................................... Measurement ................................................................................. Perceived Value of Loyalty Program ................................................. Switching Cost .......................................................................... Satisfaction ............................................................................... Attitudinal and Behavioral Loyalty .................................................. The Questionnaire ........................................................................... Data Collection .............................................................................. Data Analysis ................................................................................. CHAPTER 4 RESULTS ..................................................................................... Profile of Survey Respondents ............................................................. vii ix xi NomONM—‘F‘ l4 14 14 15 19 23 25 27 29 32 32 36 37 38 39 39 4O 4O 41 41 42 46 47 50 50 Socio—Demographic Characteristics of Survey Respondents ...................... 50 Gaming Behaviors of Survey Respondents ......................................... 52 Usage of Player’s Club Card .......................................................... 55 Segmentation Based on Respondents’ Number of Casino Loyalty Program Memberships .................................................................................. 56 Socio-Demographic Characteristics of Segments. . . . . . . . . .; ........................ 56 Gaming Behaviors of Segments ....................................................... 60 Usage of Player’s Club Card by Segment ............................................ 64 Differences in the Perceived Loyalty Program Value, Switching Costs, Satisfaction, and Loyalty across Segments ................................................. 65 Testing Measurement Model and the Hypothesized Structural Model ............... 68 Factor Analysis ........................................................................... 69 Testing the Measurement Model: Confirrnatory Factor Analysis ................. 72 Normality Test ....................................................................... 72 Confirmatory Factor Analysis: Model Specification. . . . . . . . . . . . . . . . . . . . 73 Reliability and Validity ............................................................. 78 Testing Hypothesized Structural Model .............................................. 81 Multi-Group Analysis ................................................................... 85 CHAPTER 5 DISCUSSION ................................................................................. 92 Summary ................................................................................... 92 Conclusion and Discussion .............................................................. 96 Limitation and Future Research ........................................................ 100 APPENDICES ................................................................................ 105 BIBLIOGRAPHY ........................................................................... 135 viii Table. 1 Table. 2 Table. 3 Table. 4 Table. 5 Table. 6 Table. 7 Table. 8 Table. 9 Table. Table. Table. Table. Table. Table. Table. Table. Table. Table. 10 11 l2 13 14 15 16 l7 18 19 Table. 20 Table. 21 Table. 22 Table. 23 Table. 24 LIST OF TABLES States with Commercial Casino, Racetrack Casino, Tribal Casino, Card Room, and Electronic Gaming Device ................................. 10-Year Gaming Revenue Trends ............................................. Loyalty Phases with Corresponding Vulnerabilities ........................ Empirical Studies of Switching Costs in Consumer Loyalty Intention... Loyalty Model Construct Items ................................................ Socio-Demographic Characteristics of Survey Respondents .............. Gaming Behaviors of Survey Respondents .................................. Usage of Player’s Club Card When Gaming at the Casino ................ The Results of Segmentation Based on Number of Casino Loyalty Program Membership to Which Respondents Belong ...................... Socio-Demographic Profiles of Segments .................................... Gaming Behaviors of Segments ................................................ Usage of Player’s Club Card by Segments ................................... Mean Differences in the Perceived Economic Value, Special Treatment/Services, and Communications of Loyalty Program (i.e., Player’s Club), and the Perceived Switching Costs ......................... Mean Differences in Satisfaction, Attitudinal Loyalty, and Behavioral Loyalty ............................................................................ Results of Testing for Adequacy of Factor Analysis ........................ The Result of Exploratory Factor Analysis .................................. Normality Test Results of Observed Variables Included in the Proposed Model .................................................................. Comparison of Overall Fit Indices for Proposed and Modified Measurement Models ............................................................ Reliability Analysis for the Loyalty Model Construct ...................... The Result of Confirrnatory Factor Analysis for Model 3 .................. Correlation among Exogenous Factors ....................................... Overall Fit Indices for the Hypothesized Structural Model ................ Path Coefficients in the Hypothesized Structural Model and Hypotheses Testing Results .................................................... X2 Difference Test ............................................................... ix 21 31 43 51 54 55 56 59 63 65 67 68 69 72 74 78 78 8O 80 81 83 86 LIST OF FIGURES Figure 1. Casino Locations by Category .................................................... 4 Figure 2. Dimensions of Relative Attitude ................................................. 16 Figure 3. The Attitudinal Loyalty Pyramid ....................... ‘ .......................... 18 Figure 4. Consumer Loyalty Matrix ......................................................... 22 Figure 5. Proposed Research Model ........................................................ 33 Figure 6. Survey Sections ..................................................................... 45 Figure 7. Proposed Measurement Model ................................................... 75 Figure 8. Structural Model for All Respondents ........................................... 84 Figure 9. Structural Model for Segment I .................................................. 88 Figure 10. Structural Model for Segment II ................................................ 89 Figure 11. Structural Model for Segment III ............................................... 90 Figure 12. Structural Model for Segment IV ............................................... 91 xi CHAPTER 1 INTRODUCTION The Gaming Industry in the United States According to the American Gaming Association (2007), 460 commercial casinos, 713 card rooms, 36 racetrack casinos, and 372 Indian casinos in the United States (Table 1) generated total gaming revenues of $83.7 billion in 2005. Providing hundreds of thousands of jobs, generating billions of dollars in needed tax revenue and contributing to improvements in communities nationwide, the gaming industry has become a significant force in the US. economy (Terri C. Walker Consulting, Inc., 2002). In 1931, Nevada was the first state to legalize casino gaming. The actual boom began with the opening of the Flamingo in 1947. For more than four decades, Nevada was the only state where casino gaming was offered. However, New Jersey voters approved legislation to allow gaming in Atlantic City in 1976, and the first casino opened two years later, in 1978. Atlantic City has since grown into the country’s second-largest casino destination, with annual revenues of $5.51 billion in 2006. Since the passage of the 1988 Indian Gaming Regulatory Act, gaming has become one of the fastest-growing industries in the United States. From 1989 to 1998, nine more states authorized commercial casino gaming: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri and South Dakota. In 2006, 460 commercial casinos in 11 states generated annual gross gaming revenues of $32.42 billion (Table 2) --a 6.8% increase over 2005 figures (AGA, 2007). Total gross gaming revenues from pari—mutuel wagering, lotteries, casinos, legal Table 1. States with Commercial Casino, Racetrack Casino, Tribal Casino, Card Room, and Electronic Gaming Device (Adapted from the American Gaming Association, 2007) Commercial Racetrack . Card Electronic Casino Casino W cm” Room Gam'EgDevice' Alabama 3' Alaska 3. Arizona 23 91 California 58 Colorado 469 2 Connecticut 2 Delaware 3- Florida 2 8‘ 16 Idaho 6 Illinois 9 Indiana 11 Iowa 16 3 1 Kansas 5 Louisiana 16 3 3 2,298 Maine 1 Michigan 3 15 Minnesota 20 1 Mississippi 27 2 Missouri 11 1 Montana 24 493 1,728 Nebraska 3' Nevada 274 2 New Jersey 11 2,2303 New Mexico 5- 21 New York 8 7 North Carolina 2 North Dakota 6 Oklahoma 3 79 Oregon 9 2,174- Pennsylvania + 2 Rhode Island 36 9 2- South Dakota 11 1,472 - Texas 1. Washington 32 112 West Virginia 4 1,665 - Wisconsin 24 Wyoming 1 Total 460 36 372 713 11,567 Number of States 11 11 28 5 6 *ClassIIgarrIesorIly,°—Lirrtited-stal:a>on zzmaoa .cco.>c:om A .m:_ua_fl< ace—Scot. Havoc—m \iflgig/ EEOCOON UOZOOLOE . — _ . . - . _ — — c . o _ . o o . — . . _ _ / _ . 803.9% / u - _ . . — _ . - . . _ _ . _ _ . _ _ _ _ . . . _ _ _ :O—HO GHQ—«Gm — EEGOLL >3n>0t~ _ 33 and satisfaction (Eroglu, Machleit, & Barr). Thus, the following hypotheses are proposed: H1. Perceived value of the loyalty program is positively associated with member satisfaction. H1 a. Perceived economic value of the loyalty program is positively associated with satisfaction. Hlb. Perceived special treatment/services value is positively associated with satisfaction. ch. Perceived communication value is positively associated with satisfaction. Customer value is “the fundamental basis for all marketing activity” (I-Ialbrook, 1994, p.22), and high value is the primary motivation for customer patronage. In this regard, Sirdeshmukh, Singh, and Sabol (2002) argue that customer value is a superordinate goal and customer loyalty is a subordinate goal, as is behavioral intention. According to goal and action identity theories, a superordinate goal is likely to regulate subordinate goals (Sirdeshmukh et al., 2002). Thus, customer value regulates “behavioral intentions of loyalty toward the service provider as long as such relational exchanges provide superior value” (Sirdeshmukh et al., 2002, p.21). Prior empirical research has identified perceived value as a major determinant of customer loyalty in such settings as telephone services (Bolton & Drew, 1991), airline travel, and retailing services (Sirdeshmukh et al., 2002). Chang and Wildt (1994) report that customer- perceived value has been found to be a major contributor to purchase intention. In addition, loyalty programs are meant to add customer value(s) through recognition, 34 preferred treatment, access to special products and services (Rust, Zeithaml, & Lemon, 2000); thus, it is expected to foster good feelings towards the product or service, and affect attitude. However, no empirical research discusses this relationship between perceived loyalty program value and attitudinal loyalty. In light of the preceding discussion and findings, it is proposed that: H2. Perceived value of the loyalty program is positively associated with behavioral loyalty. H2a. Perceived economic value of the loyalty program is positively associated with behavioral loyalty. H2b. Perceived Special treatment/services value is positively associated with behavioral loyalty. H2c. Perceived communication value is positively associated with behavioral loyalty. H3. Perceived value of the loyalty program is positively associated with attitudinal loyalty. H3a. Perceived economic value of the loyalty program is positively associated with behavioral loyalty. H3b. Perceived special treatment/services value is positively associated with behavioral loyalty. H3c. Perceived communication value is positively associated with behavioral loyalty. 35 A key purpose Of Offering loyalty programs may be to create switching costs for customers (Klemperer, 1987; Reinartz & Kumar, 2000). Casinos use loyalty programs in an effort to lock customers in by building switching costs through an individual value proposition that make it more costly or difficult for customers to substitute casino offerings with a competitor’s offerings. A customer who has made a significant investment in a particular loyalty program may feel locked in; he or she perceives his or her switching costs to be prohibitively high (Lee, Lee, & Feick, 2001; Reinartz & Kumar, 2000). However, no empirical research exists to demonstrate whether the perceived value of loyalty programs really builds switching cost. H4. Perceived value of the loyalty program is positively associated with switching cost. ‘ H4a. Perceived economic value of the loyalty program is positively associated with switching cost. i H4b. Perceived special treatment/services value is positively associated with switching cost. H4c. Perceived communication value is positively associated with switching COSI. Customer Satisfaction Satisfaction has been widely studied as a predictor of customer loyalty (e.g., Andreassen & Lindestad, 1998; Chenet et al., 1999; Cronin et al. 2000; Fornell et al., 1996; Kim et al. 2004; Oliver 1999; Olsen, 2002; Yang & Peterson, 2004). Customer satisfaction is an important factor for a long-term relationship between a firm and a 36 customer (Anderson & Srinivasan, 2003; Lam et al. 2004). Previous research suggests a strong linkage between customer satisfaction and customer loyalty. Fornell (1992) found a significant relationship between customer satisfaction and increased loyalty Of customers. Hallowell (1996) documented that customer - satisfaction is significantly related to customer loyalty in a bank setting and that loyalty is related to profitability. H5. Customer satisfaction is positively associated with behavioral loyalty. H6. Customer satisfaction is positively associated with attitudinal loyalty. Switching Cost Switching costs are often included in conceptual models of loyalty to refer to dependency of customers on providers or to barriers built tO keep customers in the relationships (Bendapudi & Berry, 1997; Dick & Basu, 1994). Switching costs were defined as customers’ perception of time and effort costs associated with changing from current company to competition (Bowen & Shoemaker, 1998; Porter, 1985). Convenience was also suggested as a component of switching costs (Dick & Basu, 1994; Lee & Cunningham, 2001). Previous research has shown that switching cost has a positive impact on commitment and behavioral loyalty (Bendaudi & Berry, 1997; Dick & Base, 1994). Bowen and Shoemaker (1998) found that switching costs positively influence commitment to luxury hotels. Geyskens et al. (1996) found that the perceived dependence has a positive impact on affective commitment. H7. Switching cost is positively associated with attitudinal loyalty. H8. Switching cost is positively associated with behavioral loyalty. 37 Attitudinal and Behavioral Loyalty Although terms such as commitment, brand loyalty, and affective (emotional) attachment have often been used interchangeably in the loyalty and relationships literature (Pritchard, Howard, & Havitz, 1992), the emotional attachment or commitment to a product or brand has been cited as a key element to developing and maintaining customer loyalty (Bendapudi & Berry, 1997; Dick & Basu, 1994; Geyskens et al., 1996). The positive relationship between psychological commitment and behavioral outcomes Of loyalty (repeat purchase, ancillary product use, word of mouth, cooperation) has been strongly supported in the literature (Bowen & Shoemaker, 1998; Dick & Basu, 1994). Thus, the following is hypothesized: H9. Attitudinal loyalty is positively associated with behavioral loyalty. 38 CHAPTER 3 METHODS This chapter describes the procedures and the analytical tools that comprised this study. The first section describes the study population and sample. The second section describes measurement for the model. The third and fourth sections of this chapter describe the questionnaire and data collection procedures. Finally, methods Of data analysis are discussed. Population and Sample The population for this study consists Of loyalty program members of casino gaming companies. To sample the population, loyalty program members of a casino gaming company located in the southeastern UnitedIStates were invited. At the time of data collection, this casino had over 233,000 loyalty program members. This casino is more than 1 million square feet, and has 64,048 square feet of gaming area. In addition, this company boasts over 530 hotel rooms, 7 restaurants, over 2,100 slot machines in all denominations, gaming tables, golf course, meeting facilities, RV Park, Spa, and a theater. This casino Offers rewards to loyalty program members including cash perks, point redemption (e. g., cash, meals, hotel stays, and entertainment tickets) and access to entertainment and special events. The benefits are distributed using a point system based on the amount of tracked gaming activity, which is recorded through a card system. A total of29,114 loyalty program members with email addresses who had Visited the casino during the 12 months preceding the survey (November 2006 through October 2007) were identified as a sample for this study. 39 Measurement A listing of the items selected to test the model is detailed below (Table 5). In an effort to remain consistent with existing literature, most of the scale items for each construct were based on and/or adapted from previous research. A brief of the origin, measurement, and the measurement scales is included. Perceived Value of Loyalty Program As already mentioned, casino loyalty programs are designed to support the casino by rewarding highly valued customers through the enhancement of economic benefits and other considerations such as Special treatment and communication. This study adapted four items from O’Brien and Jones’ study (1995) to measure the value perception of loyalty programs including: cash value, redemption choice, aspirational value, and relevance. Convenience dimension was not included since it is considered irrelevant to the casino loyalty program. This study adapted three items from De Wulf et al.’s (2001) and Palmer’s (2003) study to measure special treatment/services Of being a member Of a loyalty program such as “I often receive rewards/comps gifts (e.g., meal comps, hotel comps, etc.) because I am a member of this casino’s loyalty program, “I receive special treatment (e. g., discounts, invitation to special events, etc.) because I am a member of this casino’s loyalty program,” and “Members Of this casinos’ loyalty program receive better service than non-members.” Two items measure monetary aspects (i.e., comps, better price, discount, invitation to special events) of special treatment, and one item measures non- monetary aspects (i.e., better treatment). 40 Three items were adapted from Anderson, Lodish, and Weitz (1987) to gauge the relevance and timeliness of the casino communication including: “This casino keeps me informed of promotions, special events, new services, etc.”, “I receive mailings from this casino on a regular basis,” and “The quality of communications from this casino is consistently high.” Items were measured on 5-point Likert scales anchored from “strongly agree” (1) to “strongly disagree” (5). Switching Cost Switching costs consist of both monetary and non-monetary expenses that consumers perceive when switching from one casino to another. Four items were adapted from previous studies (Bansal et al. 2004; Palmer, 2003). These items ask respondents about time, effort, money, and a psychological state associated with decisions to distribute their visits and gaming across different casinos. Reliability in Bansal et al.’s study was 0.89. Items were measured on 5-point Likert scales anchored from “strongly agree” (1) to “strongly disagree” (5). Satisfaction Satisfaction is both an evaluative and an emotional response to a service encounter (Oliver, 1997). Some studies measure customer satisfaction in terms of consumers’ perceived performance quality Of a product or service (e. g., Lee et a1. 2001; Yang & Peterson, 2004). However, other researchers argue that satisfaction represents more than mere perceived service quality, and should also incorporate overall affective components (Zins, 2001). In this study and on the survey, customer satisfaction is conceptualized as consumers’ evaluation of service experience after the actual use of the service over time (Garbarino & Johnson, 1999). Three items were adapted from 41 Anderson and Srinivasan’s study (2003) to measure satisfaction including: “1 am satisfied with this casino,” “Playing games at this casino is a great experience,” and “Overall and over time, I am satisfied with this casino.“ Items ask respondents’ evaluative and affective responses to their experience at a casino. Reliability in the original work was 0.89. Items were measured on S-point Likert scales anchored from “strongly agree” (1) to “strongly disagree” (5). Attitudinal and Behavioral Loyalty In this study, loyalty is defined as customers’ general attachment or commitment to a casino (Oliver, 1999). Previous studies tended to focus on behavioral attributes of consumer loyalty (e.g., Cronin et al., 2000; Jones et al., 2002). However, researchers argue that a true measure of loyalty can be obtained from a more comprehensive evaluation including both attitudinal and behavioral aspects (Harris & Goode, 2004). Attitudinal loyalty is the set of consumers’ preferences, intentions, or strength Of affection for a brand (Iwasaki & Havitz, 1998). Three items were adapted from previous studies (Chaudhuri & Holbrook, 2001; Morgan & Hunt, 1994) to measure attitudinal loyalty. They are “I am committed to this casino,” “I feel a sense of belonging to this casino,” and “I will continue to visit this casino even if a new casino is opened nearer to my home.” Behavioral loyalty is the probability that the customer intends to maintain a relationship with the casino. Two items were adapted from previous research (Chaudhuri & Holbrook, 2001; Cunningham, 1957; Jacoby & Chestnut, 1978) including: “1 will visit this casino on my next trip“ and “I intend to continue to be a customer Of this casino.” Items were measured on 5-point Likert scales anchored from “strongly agree” (1) to “strongly disagree” (5). 42 Table 5. Loyalty Model Construct Items Variables Items Perceived Economic Value of Loyalty Program — O’Brien & Jones (1995) The cash value of this casino’s reward is high This casino’s loyalty program Offers various redemption options (e.g., gifts, ticket, cash back, food, spa, etc.) 0 I do not have to wait long to receive rewards This casino’s loyalty program Offers rewards that I have wanted I Often receive rewards/comps gifts (e.g., meal comps, hotel comps, etc.) because I am a member Of this casino’s loyalty program Special Treatment! 0 I receive special treatment (e.g., discounts, invitation to special Services - DC Wulfet al. events, etc.) because I am a member of this casino’s loyalty (2001), Palmer (2003) program 0 Members of this casinos’ loyalty program receive better service than non-members 0 This casino keeps me informed Of promotions, special events, . . new services, etc. Communications — . . . . . . . o Irecerve marlrngs from thIS casrno on a regular basis Anderson, LOdIsh, & . Th 1. f . t' fr th' . . . t I] Weitz (1987) e qua rty O communrca Ions om 1S casrno rs consrs en y high Satisfaction - Anderson & Srinivasan (2003) 0 I am satisfied with this casino 0 Playing games at this casino is a great experience 0 Overall and over time, I am satisfied with this casino Perceived Switching Cost - Bansal et al. (2004), It would take a lot of time, effort, and money to switch from this casino to other casinos 0 I feel uncertain if I visit a new casino 0 In general, it would be a hassle visiting other casinos Palmer (2003) , , . _ o It would be very Inconvement for me to swrtch to other casrnos Att'tud' l L l 0 I am committed to this casino Chziu (11$: &OH:ltlii'O_ok 0 I feel a sense of belonging to this casino (2001) Mor an & Hunt 0 I will continue to visit this casino even if a new casino is Opened (1994)’ g nearer to my home Behavioral Loyalty — Chaudhuri & Holbrook 0 I will visit this casino on my next trip (2001), Cunningham 0 I intend to continue to be a customer Of this casino (1957), Jacoby & Chestnut (1 97 8) 43 The Questionnaire The survey questions were developed in consultation with faculty from two universities who provide on-going technical assistance to the casino’s marketing department and based on previous literature. The questionnaire was composed of seven sections with a total of 94 questions. The first section of the survey was to obtain information to measure the casino’s share of the respondent’s gaming trips and spending. The second section of the survey was to compare this casino to other casinos in the same market on various characteristics, including gaming and non-gaming amenities and services for the purposes of positioning. The following section was to measure model constructs (i.e., loyalty program members’ perceived value Of the loyalty program, satisfaction, perceived switching costs, and loyalty). The fourth section was to assess satisfaction with various casino amenities, and the fifth section was to evaluate the effectiveness of casino advertisements and mail Offers. The sixth section was to evaluate respondents’ experience with their hotel stay. The last section of the Survey was to get respondents’ demographic information such as gender, age, income, and so on. 44 Player’s Club Number & I Main Page Screening Question 7 V 3 Month Active Members Only I Section 1 I * -Market Share Information All Survey Respondents -Gaming & Non-gaming Amenities and Services I Section2 I V V I Section 3 I 3 Month Active Members Only , I - Model Constructs V All Survey Respondents -Customer Satisfaction with Casino Amenities I Section4 I V 3 Month Active Members Only I Section 5 I -Advertisements & Mail Offer I Section 6 I > All Survey Respondents I -Hotel Stay I Section 7 I > All Survey Respondents -Demographic Information I Thank You I = All Survey Respondents Figure 6. Survey Sections 45 Data Collection A data driven web-based survey was utilized to collect data from members of the casino loyalty program. In the past, most casino research has been conducted through mail or by personal interviews. To date, not much casino research has been done online. Although online surveys have some recognized disadvantages (e.g., incompatibility, Internet accessibility, and security concerns), they have advantages over traditional methods in terms of lower costs, added convenience, and quicker execution and responses (Mills, Morrison, and Ismail, 2000). Since this survey was data-driven, respondents did not need to answer all questions. Respondents were only asked to complete the questions based on their previous answers. In addition, respondents were reminded to complete required questions in an effort to reduce the amount of missing data. In order to avoid duplication of submissions, the Internet Protocol (IP) addresses of respondents were checked against a list of already submitted responses to ensure that respondents only submitted one response. Before administering the web-based survey, the researcher pre-tested the survey instrument by having ten people who were similar to targeted respondents verify the suitability of the terminology used and the clarity Of the instructions and scales. This pretest also verified the skip sequence and whether or not data was being captured. On December 7th, 2007, an e-mail invitation to take the survey was sent to 29,114 members who had visited the casino during the 12 months preceding the survey (November 2006 through October 2007). Two reminders were sent to increase the response rate. Respondents who completed the survey were entered into a drawing for 46 one of three vacation packages from the client casino, consisting of two nights in an executive suite, a $100 food voucher, and $100 in cash perks. About 39% (11,324) of the emails were deliverable. Of the 11,324 recipients Of the delivered emails, 2,274 (20.1%) completed all or part of the survey. Of those, 2,222 completed the entire survey and were included in this study. Data Analysis Two different analytical packages were employed to analyze the data: SPSS 15.0 and EQS 6.1. SPSS 15.0 was utilized for descriptive statistics, chi-square analyses, and analysis of variance (ANOVA). Simple descriptive statistics such as frequencies, percentages, and mean scores were calculated to profile the demographic characteristics, gaming behavior (e.g., theoretical average and sum, and average number Of trips to the client casino), and the usage of the loyalty card. In order to formulate and profile the loyalty segments better, chi-square analyses were performed to determine if there were significant differences among the segments in demographic characteristics (e.g., age, residence, and income) and gaming behavior. Also, analysis of variance (ANOVA) was used to determine if the segments were Significantly different from each other in terms of gaming spending (e.g., theoretical sum, and theoretical average), number of trips to the client casino, and items for model construct (i.e., perceived economic value, special treatment/services, and communications of loyalty program, perceived switching costs, satisfaction, attitudinal and behavioral loyalty). To test the proposed model, structural equation modeling (SEM) was used for model-generating purposes (Joreskog, 1993). SEM is a statistical technique that takes a confirmatory (i.e., hypothesis testing) approach to the analysis of a structural theory 47 bearing on some phenomena (Byme, 2001). The purpose of the model is to explain why variables are correlated in a particular fashion. The general SEM model consists of two sub-models: a measurement model and structure model. The proportions composing both models are most frequently drawn from previous research or theory (Bollen & Long, 1993) For this study, one of three most widely used programs, EQS 6.1, was utilized to complete the analysis. Before testing the proposed model, exploratory factor analysis (EFA) using Principal Component Analysis with Varimax rotation was conducted to test unidimensionality of scales of the perceived value of loyalty program. Results from principal component analysis and re-examination of the wording of items were used to select the items in each component’s scale that were deemed to be the most reflective of their respective definitions and did not have large cross-loadings with non-intended factors. The next step was to conduct confirmatory factor analySis (CFA) of the measurement model to further assess convergent and discriminant validity. CFA focuses on how-and the extent to which the Observed variables are linked to their underlying Observed variables and how both are generated by the underlying latent variables, and thus the strengths of the regression paths from the factors to the Observed variables are Of primary interest (Joreskog & Sorbom, 1993; Tate, 1998). Once factors are identified, a measurement model was tested. The measurement model models the relationships between the latent variables and their respective indicators. After the fit of the measurement model had reached an appropriate level for the entire sample, the full structural model was tested. Modifications to the model were then made in order to 48 improve the model fit in relation to the data. In order to test multiple segments, the model was tested for each segment to determine if any differences exist among groups. 49 CHAPTER 4 RESULTS This chapter is divided into four sections and follows the sequence of the study’s major Objectives. Before providing results relevant to each objective, the first section provides a general description of the survey respondents in terms of demographic characteristics and gaming behavior. The second section reports the results for the first three objectives dealing with the loyalty-related segmentation of the memberships. It includes a comparison of socio-demographic characteristics and gaming behavior Of each of the segments. Section three identifies and analyzes the differences across the segments in terms of perceived value of the loyalty program, perceived switching costs, satisfaction, attitudinal and behavioral loyalty to the casino. The fourth section reports the results associate with testing integrated casino loyalty model and multi group analysis. Profile of Survey Respondents Soda-Demographic Characteristics of Survey Respondents Table 6 presents the respondents’ sociO-demographic information. A majority (61%) were female and about 39% were male. This is reflective of the makeup of the casinos mailing list and the higher propensity Of women to respond to web-based surveys. Their ages ranged from 21 to 85 years, with an average age of 54 years. Almost half of respondents were aged over 56 (49%). The majority of respondents (85.0%) were Caucasian or White, but about 10% of respondents were Afiican American. Almost three-quarters of respondents had some college education, with about 16% holding Bachelor degrees and about 13% holding postgraduate degrees. 50 About 27% of respondents had household income between $50,000 and $74,999, followed by those with household income ranging between $25,000 and $49,999 (24.2%) and those with household income ranging between $75,000 and $99,999 (16.3%). Almost 26% of respondents had household income over $100,000. The majority of respondents (81.9%) were married or partnered, and 15.4% of respondents were single. About 70% of respondents resided in Louisiana, followed by those living in Texas (20.3%), Mississippi (1.1%), and other states (9.2%). Table 6. Socio-Demographic Characteristics of Survey Respondents Frequency % Gender Male 854 38.8% Female 1,349 61.2% Age Mean 54.02 Less than 35 193 8.8% 36-45 319 14.5% 46-55 611 27.7% 56-65 662 30.1% 65 + 417 18.9% Race African American 215 9.9% Asian or Pacific Islander 11 0.5% Caucasian or White 1,842 85.0% Hispanic 49 2.3% Mixed 24 1.1% Native American or Aleutian Eskimo 27 1.2% Education Less than high school 15 0.7% High school 632 28.9% Some college 692 31.7% 2-year college degree 226 10.3% 4-year college degree 342 15.7% Master/doctoral degree 278 12.7% 51 Table 6. Socio-Demographic Characteristics of Survey Respondents (Cont’d) Frequency % Income Less than $25,000 127 6.5% $25,000 - $49,999 _ 473 24.2% $50,000 - $74,999 530 27.2% $75,000 - $99,999 318 16.3% $100,000 - $124,999 238 12.2% $125,000 - $149,999 98 5.0% $150,000 or more 168 8.6% Family Status Single w/O children 167 7.6% Single w/ children living at home 79 3.6% Single w/ children no longer living at home 93 4.2% Married/Partnered w/O children . 300 13.6% Married/Partnered w/ children living at home 527 24.0% Married/Partnered w/ children no longer lrvrng at 973 443% home Other 59 2.7% State of Residence Louisiana 1,541 69.4% Mississippi 25 1.1% Texas 450 20.3% Other 206 9.2% Gaming Behaviors of Survey Respondents Not surprisingly, about three quarters of the respondents indicate that the primary reasons for visiting casinos is to win but also for the pleasure/entertainment, while only 6.6% of respondents indicated that their sole reason for going to casinos is to win (Table 7). In terms of the average length of stay per casino visit, about 32% of respondents indicated that they stay two days, followed by 3 to 6 hours (22.0%), one day (15.6%), and 6 to 9 hours (12.7%). Approximately 37% indicated that their gaming budget per casino visit averaged $201 to $500, 23% allocated $101 to $200 for gaming, and about 17% 52 budgeted $501 to $1,000. Only 8.3% of respondents indicated that their average gaming budget was greater than $1,000. As already discussed, many casinos have redesigned their loyalty programs in an effort to increase value/benefits to their members (Dowling & Uncles, 1997). For example, the client casino provides differential and increasing benefits to members based on the customer’s level Of play over the previous year. This tiered/segmented approach enables casinos to reward and retain their most loyal customers through targeted incentives aimed at increasing play and providing an incentive for members to achieve higher rewards. Almost 89% Of respondents were Ruby members (i.e., base tier), followed by those who were Sapphire (i.e., middle tier, 8.1%) and Diamond (i.e., highest tier in the loyalty program, 3.3%) members. Slightly less than half of respondents (48.3%) stated that the client casino is their favorite casino. Respondents (N=l,296, 58.3% of all respondents) who visited the client casino during the past 3 months visited an average of 3.74 casinos in Louisiana and Mississippi during those 3 months. Of those who visited the client casino during the past 3 months (N=l,296), almost 42% made less than 30% of their total visits to the client casino, while 25.6% made more than 80% Of their casino Visits to the client casino. Player identification numbers were used to link casino’s loyalty program database (e.g., theoretical average, the numbers of trips to the casino, and theoretical sum) to the survey responses to achieve all survey respondents’ (N=2,222) trip and spending data. In terms of gaming trips, respondents visited the client casino 11.14 times 53 on average during the past 12 months. They spent $90.15 per trip for gaming and generated $1,409.87 for the client casino during the previous 12 months. Table 7. Gaming Behaviors of Survey Respondents Frequency % Primary Reasons for Visiting Casinos To Win 147 6.6% For pleasure/entertainment 397 17.9% Both to win and for pleasure/entertainment 1,672 75.5% Length of Casino Stay Less than 3 hours 64 2.9% 3- 6 hours 487 22.0% 6-9 hours 281 12.7% 9-12 hours 146 6.6% One day 345 15.6% Two days 703 31.8% Three days 144 6.5% More than three days 41 1.9% Gaming Budget Less than $25 ' 16 0.7% $25 - $50 95 4.3% $51 -$100 211 9.7% $101 - $200 503 23.0% $201 - $500 805 36.9% $501- $1000 373 17.1% Over $1,000 181 8.3% Loyalty Tier ‘ Ruby 1,967 88.5% Sapphire 181 8.1% Diamond 74 3.3% Favorite Casino Client Casino 1,002 48.3% Number of Casino visited ” 3.74 1 308 23.8% 2 254 19.6% 3 220 17.0% 4 124 9.6% 5+ 390 30.1% ' The client casino utilize tiered/segmented loyalty program based on customer’s level of play over the previous year, and call these tiers as Ruby, Sapphire, and Diamond. Ruby is the base tier and Diamond is the highest tier in the client casino’s loyalty program I’ Responses based on members who visited the client casino during the previous 3 months (N=1 ,296) 54 Table 7. Gaming Behaviors Of Survey Respondents (Cont’d) Frequency % Proportion of Visits to the Client Casino b >=8O 332 25.6% 5079.9 241 18.6% 30-49.9 1.80 13.9% <30 543 41.9% Gaming Spending & Trips ° Mean 12 Months Average Trips d 11.14 12 Month - Theoretical Average 6 $90.15 12 Month - Theoretical Sum f $1 ,409.87 ‘ The client casino utilize tiered/segmented loyalty program based on customer’s level of play over the previous year, and call these tiers as Ruby, Sapphire, and Diamond. Ruby is the base tier and Diamond is the highest tier in the client casino’s loyalty program. " Responses based on members who visited the client casino during the previous 3 months (N=l ,296) °Trip and spending data were achieved from the client casino’s database. Average number Of trips to the client casino during the previous 12 months c Average spending per casino visit during the previous 12 months fTotal Spending during the past 12 months Usage of Player ’s Club Card With regard to the question “How Often do you use your player’s club card when gaming at this casino?”, almost two-thirds of respondents (64.1%) use their card all the time (Table 8), and 26.4% use their card most of time. Only 2.5% of respondent use their card rarely or not at all. Table 8. Usage of Player’s Club Card When Gaming at the Casino Frequency °/o All the time 1,413 64.1% Most of the time 581 26.4% Sometimes 153 6.9% Rarely 42 1.9% Never 14 0.6% Mean " 3.51 'Items were measured on a scale ranging from 0 (Never) to 4 (All the time) 55 Segmentation Based on Respondents’ Number of Casino Loyalty Program Memberships Based on the number of casino loyalty programs they belonged to, respondents were assigned to one of four segments (Table 9). The vast majority (87.4%) Of respondents belong to more than two casino loyalty programs. They average 5.33 casino loyalty program memberships. About 31% of respondents (i.e., Segment HI) had 4 to 6 casino loyalty program memberships, followed by those with more than 7 casino loyalty program memberships (i.e., Segment IV, 30.2%) and those with 2 to 3 casino loyalty program memberships (i.e., Segment II, 26.4%). Only 12.6% Of respondents (i.e., Segment 1) were members Of one loyalty club that is the client casino’s loyalty program. Table 9. The Results of Segmentation Based on Number of Casino Loyalty Program Membership to Which Respondents Belong Number of Casino Loyalty F P t Program Membership requency ercen age Segment I 1 279 12.6 Segment 11 2-3 587 26.4 Segment HI 4-6 685 30.8 Segment VI 7+ 671 30.2 Mean 5.33 Soda-Demographic Characteristics of Segments To better understand the characteristics of segments, chi-square analyses were performed to determine if there were significant differences in socio-demographic characteristics. The results are shown in Table 10. As previously reported most of the respondents were female (61.2%). There were slightly more female respondents (64.0%) in Segment 11 compared to other segments. 56 However, there was no significant difference across the four segments in terms of gender composition. The majority of respondents were aged from 46 to over 65 (76.7%). Segment IV has the largest proportion of persons 65+ (23.8%), followed by Segment HI (20.6%), Segment II (14.1%), and Segment I (13.4%). Interestingly, the proportion of Segment I aged less than 35 years old was the highest (17.7%) among the segments. A statistically significant difference at p < 0.01 was found in the age distributions across the four segments. In terms of race, Segment IV had the highest proportion of Caucasian or White respondents (88.8%), followed by Segment HI (87.2%) and Segment II (81.0%). Segment 1 had the highest proportion of Afiican Americans (14.1%). A statistically significant difference (p < 0.01) exists in terms of the race distribution across the four segments. As previously described, about three-quarters Of all respondents had some college education. About 18% of those in Segment H had Bachelor degrees, while about 14% of respondents in Segment I had Bachelor degrees. Segment 111 had the highest proportion Of respondents with a postgraduate degree (13.5%), followed by Segment H (12.8%) and Segment IV (12.3%). However, no statistically significant differences exist in terms of education levels across the four segments. Almost 29% of those in Segment IV had the highest proportion of high household income ($100,000 plus), followed by Segment III with 28.2%. Almost 40% of Segment 1 (37.5%) and Segment II (39.4%) had household incomes of less than $50,000. There 57 was a statistically significant difference at p< 0.01 across the four segments in terms of household income. With respect to family status, Segment IV (54.3%) had the highest proportion Of married or partnered respondents with children no longer living at home, followed by Segment HI (45.8%), Segment II (35.7%), and Segment I (34.5%). Segment I (32.7%) had the highest proportion of married or partnered with children living at home across the segments, followed by Segment II (28.9%). There was a significant difference across the four segments in family status at p < 0.01. In terms of state of residence, about 73% of those in Segment II resided in Louisiana, and about 72% Of those in Segment I resided in the Louisiana. Segment III (32.9%) and Segment IV (32.1%) had the highest proportion of non-Louisiana residents, including persons residing in Texas and Mississippi. There was a statistically significant difference at p < 0.01 across the four segments in terms of state of residence. 58 Table 10. Socio-Demographic Characteristics of Segments Seg Seg Seg Seg X2 I II III IV Gender 2.538 Male 40.0% 36.0% 39.9% 39.5% Female 60.0% 64.0% 60.1% 60.5% Age 161.489 Less than 35 17.7% 12.7% 7.5% 2.9% 36-45 21.3% 21.2% 12.1% 8.3% 46-55 28.2% 25.3% 30.4% 27.0% 56-65 19.5% 26.7% 29.4% 38.1% 65 + 13.4% 14.1% 20.6% 23.8% Race 44.360* African American 14.1% 13.8% 8.0% 6.7% Asian or Pacific Islander 1.9% 0.5% 0.1% 0.3% Caucasian or White 78.5% 81.0% 87.2% 88.8% Hispanic 1.9% 2.1% 2.7% 2.1% Mixed 2.2% 1.2% 0.6% 1.1% Native American or Aleutian 1.5% 1.4% 1.3% 0.9% Education 16.569 Less than high school 0.4% 0.9% 1.0% 0.3% High school 29.6% 27.0% 28.5% 30.7% Some college 32.1% 29.5% 34.2% 30.9% 2-year college degree 12.3% 12.1% 8.0% 10.3% 4-year college degree 14.1% 17.7% 14.7% 15.5% Master/doctoral degree 11.6% 12.8% 13.5% 12.3% Income 62.246* Less than $25,000 8.8% 9.4% 5.4% 4.1% $25,000 - $49,999 28.7% 30.0% 23.1% 18.2% $50,000 - $74,999 30.3% 22.1% 26.5% 31.0% $75,000 - $99,999 12.0% 16.2% 16.8% 17.8% $100,000 - $124,999 6.8% 10.6% 14.7% 13.4% $125,000 - $149,999 4.0% 3.8% 5.0% 6.5% $150,000 or more 9.6% 7.9% 8.5% 9.0% ** Significant at p<.01 59 Table 10. SociO-Demographic Characteristics Of Segments (Cont’d) Seg Seg Seg Seg X2 I II III IV Family Status 94.386 Single w/o children 7 .6% 9.6% . 7.3% 6.2% :35? W/ Ch‘ldre“ “mg at 6.5% 5.5% 3.0% 1.4% Single w/ children no longer 47% 4.1% 4.4% 3.9% lrvrng at home Xfirzg’lime’ed W/° 10.4% 13.9% 13.5% 14.9% timed/Farmer“ W/ “1‘1““ 32.7% 28.9% 23.7% 16.3% lrvrng at home Mmed’Pt’ti‘ered W/ ch’ld‘e“ 34.5% 35.7% 45.8% 54.3% no longer lrvrng at home Other 3.6% 2.2% 2.4% 3.0% State of Residence 35.698 Louisiana 71.7% 72.6% 67.2% 67.8% Mississippi - 1.5% 0.7% 1.6% Texas 15.1% 15.3% 23.4% 23.5% Other 13.2% 10.6% 8.8% 7.0% ""I' Significant at p<.01 Gaming Behaviors of Segments In general, the majority of respondents visit casinos to win as well as for pleasure/entertainment (Table 11). However, about a quarter Of Segment I and about 21% of Segment 11 visit casinos only for the purpose of pleasure/entertainment. Interestingly, 8.1% of Segment III and 7.8% of Segment II seem to be serious gamers who visit casinos solely to win and not for recreation. There was a statistically significant difference at p< 0.01 across the four segments in terms of primary reasons for Visiting casinos. Almost two-thirds of those in Segment IV stay at the casino more than one day, followed by Segment III (58.7%) and Segment II (51.0%). Segment I (39%) had the highest proportion of respondents staying at the casino for less than 6 hours. A 60 statistically significant difference (p < 0.01) was found in regards to length Of stay at the casino per visit across the four segments. In terms Of gaming budget, Segment I (31.8%) had the highest proportion of members whose gaming budget was less than $100, follOwed by Segment H (21.5%), while about 42% of Segment IV and 39% of Segment II had a gaming budget between $201 and $500. In addition, Segment IV had the highest proportion of respondents with a gaming budget over $500. A statistically significant difference at p < 0.01 was found in the gaming budget distributions of the segments. The majority of survey respondents were Ruby members (88.5%) of the client casino loyalty program. Among these respondents, Segment I (89.6%) had a slightly higher percentage of respondents who were Ruby members compared to Segment II (89.1%), Segment III (88.5%), and Segment IV (87.6%). About 4% of those in Segment IV were Diamond members, fOllowed by Segment 1H (3.5%) and Segment I (3.2%). There was no significant difference across the four segments in terms of loyalty tier distribution. The client casino is the favorite casino for most respondents (90.6%) in Segment I and a majority (63%) of Segment 11 members. Unfortunately, only 28% of respondents in Segment IV indicated that the client casino is their favorite of casino. There was a significant difference among the segments at p <0.01. Regarding visits to the client casino, over 70% of Segment 1 members visited the client casino within the previous 3 months. A smaller proportion but still a majority of Segment II (58.8%), Segment IV (58.6%), and Segment HI. (52.7%) also visited the casino. A statistically significant difference at p<0.01 was found across the segments. 61 In terms of the number of casinos in Louisiana and Mississippi that respondents visited during the past 3 months (N=l,296), Segment IV members visited 6 different casinos on average during the previous 3 months, while Segment IH members visited about 3.6 casinos. However, Segment I members visited 1.7 casinos and Segment 11 members visited 2.4 casinos, on average. There was a significant difference at p < 0.01 in regards to the number of casinos visited during the previous 3 months across the segments. With respect to the proportion of those visiting the client casino compared to those visiting other casinos during the previous 3 months, 70.0% of Segment IV members and 46.5% of Segment 111 members made less than 30% of their total casino visits to the client casino. However, more than 70% of Segment I members made more than 80% of their casino visits to the client casino, and about 33% Of Segment H members made more than 80% of their casino visits to the client casino. Only 6.1% Of Segment IV and 15.8% of Segment III made more than 80% of their casino visits to the client casino. A statistically significant difference at p<0.01 was found in the client casino visit proportion across the segments. In terms of number of trips to the client casino, there was no significant different across the four segments. Respondents in Segment I made about 12 trips to the client casino during the previous 12 months, while those in Segments 11, HI, and IV made about 11 trips to the client casino. There was no significant difference found in the number of trips to the client casino among the different segments. A statistically significant difference at p < 0.01 exists in the theoretical average across segments. Segment IV members ($108.22) spent the most per visit at the client 62 casino, on average, followed by Segment HI ($98.00) and Segment H ($78.49). Meanwhile, Segment I members spent only $56.79 per Visit at the client casino. The theoretical sum of Segment IV ($1,674.33) was higher compared to those of Segment IH ($1,469.37) and Segment II ($1,212.45), while Segment I ($1,098.21) was the least valuable segment for the client casino. However, there is no statistically significant difference at p < 0.01 in the average theoretical sum of the four segments. Table 11. Gaming Behaviors of Segments Seg I Seg Ir Seg III Seg rv x2 Primary Reasons for Visiting Casinos 31653“ To Win 5.8% 7.8% 8.1% 4.5% For pleasure/entertainment 25.2% 21.0% 15.6% 14.6% BO‘h ‘0 “’1“ and.” 69.1% 71.2% 76.4% 80.9% pleasure/entertarnment Length of Casino Stay 86.302“ Less than 3 hours 6.5% 2.9% 2.1% 2.2% 3- 6 hours 32.5% 27.0% 19.1% 16.3% 6-9 hours 13.7% 13.3% 12.6% 11.8% 9-12 hours 7.2% 5.8% 7.4% 6.3% One day 8.7% 14.4% 16.0% 19.1% Two days 22.0% 28.0% 35.4% 35.4% Three days 6.1% 6.7% 5.7% 7.3% More than three days 3.2% 1.9% 1.6% 1.5% Gaming Budget 172.902** Less than $25 2.9% 0.5% 0.6% 0.2% $25 - $50 9.5% 7.4% 3.0% 0.9% $51- $100 19.4% 13.6% 6.1% 5.8% $101 - $200 23.8% 25.9% 22.7% 20.5% $201 - $500 29.7% 31.8% 39.3% 41.9% $501 - $1000 9.2% 14.5% 19.4% 20.2% Over $1,000 5.5% 6.2% 9.0% 10.5% Loyalty Tier ' 1.693 Ruby 89.6% 89.1% 88.5% 87.6% Sapphire 7.2% 8.2% 8.0% 8.6% Diamond 3.2% 2.7% 3.5% 3.7% Favorite Casino Client Casino 90.6% 63.3% 43.5% 28.0% 301.896** * Significant at p<.05, " Significant at p<.01 63 Table 11. Gaming Behaviors of Segments (Cont’d) Seg 1 Seg II Seg 111 Seg N x2 Visit to the Client Casino ' 26.301** mitt; 3311:1133: but N°t 29.4% 41.2% 47.3% 41.4% Within 3 Months Visitors 70.6% 58.8% 52.7% 58.6% Number of Casino Visited I’ Mean 1.71 2.42 3 .63 6.03 194.640“ 1 66.5% 28.4% 15.8% 5.6% 526.267“ 2 16.2% 35.4% 17.7% 9.2% 3 10.2% 19.7% 22.4% 13.0% 4 1.0% 7.5% 12.2% 13.2% 5+ 6.1% 9.0% 31.9% 59.0% Total Visit Proportion I’ 423.569“ >=80 70.1% 32.8% 15.8% 6.1% 50-79.9 15.7% 25.8% 21.1% 11.5% 30-49.9 5.1% 17.7% 16.6% 12.5% <30 9.1% 23.8% 46.5% 70.0% Gaming Spending & Trip ° Average Trips 1 1.90 10.68 11.19 11.17 0.219 Theoretical Average ° 56.79 78.49 98.00 108.22 8.131 ** Theoretical Sum f 1098.21 1212.45 1469.37 1674.33 0.787 * Significant at p<.05, ** Significant at p<.01 ' The client casino utilize tiered/segmented loyalty program based on customer’s level of play over the previous year, and call these tiers as Ruby, Sapphire, and Diamond. Ruby is the base tier and Diamond is the highest tier in the client casino’s loyalty program I’ Responses based on members who visited the client casino during the previous 3 months (N=l,296) ° Trip and spending data were achieved from the client casino’s database. Average number Of trips to the client casino during the previous 12 months e Average spending per casino visit during the previous 12 months fTotal Spending during the past 12 months Usage of Player ’s Club Card by Segments With regard to the question, “How often do you use your player’s club card when gaming at the casino?” over 70% of respondents in Segment IV stated that they use their player’s club card all the time, followed by 67.8% of Segment HI and 59.4% Of Segment H. About half (49.6%) of the respondents in Segment I answered that they use their player’s club card all the time. There was a significant difference at p < 0.01 in terms of the usage of a player’s club card across segments. 64 Table 12. Usage of Player’s Club Card by Segments Segment Segment Segment Segment 2 1 11 III N X M F All the time 49.6% 59.4% 67 .8% 70.4% 76.442“ Most of the time 32.0% 28.4% 24.7% 24.1% Sometimes 1 1.4% 9.8% 5.0% 4.6% Rarely 4.8% 1.9% 2.1% 0.6% Never 2.2% 0.5% 0.4% 0.3% Mean ' 3.22 3.44 3.57 3.64 38.947 ** ' Items were measured on a scale ranging from 0 (Never) to 4 (All the time) " Significant at p<.01 Differences in the Perceived Loyalty Program Value, Switching Costs, Satisfaction, and Loyalty across Segments The fourth objective of this study was to investigate whether the segments differ regarding their perceived value of loyalty program (e.g., economic value, special treatment/services, and communications), how they perceive switching costs, satisfaction, attitudinal and behavioral loyalty. Analysis of variance (ANOVA) tests were performed to determine if there were statistically significant differences among the four segments in regards to the perceived economic value, special treatment/services, communications of the loyalty program (i.e., Player’s Club), the perceived switching costs, and satisfaction, attitudinal loyalty, and behavioral loyalty. Table 13 shows that the mean differences in the perceived economic value, special treatment/services, communications Of the loyalty program (i.e., player’s club), and perceived switching costs were statistically significant for 11 statements at p <0.01, and for one statement at p<0.05. However, two items under special treatment/service, “I often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) because I am a member of this casino’s player’s club” and “Members of this casino’s player’s club receive better service than non-members” were not statistically significant at p < 0.05. 65 Members of Segments I and II tended to agree the most (higher aggregate mean scores) in regards to the perceived economic value of the client casino’s loyalty programs (3.72 and 3.65 respectively), special treatment/services (3.46 and 3.45 respectively), communications (4.03 and 3.83 respectively), and perceived switching costs (3.51 and 3.21 respectively). Interestingly, Segment III rated one of the three “special treatment/services” (i.e., “I Often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) because I am a member of this casino’s player’s club” [366]) higher in agreement than the other segments. In addition, Segments III and IV perceived switching costs relatively lower (3.00 and 2.68 respectively) than Segments I and II (3.51 and 3.21, respectively). Table 14 shows the mean differences in satisfaction, attitudinal loyalty, and behavioral loyalty. There were statistically significant differences for all statements at p < 0.01. The results show that Segments I and II had very high levels of satisfaction with the client casino (4.35 and 4.21 respectively): “I am satisfied with this casino” (4.37 and 4.22 respectively), “Playing games at this casino is a great experience” (4.26 and 4.16 respectively), and “Overall and over time, I am satisfied with this casino” (4.42 and 4.26 respectively). However, it is important to note that Segments HI and IV were also satisfied with the client casino (4.10 and 4.01 respectively), but slightly less satisfied compared to those in Segment I and II. Segments I and H (3.95 and 3.72 respectively) had higher on average on the combined attitudinal loyalty than Segments III or IV (3.61 and 3.47 respectively). In addition, Segments I and 11 showed higher behavioral loyalty (4.37 and 4.10 respectively) than Segments III and IV (3.96 and 3.81 respectively). 66 Tablel3. Mean Differences in the Perceived Economic Value, Special Treatment/ Services, and Communications of Loyalty Program (i.e., Player’s Club), and the Perceived Switching Costs Seg Seg Seg Seg I [I III IV A“ F Perceived Economic Value 3.72'” 3.65 3.54 3.41 3.55 10.262“ , The “Sh V31“? °Ith1s “51"" 5 player 5 3.51 3.48 3.40 3.22 3.38 8.568“ club rewards IS high This casino’s player’s club offers various redemption options (e.g., gifts, tickets, 3.82 3.79 3.68 3.54 3.68 8.972" cash back, food, spa, etc.) “1° “I have t° .Wa“ 1.0“? ‘° receive 3.78 3.70 3.60 3.52 3.62 5.192" rewards from this casrno 3 player s club ““5 “5“” 5 play" S club °ff°rs 3.74 3.65 3.54 3.38 3.54 10.792** rewards that I have wanted Special Treatment/Services 3.46 b 3.45 3.49 3.37 3.44 1.547 I often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) because I am a member of this 3'59 3'58 3'66 3'57 3'60 0'677 casino’s player’s club Ireceive special treatment (e.g., discounts, invitation to the special events, etc.) because I am a member of 3'43 3'39 3'39 3'21 3'34 3538* this casino’s player’s club Members °ffl“s “ism" 5 player 5 club 3.35 3.40 3.42 3.33 3.38 0.882 receive better servrce than non-members Communications 4.03 b 3.83 3.75 3.61 3.77 10.963" This casino’s player’s club keeps me informed of promotions, special events, 4.14 3.93 3.86 3.73 3.88 9.818" net services, etc. I receive mailings about this casino’s player’s club on a regular basis 3.84 3.69 3.62 3.50 3.63 5.886“ The quality of communication from this casino’s player’s club is consistently 4.08 3.88 3.78 3.62 3.80 13.070" Perceived Switching Costs 3.51 b 3.21 3.00 2.68 3.02 53.830“ It would take a lot of time, effort, and money to switch from this casino to other 3.66 3.42 3.25 2.98 3.26 30.201" casino I feel uncertain if I visit a new casino 3.53 3.29 3.08 2.75 3.09 42.728" 1“ genera} 1‘ “u“ b" a bass“ “5“” 3.44 3.05 2.82 2.47 2.85 58.592" other casinos It would be very Inconvenient for me to 3.44 3.08 2.82 2.51 2.87 54.275” switch to Other casino ' Items were measured on a scale ranging from 1 (Strongly Disagree) to 5 (Strongly Agree) b Aggregate mean scores * Significant at p<.05, I“ Significant at p<.01 67 Table 14. Mean Differences in Satisfaction, Attitudinal Loyalty, and Behavioral Loyalty Seg Seg Seg Seg I II III IV A“ F Satisfaction 4.35 ' b 4.21 4.10 4.01 4.13 14.990“ I am satisfied with this casino 4.37 4.22 4.09 4.00 4.13 14.367" Playing games at this casino is a great experience 01m". and 9vemme’ I 3‘“ saI‘Sfied 4.42 4.26 4.15 4.07 4.19 13.170** With this casrno Attitudinal Loyalty 3.95” 3.72 3.61 3.47 3.64 19.006“ I will continue to visit this casino even ifa new casino is opened nearer to my 4.13 3.90 3.81 3.70 3.84 13.504" home 4.26 4.16 4.05 3.93 4.07 12.009" I am committed to this casino 3.85 3.64 3.50 3.33 3.53 19.092" I feel a sense of belonging at this casino 3.86 3.63 3.51 3.38 3.54 15.764" Behavioral Loyalty 4.37 " 4.10 3.96 3.81 4.00 35.537 ** I will visit this casino on my next gaming trip I 1ntend to continue to be a this casrno s 450 4.31 4.28 4.22 430 9.096” customer 4.24 3.90 3.63 3.41 3.71 50.505" ‘Items were measured on a scale ranging fi'om 1 (Strongly Disagree) to 5 (Strongly Agree) " Aggregate mean scores 'I' Significant at p<.05, ** Significant at p<.01 Testing Measurement Model and the Hypothesized Structural Model The fifth and sixth Objectives of this study were to develop and test an integrated casino loyalty model, and then to exanrine if any statistical differences exist across segments for the model. The test of the hypotheses required three different analytical procedures. First, a factor analysis was performed to identify underlying dimensions of the perceived value of loyalty program. Second, Confirrnatory Factor Analysis (CFA) was performed to test the measurement model Of the model constructs and to determine whether various indicators were significantly related with the constructs. Third, Structural Equation Model using a Maximum-Likelihood estimation procedure linked with EQS 6.1 software was then employed to assess the causal relationships among perceived economic value, special treatment/services, communications, satisfaction, 68 switching costs, attitudinal loyalty, and behavioral loyalty. In this procedure, all of the hypothesized associations were simultaneously tested (Kline, 1998). Factor Analysis An exploratory factor analysis was performed to determine the underlying dimensions Of the perceived loyalty program value. Three methods were used to assess if the factor analysis was appropriate. First, the correlation matrix and the communality estimates were examined to assure that they provided high enough correlation coefficients. If the correlation coefficients are small throughout the matrix, factoring may be inappropriate (Hair, Anderson, Tatharn, and Black, 1998). Second, a Kaiser-Meyer- Olkin measure of sampling adequacy (MSA) was calculated and the overall MSA was found to be 0.92, which was acceptable (Table 15). The third procedure was a Bartlett’s Test Of Sphericity, which is a statistical test for the overall significance Of all correlations within a correlation matrix originating from a population of , variables that are independent. If the hypothesis is rejected, the data are appropriate for factor analysis (Hair et. a1, 1998). Table 15 presents the results Of the Bartlett’s test, which rejected the hypothesis, meaning the data were appropriate for factor analysis. Table 15. Results Of Testing for Adequacy Of Factor Analysis Kaiser-Meyer-Olkin Measure Of Sampling Adequacy .918 Bartlett's Test of Sphericity Approx. Chi-Square 15210.503 df 45 Sig .000 Alter the appropriateness tests were completed, a factor analysis using principal components with a Varimax rotation was performed to group 10 statements of the perceived values of loyalty program. The final solution had two factors, which explained 69 72.24% of the total variance. Cronbach’s alpha, the most commonly used reliability measure, was applied to test the reliability of the factors. The factors with alphas of more than 0.6 were retained for further analysis. An alpha of 0.6 and higher indicates that there is a reasonable level of internal consistency among the items making up the factor (Hair et. a1, 1998). Both factors had very high Cronbach alphas (0.90 and 0.93 respectively). Table 16 presents the factor solutions with their variance, Eigenvalues, and loadings. The first factor extracted was composed of seven items and was named “perceived economic value & special treatment/services.” Four statements comprised perceived economic value of loyalty program: “This casino’s player’s club offers rewards that I have wanted,” “The cash value of this casino’s player’s club rewards is high,” “This casino’s player’s club offers various redemption options (e.g., gifts, tickets, cash back, food, spa, etc.),” and “I do not have to wait long to receive rewards from this casino’s player’s club.” The other three statements were originally related to special treatment/services; “Members Of this casino’s player’s club receive better service than non-members”; “I receive special treatment (e.g., discounts, invitations to the special events, etc.) because I am a member of this casino’s player’s clu ”; and “I Often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) because I am a member Of this casino’s player’s club.” This factor had the largest Eigenvalue (3.89) and explained 38.89% of the total variance. “Communications” was the second factor. This factor had an Eigenvalue of 3.34 and explained 33.35% of the total variance. Three statements were related to this casino’s communication efforts: “I receive mailings about the loyalty program on a 70 regular basis,” “This casino keeps me informed of promotions, special events, services, etc.,” and “The quality of communication from this casino is consistently high.” The exploratory factory analysis revealed that the perceived economic value Of loyalty program and special treatment/services were loaded on the same factor. Under further inspection of the wording Of the items, it is probable that special treatment/services may be similar in nature to properly discriminate from the perceived economic value of loyalty program. To illustrate this point, consider statements “I Often receive rewards/comps/gifts because I am a member of this casino’s player’s club” and “I receive special treatment because I am a member of this casino’s player’s club” are directed at the level of special treatment/services made by the casino to increase perceived economic value Of loyalty program. The issue regarding validity of including special treatment/services in the customer loyalty model was subsequently reassessed by confirmatory factor analysis, to be discussed later in this chapter. 71 Table 16. The Result of Exploratory Factor Analysis Eigen Variance Loading Value Explained Perceived Economic Value & Special Treatment/Services 3.888 38.884 This casino’s player’s club offers rewards that I have wanted .793 The cash value of this casino’s player’s club rewards is high ‘ .793 This casino’s player’s club offers various redemption Options 782 (e.g., gifts, tickets, cash back, food, spa, etc.) ' I do not have to wait long to receive rewards from this casino’s 734 player’s club ' Members Of this casino’s player’s club receive better service 669 than non-members I receive special treatment (e.g., discounts, invitation to the special events, etc.) because I am a member of this casino’s .665 player’s club I Often receive rewards/comps/gifis (e.g., meal comps, hotel comps, concert tickets) because I am a member of this casino’s .583 player’s club Communications 3.335 33.353 1 receive mailings about the loyalty program on a regular basis .886 This casino keeps me informed Of promotions, special events, 880 services, etc. ' The quality of communication from this casino is consistently hi 1 .878 Total Explained Variance 72.237 Testing the Measurement Model: Confirmatory Factor Analysis This section concentrates on assessing and refining the measurement model that represents relations between observed variables and factors. First, SEM assumption tests measuring normality Of the data are discussed. Next, the measurement model was assessed and refined through confirmatory factor analysis (CFA). The procedures for improving model fit are presented, along with the discussions of reliability, convergent validity, and discriminant validity for the measurement model. Normality Test SEM is extremely sensitive to distributional characteristics of data. In SEM, maximum likelihood estimation (MLE) is utilized, and it is based on the assumption of normality (Hair et al., 1998). Normalin for each variable in the proposed model was 72 examined to determine whether the data meet the normality assumption for the MLE. Since the results must fall within acceptable standards for subsequent SEM analyses to be meaningful, the normality test is a very important preliminary analysis step. In order to evaluate normality, skewness and kurtosis tests were perfOrmed. Table 17 shows that the value for univariate skewness and kutosis ranged from -1.05 (SA3) to 0.29 (SC3) and from -.91 (ST2) to 1.21 (SA3) respectively. Values of all variables in the model for univariate skewness and kurtosis were found to fall within conventional criteria (Kline, 1998) of normality (-3 to 3 for skewness and -10 to 10 for kurtosis). Confirmatory Factor Analysis: Model Specification The proposed measurement model was examined for the relations between the Observed variables and the factors through loadings of the observed variables and their error term. The proposed measurement model consisted of seven factors and 22 observed variables as shown in Figure 7. The perceived economic value of the loyalty program and perceived switching cost were each specified by four Observed variables. Communications, special treatment/services, satisfaction, and attitudinal loyalty were each specified by three Observed variables. Behavioral loyalty was specified by two Observed variables. All observed variables in the proposed measurement model were presented earlier in Table 5. 73 Table17. Normality Test Results Of Observed Variables Included in the Proposed Model Variable Skewness Kurtosis Names ' b Perceived Economic Value The cash value of this casino’s player’s club rewards is high PVl -.O780 -.3118 This casino’s player’s club Offers various redemption ' options (e.g., gifts, tickets, cash back, food, spa, etc.) PV2 "4054 "0978 I do not have to wart long to recerve rewards from this PV3 _. 4298 _'2394 casrno 3 player 8 club This casrno 3 player s club offers rewards that I have PV4 _.2 827 _. 2 683 wanted Special Treatment/Services I Often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) because I am a member of this ST1 -.9321 .4033 casino’s player’s club I receive special treatment (e.g., discounts, invitation to the special events, etc.) because I am a member of this casino’s ST2 -.5 877 -.5429 player’s club Members Of this casino’s player’s club receive better . ST3 -.7124 -.0743 servrce than non-members Communications This casrno S player 3 club keeps me'rnformed of COMl _. 5 476 -.8508 promotions, specral events, new servrces, etc. I receive marlrngs about the thrs casrno s player 5 club on a COM2 -.22 41 ‘9077 regular b381s The quality of communicatron from this casmo s player s COM3 -.1384 _. 4 5 41 club 1s consrstently high Satisfaction - - I am satisfied with this casino SATl -.9369 .8222 Playing games at this casino is a great experience SAT2 -.6727 .1972 Overall and over time, I am satisfied with this casino SAT3 -l .0501 1.2084 Switching Cost It would take a lot Of time, effort, and money to switch from this casino to another casino SC] "0230 ”6177 I feel uncertain if I visit a new casino SC2 .05 84 -.5955 In general it would be a hassle visiting other casinos SC3 .2853 -.5387 It would be very inconvenient for me to swrtch to another S C4 :2 808 _'5 544 casrno Attitudinal Loyalty I will continue to visit this casino even if a new casino is opened nearer to my home AL] "6441 '0442 I am committed to this casino AL2 -.2208 -.4803 I feel a sense of belonging at this casino AL3 -.2362 -.4310 Behavioral Loyalty I will visit this casino on my next gaming trip BL] -.4130 -.5425 I intend to continue to be a this casino’s customer BL2 -.9288 1.0915 ‘ Skewness refers tO the symmetry of the distribution. Skewness with a value above 3 is conventionally considered as extremely skewed. b Kurtosis value of 10 is a conventional criterion indicating normality distribution in terms of its peakedness. Values above 10 are considered extremely peaked. 74 e1 PV1 Perceived pvz Economic °2 Value 93 —‘> PV3 / e4 —>* PV1 1 e5 —~~ 571 3%: Treatment! 96 —> ST2 Services j 97 sr1 / 98 * com A Communications +— 99 COMZ € com. 7/ e10 v 011 —* sc1 <3 Switchln ‘ e12 —>~ scz Costs“ 1 013 —H~ scs r/ 914 i sc4 e15 —> SAT1 N4— Satisfactlon : e16 __/¢ 1 e17 —> 1 e18 AL1 Attitudinal e19 AL2 / Loyalty 020 —> AL3 1 e21 —H BL1 Behavioral Loyalty e22 —> BL2 Figure 7. Proposed Measurement Model 75 The purpose of the measurement model is to test convergent and discriminant validity. Once the measurement model has reached an acceptable level of fit, the fiill hypothesized structural model is tested to determine its fit relative to the data being tested. Model modification procedures were used to identify observed variables that had low factor loadings, significant cross loadings, and large residuals using standardized factor. The Lagrange Multiplier Test (LM Test) then provided suggestions for model modifications to improve the chi-square/degrees of freedom ratio, thus attempting to improve the fit of the model to the data. Some researchers have raised questions related to the reliability of using chi- square tests as the only indicator of model fit (Fan, Thompson, & Wang, 1999). As a result, a number of model fit indices have been developed and are now included in all structural equation modeling statistical programs. The most commonly accepted fit indices are the Comparative Fit Index (CPI: Bentler, 1990), Incremental Fit Index (IFI; Bollen , 1980), and Non-Normed Fit Index (NNFI: Bentler & Bonett, 1890). The cut-Off values for CIF, IFI, and NNFI are set at 0.90. The Root Mean Square Error of Approximation (RMSEA) is the most cited alternative fit index, and this focuses on the degree of fit between the data being tested and the proposed model. According to MacCallum et al. (1996), the RMSEA value should be small (preferably 0.05 or lower). As stated previously, the proposed measurement model was tested first. Overall fit indices for proposed and modified measurement models through modification procedures are presented in Table 18. They indicated that the proposed model did not produce a good fit with the data it 2(188) =1864.3, p<.001 (x 2/df=9.92, CFI=.954, NNFI=.944, RMSEA=.069). The proposed model needed further modification, since the 76 x 2/df value Of 9.92 did not fall within a range of acceptable values (two to five as suggested by Marsh and Hocevar, 1985) and the RMSEA was greater than 0.05. One of the observed variables (i.e., Members of Paragon Preferred Players Club receive better service than non-members) in special treatment/services with low factor loading (less than .50 as suggested by Kline, 1998) was removed from the proposed measurement model in accordance with rules suggested by Kline (1998). However, the decision was made to keep the other two special treatment/services items that were a problem as earlier Observed from exploratory factor analysis because the model including these two special treatment/services items had better model fit. The CFA test results showed that Model 1 was a significantly better fit than the proposed model in terms of chi-square difference (Ax 2(50)=827.1, p<.0001). However, this model still presented a poor fit to the other indices (x 2/df=7.52, RMSEA=.059). Thus, one observed variable (i.e., It would take a lot of time, effort, and money to switch from this casino to other casino) was identified and deleted due to shared large residuals with other observed variable loadings to form Model 2. Model 2 was tested. Even though Model 2 was a significantly better fit than Model 1 in terms of chi-square differences (Ax 2(23) =389.7, p<.0001), Model 2 needed further improvement since the def value (5.63) was still greater than 5 (outside a range of 2 to 5 as suggested by Marsh and Hocevar, 1985). Thus, additional error variances were manipulated to improve fit of the model. Finally, Model 3 was re-examined. The fit index showed a significant improvement in terms of chi-square differences (Ax 2(24) =420.5, p<.0001). In addition, all fit indices indicated a good fit to the data (x 2/df=2.49, CFI=.996, NNFI=.993, 77 RMSEA=.028). The modified model (Model 3) exceeded the proposed model on all fit criteria, which confirmed that the modifications were meaningful and appropriate. Table 18. Comparison of Overall F it Indices for Proposed and Modified Measurement Models x7 df x2/df NNFI CFI RMSEA sz Proposed Model 1864.263 1 88 9.92 .944 .954 .069 - Model 1 1037.728 138 7.52 .963 .975 .059 827.1 Model 2 648.010 115 5.63 .975 .985 .049 389.7 Model 3 227.469 91 2.49 .993 .996 .028 420.5 NNFI=non-normed fit index; CFI=comparative fit index; RMSEA=root mean square error of approximation; sz = x2 difference between two models (e.g., x2 of Model 1 - x of Model 2) Criteria to accept model: x2/df should be less than 5; NNFI and CFI should be greater than .90, RMSEA should be small than .05 Reliability and Validity A reliability test was used to assess the internal consistency between measurements of Model 3. As Sekaran (1992) suggested, the coefficient alpha is the most popular measure of reliability. It was used to assess the internal homogeneity existing among the items in this study. Table 19 presents the coefficient alpha estimates for each of the model constructs. The Coefficient Alpha ranged from .707 to .935. As recommended by Nunnally(1978), all alpha coefficients exceed the minimum standard for reliability of 0.7. Therefore, these items are highly reliable for measuring each construct. Table 19. Reliability Analysis for the Loyalty Model Construct Variables Coefficient Alpha Perceived Economic Value .911 Communications .93 1 Satisfaction .91 5 Switching Cost .935 Attitudinal Loyalty .900 Behavioral Loyalty .707 78 Content validity ensures that the measure includes an adequate and representative set of items that would adequately and validly describe the concept. The items used to measure the perceived economic value of the loyalty program, special treatment/services, communications, perceived switching cost, satisfaction, and attitudinal and behavioral loyalty were selected after (1) an extensive literature review, (2) input fiom casino marketing and customer service staff, and (3) reviews fiom faculty members with expertise in casino marketing. All items were pilot tested and respondents were asked to evaluate the appropriateness Of the measuring instruments. It was evident that these research procedures ensured the high content validity of the measurement instrument. Convergent validity is used to determine whether different Observed variables used to measure the factors are highly correlated. Convergent validity can be examined by reviewing the result of t-test for the factor loadings (Hatcher, 1994). Table 20 shows that all the factor loadings for the observed variables measuring each factor are highly loaded ranging from .76 to .96 and are statistically significant. Thus, it can be concluded that all observed variables measure their corresponding factor, providing evidence of convergent validity. Discriminant validity is the degree to which items differentiate among constructs or measure distinct concepts. As shown in Table 21, discriminant validity was assessed through inspection of the correlations among factors. Table 21 provides the evidence for discriminant validity (Anderson & Gerbing, 1988) since estimated correlations were not excessively high, and no correlations are higher than the recommended level (0.85). This suggests that discriminant validity was achieved and all of the factors being modeled are distinct. 79 Table 20. The Result of Confirmatory Factor Analysis for Model 3 (Convergent Validity) Variable Standardized . . t-value Names loading Perceived Economic Value The cash value of this casrno 5 player 5 club rewards PV1 . 8 63* is high - This casino’s player’s club offers various redemption * options (e.g., gifts, tickets, cash back, food, spa, etc.) PV2 '847 43592 I do not have to wait long to receive rewards from this PV3 .8 64* 43.247 casmo 5 player 3 club This casrno 8 player 5 club offers rewards that I have PV4 .8 62* 44.994 wanted Communications Tlus casino 8 player 3 club keeps me informed of COM] 902,, promotions, specral events, net servrces, etc. Ireceive mailings about this casrno 5 player 5 club on COM2 .878* 47.062 a regular basrs . . . . . , * The quality of communication from this casrno s COM3 .954 61.583 player 5 club IS consrstently high Satisfaction I am satisfied with this casino SATl .899* Playing games at this casino is a great experience SAT2 .913* 46.560 Overall and over time, I am satisfied with this casino SAT3 .906” 49.132 Perceived Switching Cost I feel uncertain if I visit a new casino SC2 .928* In general it would be a hassle visiting other casinos SC3 .959* 45.488 It would bevery inconvenient for me to swrtch to S C4 .931. 40.240 another casrno Attitudinal Loyalty Iwrll contlnue to v151t thlS casrno even if a new casrno AL1 .756* IS opened nearer to my home I am committed to this casino AL2 .915* 35.532 I feel a sense of belonging at this casino AL3 .942* 33.495 Behavioral Loyalty I will visit this casino on my next gaming trip BL1 .755“ I intend to continue to be this casino’s customer BL2 .774* 23.927 ' Standardized loadings indicate relationships between observed variables and their associated factors in order to examine convergent validity. Convergent validity refers to the degree of association between observed variables of a factor. * Factor loadings were all significant at p<. 05. Table 21. Correlation among Exogenous Factors SC SAT AL BL Switching Cost (SC) 1.00 Satisfaction (SAT) .48 1.00 Attitudinal Loyalty (AL) .65 .71 1.00 Behavioral Loyalty (BL) .55 .67 .76 1.00 80 Testing the Hypothesized Structural Model The proposed structural model was examined using measures resulting from the measurement model analysis. Table 22 presents the overall fit indices for the hypothesized structural model. The results shows that the proposed structural model adequately fits the data with all fit indices (RMSEA=0.32, xz/df =2.97, x2=273.3 (df=92, p<.001), CFI=.995, NNFI=.988). Table 22. Overall Fit Indices for the Hypothesized Structural Model 12 df ledf NNFI CFI RMSEA Proposed Model 273.325 92 2.97 .988 .995 .032 NNFI=non-normed fit index; CF I=comparative fit index; RMSEA=root mean square error of approximation Criteria to accept model: xZ/df should be less than 5; NNFI and CFI should be greater than .90, RMSEA should be small than .05 Table 23 presents path coefficients estimated by SEM and‘the results of the tests of hypotheses. The path coefficients from the perceived economic value of the loyalty program, special treatments/services, and communications to the perceived switching costs (PV—> SC, ST—->SC, and COM—>SC) were all significant at the .05 level, and indicated strong relationships. Thus, Hypothesis H4a (i.e., Perceived economic value of the loyalty program is positively associated with switching cost), H4b (i.e., Perceived special treatment/services value is positively associated with switching cost), and H4c (i.e., Perceived communication value is positively associated with switching cost) were supported. Among the components of loyalty programs, the perceived economic value of the loyalty program had the highest level of explanatory power for the perceived switching costs with a standardized coefficient of .460. The path coefficients fi'om the perceived economic value of loyalty program, special treatments/services, and communications to satisfaction (PV—> SAT, ST——> SAT, 81 and COM—4 SAT) were all significant at the .05 level, and indicated strong relationships. The perceived economic value of loyalty program had a strong effect on customer satisfaction with a standardized coefficient of .651. As a result, Hypothesis Hla (i.e., Perceived economic value of the loyalty program is positively associated with satisfaction), Hlb (i.e., Perceived special treatment/services value is positively associated with satisfaction), and ch (i.e., Perceived communication value is positively associated with satisfaction) were supported. The path coefficients fi'om the perceived economic value of loyalty program, special treatment/services, and communications to attitudinal loyalty (PV-—>AL, ST—>AL, and COM—>AL) showed strong and positive relationships at .05 levels. In addition, the path coefficients from satisfaction and the perceived switching costs to attitudinal loyalty (SC—>AL, and SAT—>AL) were significant at .05 levels with strong positive relationships. These results support Hypothesis H3a (i.e., Perceived economic value of the loyalty program is positively associated with attitudinal loyalty), H3b (i.e., Perceived special treatment/services value is positively associated with attitudinal loyalty), and H3c (i.e., Perceived communication value is positively associated with attitudinal loyalty) were supported. In addition, Hypothesis H7 (i.e., Switching cost is positively associated with attitudinal loyalty), and H5 were supported (i.e., Customer satisfaction is positively associated with attitudinal loyalty). As shown in Table 23, the path coefficients from special treatments, communications, perceived switching costs, satisfaction, and attitudinal loyalty to behavioral loyalty (ST—>BL, COM—>BL, SC—+BL, SAT—+BL, and AL—>BL) were significant at the level of .05. Thus, Hypothesis H2b (i.e., Perceived special 82 treatment/services value is positively associated with behavioral loyalty), H2c (i.e., Perceived communication value is positively associated with behavioral loyalty), H6 (i.e., Customer satisfaction is positively associated with behavioral loyalty), H8 (i.e., Switching cost is positively associated with behavioral loyalty), and H9 (i.e., Attitudinal loyalty is positively associated with behavioral loyalty) were supported. However, the path coefficient from the perceived economic value of the loyalty program to behavioral loyalty (PV—>BL) was not significant at the level of .05. Thus, Hypothesis H2a (i.e., Perceived economic value of the loyalty program is positively associated with behavioral loyalty) was not supported. Based on the relative values of path coefficients that are show in Table 23, the effect of attitudinal on behavioral loyalty is shown by its high level of explanatory power ([3 =.693). Table 23. Path Coefficients in the Hypothesized Structural Model and Hypotheses Testing Results Standardized - H theses testin Path coefficient (l3) t-value Standard error ypo results g PV —v SC .460 11.942 .044 H4a Supported ST —> SC .152 3.690 .038 H4b Supported COM —> SC .303 9.743 .033 H4c Supported PV —+ SAT .651 17.125 .034 Hla Supported ST -+ SAT .182 4.805 .027 Hlb Supported COM —+ SAT .264 9.104 .023 ch Supported PV -—* AL .128 3.539 .030 H3a Supported ST —’ AL .109 3.423 .022 H3b Supported COM —> AL .096 3.902 .019 H3c Supported SC -+ AL .356 15.694 .016 H7 Supported , SAT —+ AL .415 15.289 .025 H5 Supported PV -—> BL .052 3.204 .046 H23 Not Supported ST —> BL .103 2.276 .033 H2b Supported COM —, BL .159 3.186 .041 H2c Supported SC ——> BL .242 6.396 .030 H8 Supported SAT —> BL .457 10.062 .043 H6 Supported AL —-> BL .693 12.036 .063 H9 Supported Note: PV=perceived economic value of loyalty program, ST=special treatment/services, COM=communicatious, SC=perceived switching costs, SAT=satisfaction, AL=attitudinal loyalty, BL=behavioral loyalty. *Coefficients were significant at p<.05 83 Emu—mama 32 AE. mEowaommom =< how 682 Begosbm .w Esmi move a Haggai l N8.u nascent-«m 938:3“.— .533»?— 84 Multi-Group Analysis After completing hypothesized structural model testing, a multi-group analysis was performed to assess moderating effects of number of loyalty program memberships on the final structural model. The multi-group analysis was. used to facilitate a simultaneous examination across the four segments. The multi-group analysis test was conducted using a two-step approach prescribed by Joreskog and Sorbom (1996). First, the appropriate structural parameters were constrained to be equal across groups, thereby generating an estimated covariance matrix for each group and an overall x2 values. Next, the parameter equality constraints were removed to allow paths to be freely and independently estimated, which resulted in a second x2 value with less degree of freedom. Moderator effects were tested by assessing whether statistical differences existed between the two xz values. For each data set, the change in the 12 value was found to be significant, rejecting the null hypothesis that the structural parameters were identical across segments. In order to examine segments’ differences in individual paths, the x2 difference test was used to test for the moderating effects on individual paths. Table 24 presents chi- square difference results for path coefficients among segments. The chi-square difference tests showed that the paths of Perceived Economic Value -+ Perceived Switching Cost, Communications —> Perceived Switching Cost, Perceived Economic Value —r Satisfaction, and Communications —-> Satisfaction were highly significant. However, no statistically significant difference was found across segments for the paths from Special Treatment/Services —+ Perceived Switching Cost, Special Treatment/Services —-> Satisfaction, Perceived Economic Value -> Attitudinal Loyalty, 85 Special Treatment/Services —+ Attitudinal Loyalty, Communications —> Attitudinal Loyalty, Perceived Switching Cost —+ Attitudinal Loyalty, Satisfaction -—> Attitudinal Loyalty, Perceived Economic Value —+ Behavioral Loyalty, Special Treatment/Services —-> Behavioral Loyalty, Communications —* Behavioral Loyalty, Perceived Switching Cost —+ Behavioral Loyalty, Satisfaction —> Behavioral Loyalty, and Attitudinal Loyalty —-> Behavioral Loyalty. Table 24. x2 Difference Test Path Difference in x 2 Perceived Economic Value —r Perceived Switching Cost 10.46* Special Treatment/Services —’ Perceived Switching Cost 1.26 Communications —> Perceived Switching Cost 988* Perceived Economic Value —> Satisfaction 8.48”“ Special Treatment/Services -—» Satisfaction 4.53 Communications —> Satisfaction 8.19* Perceived Economic Value —r Attitudinal Loyalty 4.15 Special Treatment/Services —> Attitudinal Loyalty 1.79 Communications —> Attitudinal Loyalty 2.56 Perceived Switching Cost —r Attitudinal Loyalty 1.73 Satisfaction —> Attitudinal Loyalty 1.31 Perceived Economic Value —r Behavioral Loyalty 3.45 Special Treatment/Services —> Behavioral Loyalty 2.51 Communications -—> Behavioral Loyalty 1.35 Perceived Switching Cost —» Behavioral Loyalty 2.21 Satisfaction —> Behavioral Loyalty 1.53 Attitudinal Loyalty —» Behavioral Loyalty 1.89 I"Coefficients were significant at p<.05 The results of comparisons of path coefficients among four segments are presented in Table 25. Although multi-group results were not predicted to occur beyond the construct level, multi-group analysis provided partial evidence that the strength between constructs was indeed moderated by segments. 86 In comparing the models for four segments, four statistically significant differences (i.e., Perceived Economic Value -—> Perceived Switching Cost, Communications -+ Perceived Switching Cost, Perceived Economic Value —-> Satisfaction, Communications —> Satisfaction) at <.05 were for the path coefficients. Table 25. Path Coefficients in the Hypothesized Structural Model and Hypotheses Testing Results by Segments Path Hypotheses Seg I Segil Seg III SeLIV PV —+ SC H4a .544* .454* .417"' .383* ST —> SC H4b .236* .154"I .089 .097 COM —-> SC H4c .399* .305* .265* .262* PV —> SAT Hla .673* .552“ .669“ .618* ST —> SAT Hlb .250* .145“ .147“ .065 COM -—> SAT ch 332* .325* .203* .180* PV —v AL H3a .029 .160* .130* .150* ST —-> AL H3b .123* .110“ .082 .071 COM —-> AL H3c .080 .034 .124* .139* SC -r AL H7 .345* .380* .339* .309“ SAT —’ AL H5 .485* .445* .408* .431* PV —’ BL H2a .079 .080 .032 .023 ST —r BL H2b .187* .113* .095 .033 COM —> BL H2c .064 .202* , .148“ .159* SC —r BL H8 .296* .205* .183“ .173* SAT —> BL H6 524* .471“ .368“ .536“ AL —> BL H9 .621* .518" .825* .869* Note: PV=perceived economic value of loyalty program, ST=special treatment/services, COM=communicatious, SC=perceived switching costs, SAT=satisfaction, AL=attitudinal loyalty, BL=behavioral loyalty. I"Coefficients were significant at p<.05 Table 26. Comparison of Overall Fit Indices for Four Segments x 2 df ledf NNFI CFI RMSEA Segment I 161.193 92 1.75 .963 .983 .049 Segment 11 156.393 92 1.70 .986 .993 .037 Segment 111 225.657 92 2.45 .987 .994 .035 figment v1 172.553 92 1.88 .983 .992 .039 NNFI=non-normed fit index; CFI=comparative fit index; RMSEA=root mean square error of approximation Criteria to accept model: x 2/df should be less than 5; NNFI and CFI should be greater than .90, RMSEA should be small than .05 87 H «aofiwom do.“ 332 Lagosbm .o oSwE Lasagna 877.... 3va a efioeuaal avorfimzm mares memuazz 3.. 33x .. .. meetaomeafifieu 380 9.39:5 833.8.— mover—om b55325 .39on 5.93 35.552 333 33325 4 Ne. 2:5» £8283— v. .... NW. .... ow. 323.8.— sexism 88 : .5...me 8.. 6on 35835 .o. 8%.“. EoncwE .02 A5. 8.x. 3 seesaw l nmo.n538; mm. _ _. 39on v. .... 5.. .... we. . _. m _ . 2:5» 533.33% 352.com v3.8.3; 89 $3.3m .oz 4... 8.x. 3 283%... l mmo.u.~. gauze Smuzzz 2.33% 333 2. E EoEwom 8.. $on 1.583% .2 8:3”. R. Mai—8:5 an. 32:33:55.5 323.8.— ao a CC... axiom buofiuaohh 3.13 _a..e_>a._om 0 mm. 13:55:. .39on hm. .v. o.._a> 382.com 338.3.— 5:83am 90 Z .eoEwom 8.. .322 anagram .m. 2%.“. Emommcwfi .02 A5. 3.x. 3 .5835 l omo.u 35283— 13.8th . 91 CHAPTER 5 SUMMARY, DISCUSSION, AND LIMITATIONS This chapter summarizes important findings from this study and discusses their relevance to the study objectives. The practical implications of the study are discussed, and the limitations of the study and directions for future study are addressed. Summary As the use of loyalty programs continues to grow in the casino industry, it is crucial to better understand their role, importance, and effectiveness in creating and building attitudinal and behavioral loyalty. Understanding the components of loyalty programs (e. g., economic value, special treatment/services, and communications) to increase perceived switching cost, satisfaction, attitudinal and behavioral loyalty is even more critical to maximizing the return on investment from loyalty programs. Moreover, understanding which customers have multiple loyalty program memberships and which customers have only one loyalty program membership in terms of socio-demographic characteristics and gaming behavior (including gaming spending) is extremely critical to better design casino loyalty programs. Although more research is necessary, this study sheds additional light on loyalty and loyalty programs in the casino industry. The first objective of this study was to segment the client casino’s loyalty program members based on the number of similar casino loyalty programs to which they belong. It was found that the majority of respondents (87.4%) were members of more than two casino loyalty programs, and only 12.6% of respondents were only members of the client’s program. On average, respondents were members of five casino loyalty programs. The findings confirmed previous research done by Long and Schiffinan (2000). 92 They claim that casino customers have opportunities and reasons to visit multiple casinos and to be members of multiple loyalty programs due to the low cost of switching, the growing number of casinos to choose among, and marketing efforts aimed at attracting new customers. This is especially true of persons who travel to casinos on buses because a common requirement is that they join the loyalty programs (i.e., player’s club) of the casinos they visit. Obviously, the acquisition of a player’s club card from a casino does not guarantee loyalty. These results clearly demonstrate to casinos the potential value of finding ways to capture a greater share of the gaming trips and gaming budgets of their club members. Comparing the segments based on socio-demographic characteristics was the second objective of this study. The results of this study show that there were statistically significant differences in the age, race, income, family status, and state of residence distributions across the four segments. However, there were no significant differences in terms of gender and the level of education across the four segments. With respect to age distribution, the proportion of respondents with multiple loyalty program memberships aged 36 to over 65 was relatively higher compared to respondents with a single loyalty program membership. Also, respondents with multiple loyalty program memberships had the higher proportion of married or partnered respondents with children no longer living at home, were Caucasian or White, and high-income ($100,000 plus) compared to those who belong to one casino loyalty program. A greater proportion of the persons who hold multiple memberships live outside the state where the client casino is located, suggesting that they are gaming tourists and therefore visit more casinos. 93 The next research objective was to compare and contrast gaming behaviors of the segments. The findings of this study show that respondents with multiple casino memberships tend to stay longer at the casino, have a higher gaming budget, and spend more money per casino visit on average. In addition, they have generated more revenue for the casino during the past 12 months compared to those with one loyalty program membership (i.e., the client casino’s player’s club). It is also found that persons with multiple casino memberships visited a relatively higher number of different casinos compared to respondents with one loyalty program membership; their visit proportion to the client casino was relatively low—only 6.1% of respondents with. more than 7 casino loyalty program memberships made more than 80% of their total visits to the client casino, while more than 70% of respondents with one casino membership made more than 80% of their casino visits to the client casino. Even though there is no previously published research available that empirically examines the gaming behavior differences between customers with multiple loyalty program memberships and those with a single membership, the findings of the current study suggest that customers with multiple casino memberships are potentially more profitable than those with one loyalty program membership, since they stay longer and spend more when they visit the client casino. However, the problem is that they divide their spending over more casinos and the cost of winning their loyalty (e.g., incentives, etc.) is higher. The fourth research objective was to investigate and compare these segments’ perceived value of the loyalty program, the perceived switching costs, their level of satisfaction, and the level of attitudinal and behavioral loyalty to the client casino. The mean differences in the perceived economic value of the loyalty program, 94 communications, and the perceived switching costs were significantly different across segments. However, the results show that the overall mean difference in special treatment/services was not statistically significant. With regard to satisfaction, attitudinal loyalty, and behavioral loyalty, there were statistically significant differences across segments. The findings indicate that persons with multiple casino loyalty program memberships tended to perceive the economic value and communication value of the loyalty program as relatively low compared to customers with one casino loyalty program membership. In addition, their perceived switching cost was comparatively lower than respondents with one loyalty program membership. The findings indicate that customers with multiple casino loyalty program memberships are less satisfied with the client casino compared to persons with one casino program membership (i.e., the client casino’s player’s club card). This is possibly because they had other preferred casinos or because they had greater expectations since they have experienced a greater variety of casinos. As was expected, they demonstrate lower attitudinal and behavioral loyalty to the client casino. The fifth objective was to develop and test an integrated casino loyalty model that examined the influence of perceived value of the loyalty program on switching cost, satisfaction, attitudinal and behavioral loyalty. The structural model was developed based on the findings of previous loyalty studies. The structural model provided information on how each component of the loyalty program contributes to the development of the perceived switching cost, satisfaction, and attitudinal and behavioral loyalty. Overall, the perceived economic value of the loyalty program has a great influence on predicting the perceived switching cost and satisfaction. The perceived economic value of the loyalty 95 program has a moderate influence on attitudinal loyalty, but very low influence on behavioral loyalty. With respect to special treatment/services and communications, they have moderate effects on the perceived switching cost, satisfaction, and attitudinal and behavioral loyalty. In order to examine and compare the effects of the perceived loyalty program, multi-group analyses were conducted. As a result, the paths of Perceived Economic Value —+ Perceived Switching Cost, Communications —+ Perceived Switching Cost, Perceived Economic Value —+ Satisfaction, and Communications —> Satisfaction were found to be significantly different across segments. However, no statistically significant difference was found for the other paths across the segments. This multiple group analysis suggests that the perceived economic value of loyalty program and communications create a higher leVel of perceived switching cost and satisfaction for persons with one loyalty program membership than those with multiple loyalty program memberships. Moreover, the perceived economic value of the loyalty program has a greater influence on the perceived switching cost and satisfaction than communications. Conclusion and Discussion This study is one of only a few empirical studies of customer loyalty programs and is perhaps the most comprehensive study of customer loyalty programs in the casino industry. This study resulted in a number of findings that shed light on loyalty, designing loyalty programs, and even casino management. Given that loyalty programs are designed to instill or maintain customer loyalty, and there are more casinos vying for customers, casino marketers need to understand more about what cost-effectively affects loyalty and the process of how loyalty programs can create enhanced perceptions of the 96 economic value, special treatment/services, and communications. Findings of this study provide helpful guidelines for casino marketers in the understanding of loyalty programs. New casinos are being built and renovations and expansions are being completed on current casinos. In order to boost awareness of their new initiatives and gain advantage over their competitors, many casinos are utilizing extensive marketing strategies such as loyalty programs that add benefits and offer special promotions to their members. Even though loyalty programs only maintain a defensive position in a competitive market (Ehrenberg, 1997), these promotions do increase awareness of new gaming opportunities and could potentially draw current (and new) casino customers onto their properties (Palmer, 2003). However, this also results in customers having the opportunity to visit multiple casinos and be members of multiple casino loyalty programs (Palmer, 2003). As confirmed by the results of this study, the majority of respondents are members of multiple casino loyalty programs. According to Rowley (2007), some researchers and businesses would regard the holding of multiple loyalty cards as a sign of disloyalty. While Yim & Kannon (1999) argue that customers who have loyalty to more than one brand may exhibit loyalty to the notion of reward program membership either alongside or instead of loyalty to specific brands. Obviously, casinos should take time to distinguish between members who exhibit the potential for loyalty development when recruiting and managing their loyalty program members. Despite the fact that some researchers remain unconvinced about the effectiveness of loyalty programs in generating and sustaining customer loyalty, and thus see these programs as a drain on firm resources and actually add little to firm revenue and profit streams (Barnes 1997; Kearney, 1990; Newell, 2000; Uncles, 1994), the results of this 97 study verify that loyalty programs do have an impact on loyalty in the casino industry (O’Brien & Jones, 1995; Dowling 1998). However, the findings of this study suggest that casino marketing needs to incorporate their loyalty marketing effort to design loyalty programs that are relevant to the customers and different from competitors. Favorable loyalty program effects can be produced when the offered loyalty program meets the needs of a customer. The primary goal of a loyalty program is to develop and enhance the true loyalty of customers who feel so strongly that the casino can best meet their customer needs that casino competition is virtually excluded from the consideration set (Shoemaker & Lewis, 1999, p349). While some incentives may encourage casino visits it does not necessarily follow that these customers will remain loyal after that incentive is no longer available or is matched by other casinos located nearby or one with newer facilities or more amenities. This study suggests that efforts to create and sustain loyalty are not likely to be successful unless factors that encourage members to take advantage of loyalty program-related incentives and participate in events are the basis for the design of loyalty program features. Even though it is difficult for casinos to build and retain loyalty solely on the basis of their loyalty program for a number of reasons, the findings of this study demonstrate that the components of loyalty programs (i.e., economic value, special treatment/services, and communications) do have direct and indirect effects on attitudinal and behavioral loyalty. Thus, it is very significant that casinos understand which components of their loyalty program have the greatest positive influence on creating attitudinal and behavioral loyalty of customers comprising their different target markets. 98 While loyalty program incentives, rewards, and perks can increase trips to casinos it is important that casinos recognize the importance of designing and offering marketing mixes (including the loyalty club) which increase the motivations of different target markets to visit their casino. As is the case with almost all marketing, it is important to understand that different segments will assign different importance and value to various loyalty program offers. It would be useful to design and implement experiments to measure the response elasticity to different types and amounts of loyalty program rewards/incentives. Casinos can use this information to assess the optimal levels of benefits to offer different segments or loyalty program tiers. It is also critical to understand the relationship between loyalty club program offers and other marketing mix elements (e. g., services, hospitality, facilities). The study reveals that there is a segment (Segment IV) that can be labeled as “tourist gamers.” They game more often, visit more casinos in more different states and they spend more gaming when visiting casinos. However, at least in the case of the client casino, this segment demonstrates a relatively low level of loyalty and it appears to be relatively more difficult and costly to encourage greater loyalty on their part. They appear to be motivated more by an interest to visit different casinos in different locations even if this means that they qualify for less rewards/incentives. So while they may be attractive targets in terms of the volume of their gaming, they distribute their gaming across a number of casinos and as a result their switching costs are not significant. Since the client casino desires to establish itself as a destination casino, it would benefit from additional research aimed at understanding how it can go about capturing a greater proportion of these destination casino trips. 99 The results confirm previous research showing perceived switching costs are relatively low in the casino industry (Long & Schiffrnan, 2000) in large part because a majority of customers have multiple casino loyalty program memberships. However the results indicate that there are potential revenues producing benefits to casinos if they can design loyalty program elements that simultaneously enhance attitudinal and behavioral loyalty and increase real and perceived switching costs. The results demonstrate that various components of loyalty programs do have an influence on the perceived switching cost, specifically that perceived economic value of the loyalty program does have a relatively greater influence on the perceived switching cost than other components of the loyalty program (i.e., special treatment/services, and communications). Developing strategies intended to increase the real and perceived switching cost (e.g., failing to obtain higher club status, losing out on loyalty program benefits, social bonds, etc.) of their loyalty program members at other casinos is critical. Improving social bonds (e. g., recognition, two—way communications) between casinos and loyalty program members can increase the real and perceived switching cost. The results form this study shows that social bonds were determined to be a significant predictor of perceived value. In addition, the cost of improving social bonds is less than other marketing efforts such as direct mail, discounts, promotions, etc. Moreover, improved social bonds between loyalty program members and casino staff will allow feedback and expectations to be achieved from members on a regular basis. In addition, airlines often use a variation of the scheme; an economy class airfare results in 1 point per mile or dollar spent, business class 1.5 points, and first class 2 points. Thus, if a casino redesigns their loyalty program utilizing the 100 above variation, it may boost the customers’ perceived switching cost as well as amplify customers’ motivation to visit the casino rather than other casinos. Hallberg (2004) noted that the greatest gains in purchasing and retention are only achieved when a customer’s commitment to the casino reaches the highest level. Customer satisfaction is an essential customer loyalty building block. While building customer-focused loyalty programs is important, this alone can not assure attitudinal and behavioral loyalty. Internal relationship marketing efforts (e.g., social ties with customers) and adding amenities and services that appeal to customers with multiple casino loyalty program memberships can not be overlooked since "customers may not come to the casino even if the casino has good service, but they will not come to the casino if they don’t have good service." (Hashimoto, et al., 1998. p250). Many casinos offer the same features and their advertising promises such as "guaranteed satisfaction," "highest quality," and "knock-your-socks-off service" now generate little attention among customers (Bowen & Lawler, 1995). Therefore, the casino needs to differentiate themselves from other competitors through offering superior products and services as well as creating "unique" and "new" gaming experiences to casino players. Additionally, casinos need to scientifically assess customer satisfaction by utilizing appropriate assessment tools on a regular basis and provide services that meet expectations and satisfy the needs of different customers to build greater loyalty. This study segmented loyalty program members based on numbers of casino loyalty programs to which they belong. Segrnenting customers based on the number of loyalty programs to which they belong, and investigating whether customers with multiple loyalty program memberships demonstrate less attitudinal and behavioral loyalty, 101 provides interesting and actionable insight into potential marketing strategies. In addition, this segmentation can assist casinos allocate their finite resources to effective relationship marketing strategies in designing, targeting, and applying their loyalty programs. Limitations and Future Research Although this study provides theoretical and practical contributions to the field of casino marketing, there are several limitations related to this study that necessitate further investigation. The findings of this study may not be generalizable to other casinos since survey respondents were limited to the members of only one casino loyalty program and in the case of this casino the majority of survey respondents reside in the state in which the client casino is located. Thus, the results of the study may vary if the survey is conducted at other places, such as travel destinations (e.g., Las Vegas). It would be interesting to confirm the results by sampling the members of different casino loyalty clubs. While the model fits the data reasonably well, there will always be models that can fit the data better than the final models developed as part of this study (Bollen, 1989). In addition, it is very difficult to identify and to capture all factors relevant to customer loyalty even though this study provided the extended view of a customer loyalty model. Undoubtedly, other critical antecedents, mediators, and moderators of customer loyalty may be missing from the current model, such as demographic characteristics of respondents and their gaming preferences/ characteristics. Further research might explore, develop, and examine the implications of adding other critical antecedents, mediators, and moderators of customer loyalty to the model. 102 The result of the exploratory factor analysis on the perceived value of the loyalty program revealed that the economic value of the loyalty program and special treatment/services were loaded on the same factor. As stated previously, it is likely that they are perceived as being inter-related. However, it is recommended that firture studies experiment with alternatively worded statements intended to represent these aspects of loyalty so they can be represented in the model. This study attempted a comprehensive examination of customer loyalty programs, but more research is necessary to distinguish loyalty programs that simply reward loyal customers compared with programs that actually produce and sustain customer loyalty. Some customers may have a tendency to demonstrate loyalty even if they receive relatively little in terms of rewards or incentives, whereas others may behave disloyally even though they receive substantial incentives/rewards and received great service (O’Brien & Jones, 1995; Reichheld, 1993). It is possible that for some segments the total rewards and incentives required to create and sustain loyalty may be so great as to be unprofitable. Therefore, further research is needed to distinguish between loyalty programs that simply reward loyal customers and those programs that actually create and build loyalty. It would also be useful to explore in greater depth the combination and amount of rewards/incentives and types and amount of communications that affect and shape the loyalty of customers comprising different segments, the revenue implications and the retum-from-investment associated with different amounts of incentives and rewards. This would require establishing control and treatment groups of player club members and 103 measuring the effects of different types and amounts of rewards on different types of loyalty. It would be beneficial to loyalty programs to test the model utilizing different segmentation methods such as heavy vs. light casino gamers and local vs. non-local loyalty program members. Additional research is also needed to determine the motivations for joining and continuing membership of loyalty programs, the mix of incentives most effective at encouraging greater attitudinal and behavioral loyalty, and the return from investments that casinos make in loyalty programs. 104 APPENDICES 105 APPENDIX A Survey Invitation 106 (Paragon Casino Resort Customer Survey Dear Paragon Guest: Paragon Casino Resort is constantly looking for ways to satisfy our guests. The best way to accomplish this is by asking you about your preferences and satisfaction. By understanding your preferences and how you evaluate Paragon’s facilities and services we can change for the better! We greatly appreciate you as a Paragon Guest and value your input! I invite you to visit our survey website to give us your opinion about our service quality. The survey will take about 15 minutes to complete. You access the survey by clicking on this link: hug:avgvici.gomzl.dIIzJGsngngFgmlgosxuzong11.hm As an incentive for your participation, your name will be entered into a drawing to win one of three Paragon Escape Packages , which includes two nights in a Paragon Executive Suite, a $100 Food Voucher, and $100 in Cash Perks. The drawing will take place Monday, April let 2008 and you need not be present to win. You must be sure to enter your Paragon Preferred Players Club number (numbers only, no commas or decimal points) on the first page of the survey. Your Players Club number is: ****** You may have participated in a Paragon Survey before, but that's okay. We want to know if the changes we made have been the ones you like. At Paragon we like to say, "We Know What You Like." You can only complete the survey once with your players club number. D_O_l1QI 0' DT I MAIL . n . hr '-. ... -I-. - .- .- - h -r- no ----liil nl r ivanmilirlfrm If you have a problem accessing the survey, email us at rirc@m§u.egu Sincerely, John Barbry Vice-President of Marketing Department Paragon Casino & Resort 107 APPENDIX B Questionnaire 108 Paragon Casino Resort Survey A Chance to Win a Paragon Escape Package Thank you for your willingness to complete the following survey for Paragon Casino Resort. ‘ As thanks for participating you will be entered into a drawing for one of three Paragon Escape Packages that include two nights In an Executive Sulte, $100 Food Voucher, and $100 In Cash Perks. You can only submit this survey once. Only persons who were members of Paragon Preferred Players Club on October 20, 2007 are eligible. The survey will not take long to complete and all the information you provide is strictly confidential. You must complete all the questions to be eligible for the drawing for the Paragon Escape Package. It is especially important that you provide your Paragon Preferred Players Club Card Number so we can contact you with the result of the drawing. 1) Please insert your players club number. 2) Have you visited any casinos during the last three months? OYes ONO 3) In what state(s), did you visit easino(s) during last the three months? (Please check all that apply) CI Arizona Cl Florida 0 Louisiana Cl Mississippi D New Jersey CI Nevada Cl Oklahoma CI Other (please specify) If you selected other please specify: 109 4) Have you visited any casinos during the last 12 months? OYes O No 5) During what month was your last visit to a casino? 0 July, 2007 0 June, 2007 0 May, 2007 0 April, 2007 0 March, 2007 0 February, 2007 0 January, 2007 0 December, 2006 0 November, 2006 6) You indicated that you have visited a casino in Louisiana during the last three months. Which of the following casinos in Louisiana did you visit during the last three months? Cl Amelia Belle (Amelia, LA) Cl Belle of Baton Rouge (Baton Rouge, LA) D Boomtown (Bossier City, LA) Ci Boomtown (New Orleans, LA) Cl Coushatta (Kinder, LA) Cl Cypress Bayou (Charenton, LA) Ci Delta Downs (Vinton, LA) Cl Diamond Jacks (Bossier City, LA) Cl Eldorado (Shreveport, LA) Cl Evangeline Downs (Opelousas, LA) Cl Harrah's (New Orleans, LA) Cl Hollywood Casino (Baton Rouge, LA) Cl Horseshoe (Bossier City, LA) CI Isle of Capri (Lake Charles, LA) Cl L'auberge du Lac (Lake Charles, LA) Cl L.A. Downs (Bossier City, LA) CI Paragon (Marksville, LA) D Sam's Town (Shreveport, LA) Cl Treasure Chest (Kenner, LA) 7) How many visits did you make to each of the casinos In Louisiana during the last three months? ' - - . _ _ Amelia Belle (Amelia, LA) Belle of Baton Rouge (Baton Rouge, LA) Boomtown (Bossier City, LA) Boomtown (New Orleans, LA) Coushatta (Kinder, LA) Cypress Bayou (Charenton, LA) Delta Downs (Vinton, LA) Diamond Jacks (Bossier City, LA) Eldorado (Shreveport, LA) 110 Evangeline Downs (Opelousas, LA) Harrah's (New Orleans, LA) Hollywood Casino (Baton Rouge, LA) Horseshoe (Bossier City, LA) Isle of Capri (Lake Charles, LA) L'auberge du Lac (Lake Charles, LA) LA. Downs (Bossier City, LA) Paragon (Marksville, LA) Sam's Town (Shreveport, LA) Treasure Chest (Kenner, LA) 8) You indicated that you have visited a casino in Mississippi during the last three months. Which of the following casinos in Mississippi did you visit during the last three months? 0 Ameristar (Vicksburg, MS) Ci Bally's Tunica (Tunica, MS) CI Beau Rivage (Biloxi, MS) Ci Boomtown (Biloxi, MS) Ci Fitzgeralds (T unica, MS) 0 Gold Strike (Tunica, MS) Ci Grand Casino (Biloxi, MS) Ci Grand Casino (T unica, MS) Cl Hard Rock Casino (Biloxi, MS) CI Hollywood (Bay St. Louis, MS) D Hollywood Tunica (T unica, MS) Ci IP Casino (Biloxi, MS) Cl Island View (Guflport, MS) Ci Isle of Capri (Biloxi, MS) Ci Isle of Capri (Natchez, MS) 0 Palace Casino (Biloxi, MS) Ci Pearl River (Choctaw, MS) 0 Silver Slipper (D'Iberville, MS) Ci Treasure Bay (Biloxi, MS) 9) How many visits did you make to each of the casinos in Mississippi during the last three months? ' - ._ . . Ameristar (Vicksburg, MS) Bally's Tunica (T uni, MS) Beau Rivage (Biloxi, MS) Boomtown (Biloxi, MS) Fitzgeralds (T unica, MS) Gold Strike (Tunica, MS) Grand Casino (Biloxi, MS) Grand Casino (T unica, MS) Hard Rock Casino (Biloxi, MS) Hollywood (Bay St. Louis, MS) Hollywood Tunica (T unica, MS) IP Casino (Biloxi, MS) Island View (Guflport, MS) Isle of Capri (Biloxi, MS) Isle of Capri (Natchez, MS) 111 Palace Casino (Biloxi, MS) Pearl River (Choctaw, MS) Silver Slipper (D'Iberville, MS) Treasure Bay (Biloxi, MS) 10) Which one of the following casinos in Louisiana or Mississippi Is currently your favorite casino? 0 Amelia Belle (Amelia, LA) 0 Belle of Baton Rouge (Baton Rouge, LA) 0 Boomtown (Bossier City, LA) 0 Boomtown (New Orleans, LA) 0 Coushatta (Kinder, LA) 0 Cypress Bayou (Charenton, LA) 0 Delta Downs (Vinton, LA) 0 Diamond Jacks (Bossier City, LA) 0 Eldorado (Shreveport, LA) 0 Evangeline Downs (Opelousas, LA) 0 Harrah's (New Orleans, LA) 0 Hollywood Casino (Baton Rouge, LA) 0 Horseshoe (Bossier City, LA) 0 Isle of Capri (Lake Charles, LA) 0 LA. Downs (Bossier City, LA) 0 L'auberge du Lac (Lake Charles, LA) 0 Paragon (Marksville, LA) 0 Sam's Town (Shreveport, LA) 0 Treasure Chest (Kenner, LA) 0 Ameristar (Vicksburg, MS) 0 Bally's Tunica (T unica, MS) 0 Beau Rivage (Biloxi, MS) 0 Boomtown (Biloxi, MS) 0 Fitzgeralds (T unica, MS) 0 Gold Strike (T unica, MS) 0 Grand Casino (Biloxi, MS) 0 Grand Casino (T unica, MS) 0 Hard Rock Casino (Biloxi, MS) 0 Hollywood (Bay St. Louis, MS) 0 Hollywood Tunica (T unica, MS) 0 IP Casino (Biloxi, MS) 0 Island View (Guflport, MS) 0 Isle of Capri (Biloxi, MS) 0 Isle of Capri (Natchez, MS) 0 Palace Casino (Biloxi, MS) 0 Pearl River (Choctaw, MS) 0 Silver Slipper (D'Iberville, MS) 0 Treasure Bay (Biloxi, MS) 11) Was your favorite casino the one that you visited most often during the last three months? 0 Yes 0 No 112 12) What are the reasons for visiting Paragon Casino Resort? Please Indicate the importance of different reasons for visiting Paragon Casino Resort. Very Important Reason Important Reason Somewhat Important Reason Not Important Reason Receiving invitations to special events 0 v . O O O Has promotions/drawings that appeal to me Players Club benefits Wide selection of slot machines Has my favorite types of slot machines Has a variety of table games that appeal to me Has my favorite types of table games y gambling budget goes further at this sino get the most cash back with slot ints in more often compared to other casinos Restaurants provide good value Has a variety of restaurants Provides good, friendly service The hotel rooms are a good value for _ the money Casino hosts Close to home 0000000 0 0000000 The friends/relatives I gamble with like this casino 00000000 0 0000000 O 00000000 0 0000000 00000000 0 0000000 13) You indicated that Paragon Casino Resort is not your favorite one. Please indicate the importance of different reasons for visiting your favorite casino. Very Important Reason Important ‘ Reason Somewhat Important Reason Not Important Reason Reoelvinflivitations to special events 0 O O Has promotions/drawings that appeal to me Pia ers Club benefits Wide selection of slot machines Has my favorite types of slot machines Has a variety of table games that appeal to me Has my favorite types of table games y gambling budget goes further at this sino Elget the most cash back with slot points i n more often compared to other casinos Restaurants provide good value OOOOOOOOOO OOOOOOOOOOO OOOOOOOOOO OOOOOOOOOO p—s p—n b) Has a variety of restaurants Provides good, friendly service The hotel rooms are a good value for the money Casino hosts Close to home The friends/relatives I gamble with like is casino OOOOOO 000000 000000 000000 14) We would like to know the reasons why you visited other casinos more often rather than your favorite one. Very Important Important Somewhat Not Important Important Beoeivigg invitations to special events 0 O O Has promotions/drawings that appeal to me Players Club benefits ide selection of slot machines Has mLfavorite types of slot machines Has a variety of table games that appeal to me Has my favorite types of table games y gambling budget goes further at this sino II_get the most cash back with slot points Win more often compared to other casinos Restaurants provide good value Has a variety of restaurants Provides good, friendly service The hotel rooms are a good value for the money Casino hosts Close to home The friends/relatives I gamble with like this casino OOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOO 15) You Indicated that Paragon Casino Resort is not your favorite casino. We would like to know the reasons why Paragon Casino Resort is not your favorite casino. Please check all that apply. Please check all that apply Can't receive invitations to special events Doesn't have promotions/drawings that appeal to me Bad Players Club benefits Doesn't have a wide selection of slot machines DDDDD Doesn't have my favorite types of slot machines 114 Doesn't have a variety of table games that appeal to me Doesn't have my favorite types of table games ambling budget does not go far at this casino can not get the most cash back with slot points Eda not win as often compared to other casinos Restaurants do not provide good value Doesn't have a variety of restaurants Doesn't provide goodiriendiy service The hotel rooms are not agood value for the money Do not like casino hosts [It is not close to home [The friendsjrelatives I gamble with do not like this casino DDDUDDDUDDDD 16) Please indicate how strongly you agree with the following statements about Paragon Casino Resort. Strongly Agree Neutral Disagree Strongly Disagree Agree The more I game at Paragon Casino Resort, 0 the more rewards/comps/gifts I receive 0 [I have used my points of comp balance to O urchase gifts, tickets, or obtain cash back 0 I often receive rewards/comps/gifts (e.g., meal comps, hotel comps, concert tickets) 0 because I am a member of Paragon Preferred Players Club receive special treatment (e.g., discounts, nvitation to the special events, etc.) because am a member of Paragon Preferred Players lub Members of Paragon Preferred Players Club receive better service than non-members Being part of the Paragon Preferred Players Club makes me want to visit Paragon Casino 0 Resort more often Compared to other casinos, I receive better value for my money at Paragon Casino Resort Compared to players clubs at other casinos, Paragon Preferred Players Club offers better ‘ romotions/drawings O O O O O Compared to players clubs at other casinos, Paragon Preferred Players Club offers better comps/rewards/gifts I win more often at Paragon Casino Resort [I can play longer on my gaming budget at Paragon Casino Resort The cash value of Paragon Casino Resort Players Club rewards is high OOOOO Paragon Casino Resort Players Club offers various redemption options (e.g;,__gil'tsL OOOOO ooooo’ OOOOO OOOOO 115 hckets, cash back, food, spa, etc.) do not have to wait long to receive rewards m Paggon Casino Resort Piggers Club aragon Casino Resort Players Club offers ards that I have wanted 17) Please indicate how strongly you agree with the following statements about your perception of service quality at Paragon Casino Resort. Strongly Agree ‘i Neutral Disagree Strongly Disggree Paragon Casino Resort has up-to-date gaming |re_therment ($9., slots, kiosks, etc.) O O O aragon Casino Resort has a wide selection of lot machines mes Egragon Casino Resort has a variety of table aragon Casino Resort has quality restaurants £25390” Casino Resort serves quality food and erages aragon Casino Resort offers quality ccommodations Paragon Casino Resort offers exciting headliner entertainment (e.g., shows, bands) Paragon Casino Resort offers consistent service qgality Overall service quality at Paragon Casino Resort Ls excellent Perall service quality at Paragon Casino Resort 5 superior Fiverall service quality at Paragon Casino Resort 5 high standards Paragon Casino Resort is aesthetically appeali [I like the way Paggon Casino Resort looks aragon Casino Resort’s interior and exterior re well maintained Eaggm Casino Resort is clean atmosphere OOOOOOOOOOOOOO OOOOOOOOOOOOOOO oooooo'oooooooo OOOOOOOOOOOOOO OOOOOOOOOOOOOOO 18) Please indicate how strongly you agree with the following statements about staff at Paragon Casino Resort. Strongly Strongly Afiee Agree Neutral Disagree Disa ree aragon Casino Resort staff show a sincere interest in solving it when a customer has a O O O O O ‘ roblem . Paragon Casino Resort staff handle complaints of customers effectively 0 O O O O Paragon Casino Resort staff corrects problems 0 O O O O 116 quicklx Paragon Casino Resort staff perform the service mm the first time Paragon Casino Resort staff give prompt service to customers Paragon Casino Resort staff are always willing to help customers Paragon Casino Resort staff are never too busy to respond to customers' requests. Paragon Casino Resort has knowledgeable staff Paragon Casino Resort has trained/experienced staff Egragon Casino Resort staff are consistently urteous with customers aragon Casino Resort staff treat me as a pecial and valued customer aragon Casino Resort staff understand the ific needs of their customers OOOOOOOOOO OO O O 000 O O O OO O O 000 O O O OO O 0 000 O O O OO O 0 000 O O O Paragon Casino Resort staff are neat-appeari 19) Which one of the following Players Clubs do you belong to? Please check all that apply. Cl Amelia Belle (Amelia, LA) Cl Belle of Baton Rouge (Baton Rouge, LA) 0 Boomtown (Bossier City, LA) Cl Boomtown (New Orleans, LA) Cl Coushatta (Kinder, LA) Cl cypress Bayou (Charenton, LA) Cl Delta Downs (Vinton, LA) Cl Diamond Jacks (Bossier City, LA) Ci Eldorado (Shreveport, LA) Cl Evangeline Downs (Opelousas, LA) Cl Harrah's (New Orleans, LA) CI Hollywood Casino (Baton Rouge, LA) Ci Horseshoe (Bossier City, LA) El Isle of Capri (Lake Charles, LA) El L.A. Downs (Bossier City, LA) Ci L'auberge du Lac (Lake Charles, LA) CI Sam's Town (Shreveport, LA) Cl Treasure Chest (Kenner, LA) Cl Ameristar (Vicksburg, MS) El Bally's Tunica (T unica, MS) D Beau Rivage (Biloxi, MS) 0 Boomtown (Biloxi, MS) Cl Fitzgeralds (Tunica, MS) Cl Gold Strike (T unica, MS) Cl Grand Casino (Biloxi, MS) Cl Grand Casino (T unica, MS) Cl Hard Rock Casino (Biloxi, MS) Cl Hollywood (Bay St. Louis, MS) 117 El Hollywood Tunica (T unica, MS) 0 IP Casino (Biloxi, MS) Cl Island View (Guflport, MS) Cl Isle of Capri (Biloxi, MS) 0 Isle of Capri (Natchez, MS) CI Palace Casino (Biloxi, MS) Cl Pearl River (Choctaw, MS) Cl Silver Slipper (D'Iberville, MS) Cl Treasure Bay (Biloxi, MS) 20) Which one is your favorite players club? 0 Amelia Belle (Amelia, LA) 0 Belle of Baton Rouge (Baton Rouge, LA) 0 Boomtown (Bossier City, LA) 0 Boomtown (New Orleans, LA) 0 Coushatta (Kinder, LA) 0 Cypress Bayou (Charenton, LA) 0 Delta Downs (Vinton, LA) 0 Diamond Jacks (Bossier City, LA) 0 Eldorado (Shreveport, LA) 0 Evangeline Downs (Opelousas, LA) 0 Harrah's (New Orleans, LA) 0 Hollywood Casino (Baton Rouge, LA) 0 Horseshoe (Bossier City, LA) 0 Isle of Capri (Lake Charles, LA) 0 LA. Downs (Bossier City, LA) 0 L'auberge du Lac (Lake Charles, LA) 0 Paragon (Marksville, LA) 0 Sam's Town (Shreveport, LA) 0 Treasure Chest (Kenner, LA) 0 Ameristar (Vicksburg, MS) 0 Bally's Tunica (T unica, MS) 0 Beau Rivage (Biloxi, MS) 0 Boomtown (Biloxi, MS) 0 Fitzgeralds (Tunica, MS) 0 Gold Strike (T unica, MS) 0 Grand Casino (Biloxi, MS) 0 Grand Casino (T unica, MS) 0 Hard Rock Casino (Biloxi, MS) 0 Hollywood (Bay St. Louis, MS) 0 Hollywood Tunica (T unica, MS) 0 IP Casino (Biloxi, MS) 0 Island View (Guflport, MS) 0 Isle of Capri (Biloxi, MS) 0 Isle of Capri (Natchez, MS) 0 Palace Casino (Biloxi, MS) 0 Pearl River (Choctaw, MS) 0 Silver Slipper (D'Iberville, MS) 0 Treasure Bay (Biloxi, MS) 118 21) Please rate the following benefits of Paragon Casino Resort's Players Club. Very Good Fair Poor Very N/A Poor mail offers tickets to to concerts or events pay (retail purchases with your slot added to back for slot of associates of associates time for service OOOOOOOOOOOOOog 00000000000000 00000000000000 00000000000000 00000000000000 0 O O O O O O O O O O O O 0 club 22) How often do you use your players club card when gaming at Paragon Casino Resort? 0 All the time 0 Most of the time 0 Sometimes O Rarely 0 Never 23) Please indicate how strongly you agree with the following statements about your experience with and image of Paragon Casino Resort. Strongly Strongly Agree Agree Neutral Disagree Di sa ree trust Para on Casino Resort 0 O O O O enjoy playinggames at Paragon Casino Resort 0 O O O O Efeel good when I play at Paragon Casino Resort 0 O O O O Paragn Casino Resort gives me pleasure O O O O 0 am satisfied with Paragon Casino Resort 0 O O O 0 Playing games at Paragon Casino Resort is a great experience 0 O O O O Paragon Casino Resort is a fun place to visit 0 O O O O Paragon Casino Resort offers a different gaming experience than other casinos O O O O 0 Many people have a high opinion of Paragon Casino Resort 0 O O O O Paragon Casino Resort is a safe place 0 O O O O Paragon Casino Resort has a god image 0 O O O 0 Playing at Paragon Casino Resort gets me away m it all 0 O O O O 119 laying at Paragon Casino Resort makes me feel ike I am in another world Fget so involved when I play at Paragon Casino Resort that I forget everythingelse Paragon Casino Resort doesn’t just offer gaming pportunity-it entertains me think Paragon Casino Resort is very entertainim hen I think of Paragon Casino Resort, I think of xcellence Eerall and overtime, I am satisfied with Paragon sino Resort aragon Casino Resort is honest in its business lth me [I rely on this casino for my gaming OOOOOOOO OOOOOOOO OOOOOOOO OOOOOOOO OOOOOOOO 24) Please indicate how strongly you agree with fire following statements about Paragon Casino Resort. Strongly Agree Agree Neutral Disagree Strongly Disarm Visiting Paragon Casino more often speeds up the amount of points that I accumulate (e.g., bonus ints) O O O O visit Paragon Casino more frequently (rather than other casinos) in order to concentrate my nts/comp balance there 0 O O Because of the points I have collected and benefits of the Paragon Preferred Players Club, it is not worth it to visit other casinos O O O O O will visit Paragon Casino Resort on my next aming trip intend to continue to be a Paragon Casino esort customer Brould continue to visit Paragon Casino Resort en if it were more difficult to reach E‘will continue to visit Paragon Casino Resort even a new casino is opened nearer to my home Earn committed to Paragon Casino Resort feel a sense of belonging at Paragon Casino esort aragon Casino Resort is a casino I would mmend to friends and relatives asked, I would say good things about Paragon ino Resort E: would take a lot of time and effort to switch om Paragon Casino Resort to other casinos II feel uncertain if I visit a new casino E general it would be a hassle visiting other sinos fiwould be very inconvenient for me to switch to OOOOOOOOOOOO OOOOOOOOOOOO OOOOOOOOOOOO OOOOOOOOOOOO OOOOOOOOOOOO 120 ther casinos Paragon Casino Resort keeps me informed of romotions, special events; new services, etc. receive mailings about the loyalty program on a ular basis e quality of communication from Paragon sino Resort is consistently high 25) Did you play any table games or slot machines at Paragon Casino Resort during fire last trip? 0 Yes, I played table games 0 Yes, I played slot machines 0 Yes, I played both table games and slot machines 0 No, I did not play either table games or slot machines 26) Please indicate fire importance of fire following slot game-related items when deciding which casino to visit. 2 2 Very Important different of slot machines of favorite slot machines for of of of slot machines area floor air with which staff responds to slot or issues 0 0000000 0 0000000 27) Please rate your satisfaction with the slot games during your last trip to Paragon Casino Resort. Neither Ve . Satisfied Ve Satisfiyed Satisfied nor issatisfied Dissatgfied Dissatisfied Variety (different types) of slot machines 0 O O O O vailability of my favorite slot machines 0 O O O 0 we required for jackpot payouts O O O O 0 Number of payouts O O O O O mount of payouts O O O O O Cleanliness of slot machines area 0 O O O O Gamiggflgor air quality 0 O O O O romptness wrth whrch staff responds to O O O O O lot-related questions or Issues [Overall satisfaction with slotfiqames O O O O O 121 28) Please indicate fire importance of fire following table games related-items when dedding which casino to visit. Very Important of table of favorite table dealers of dealers of table area 29) Please rate your satisfaction with fire table games during your last trip to Paragon Casino Resort. Very Satisfied Neither issatisfied Very Satisfied Satisfied Dissatisfied nor Dissatisfied Variety of table games 0 O O O 0 Availability of Mavorite tabl_egames O O O O O IKnowggeable dealers O O O O O Friendliness of dealers O O O O O Cleanliness of table ga:me area 0 O O O 0 Overall satisfaction with tabflmes O O O O O 30) Did you stay at Paragon Casino Resort Hotel during your last trip? OYes O No 31) Whidr tower did you stay in during your last trip? 0 North & South Tower 0 Atrium Tower (New) 0 Do not remember 32) Please indicate fire importance of fire following hotel-related items when deciding which casino to visit. of reservation of hotel room of hotel staff of check-in out valet service 122 cleanliness amenities of access to floor . locks 33) Please rate your satisfaction with hotel during your last trip to Paragon Casino Resort. Very Satisfied Neither issatisfied Very Satisfied Satisfied Dissatisfied nor Dissatisfied Speed of reservation process 0 O O O O Price/Value of hotel room 0 O O O O Friendliness of hotel staff 0 O O O O S of check-in / out 0 O O O 0 Hotel valet service 0 O O O 0 Room cleanliness O O O O O :aoom amenities (e.g., bed, furniture, 0 O O O O throom ) Ease of access to gaming floor 0 O O O 0 Room security (e.g., locks) O O O O 0 Overall quality of accommodation 0 O O O O erall satisfaction with accommodations O ' O O O O 34) Did you eat at any restaurants at Paragon Casino Resort during your last trip? OYes O No 35) Please indicate the importance of the following restaurant-related items when dedding which casino to visit. of staff of cashier of service time for for the Very Important Somewhat Not 0 O O O O O O O O O O O O O O O O O O O O O 123 00000000000 00000000000 36) Whldr one of the following restaurants did you dine in during your last trip to Paragon Casino Resort? Ci Legends Restaurant D Roxy's Dinner Cl Big Daddy E’s Cajun Grill & Oyster Bar Cl Snack Bar Cl Market Place Buffet 37) Please rate your satisfaction with fire restaurants that you visited during your last trip to Paragon Casino Resort. Very Neifirer Dissatisfied Very Satisfied Satisfied Dissatisfied nor ' Dissatisfied of staff of cashier of service time for for the satisfaction with 000000000000 000000000000 000000000000 000000000000 000000000000 38) Please indiaate the importance of fire following casino amenlfies and services- reiated items when deciding which casino to visit. Very Somewhat Not Important 0 O O O O O O O O O O O ' O O O O O 0 000000000 000000000 124 39) Please indicate whefirer you used fire following amenities/services during your last trip to Paragon Casino Resort, and rate your safisfaction with fire amenities] services firat you used. Services/Ameniti film}: 5333:? Rate your satisfaction with fire following trip to Paragon amenities/servrces at Paragon Casrno Resort Casino Resort Neither Check all that Very Satisfied Very apply Satisfied Satisfied nor Dissatisfied Dissatisfied Dissatisfied Cashier station Cl 0 O O O 0 Self service CI 0 O 0 O O redemption kiosks VIP room 0 O O O O O Valet parkflg El 0 O O O 0 Golf course 0 O O O O O RV/Campground Cl 0 0 O 0 0 Entertainment events D O 0 0 O 0 Eg" concert) i htclubs D O O O O O ift shop E] O O O O O 40) Have you taken an overnight trip to a casino during fire last 12 monfirs? OYes O No 41) While on an overnight trip to any aasino during fire last 12 monfirs, have you ever stayed overnight in a hotel that is owned] operated by fire casinos firat you visited? OYes O No 42) How many different casino hotels have you stayed in overnight during fire last 12 monfirs? 43) Have you stayed overnight in a casino hotel located In Mississippi or Louisiana during fire last 12 months? OYes O No 125 44) What nights have you stayed at casino hotels located In Mississippi or Louisiana during fire last 12 months? 0 Weekend (Friday and Saturday) nights only 0 Weekday (Sunday, Monday, Tuesday, Wednesday, Thursday) nights only 0 Weekend and Weekday nights 45) Which casino hotels located in Mississippi or Louisiana have you stayed in during fire last 12 months? Please check all that Belle LA of Baton LA New LA Kinder LA LA Downs LA Jacks Bossier LA LA Downs LA LA Casino Baton LA Bossier LA of Lake LA Downs Bossier LA du Lac Lake LA Town LA reasure Chest Kenner LA MS Tunica u MS unica Strike Casino Biloxi Casino MS Rock Casino Biloxi St. Tunica Casino MS View of MS of MS Casino Biloxi MS River Choctaw Cl Cl CI CI CI CI CI Cl CI Cl El CI 0 CI 0 0 Cl CI CI Cl Cl Cl C] CI CI Cl D D CI CI CI CI Cl C] 0 Cl D D reasure MS 126 46) When staying overnight at a hotel that is owned/operated by fire casino firat you visit, do you prefer to stay weekday or weekend nights? 0 Weekend (Friday and Saturday) nights only 0 Weekday (Sunday, Monday, Tuesday, Wednesday, Thursday) nights only 0 Weekend and Weekday nights 47) Given your work schedule and ofirer commltrnents (e.g., childcare), are you able to take overnight trips to casinos on weekday nights (Sunday, Monday, Tuesday, Wednesday, or Thursday)? OYes O No 48) What determines whidr day(s) of fire week you take overnight trips to casinos? Please check all firat apply. Ci Work schedule D Other commitments Cl Room rates Cl Comps and special offers Cl Entertainment and special events El Ability to obtain a room Ci Schedule of other people in trip party (i.e. friends, spouse, partner) Ci When it is less crowded Cl Ofirer (please specify) If you selected other please specify: 49) During the last 12 monfirs, have you stayed overnight at fire hotel firat is owned/operated by Paragon Casino and Resort? OYes ONo 50) Why have you not stayed overnight in fire hotel owned] operated by Paragon Casino and Resort during the last 12 months? Please check all firat apply. Ci I have tried but can never get a room when I want to stay Cl Live nearby and don’t need to stay overnight in the hotel Cl Too expensive Cl Rather spend my money on other things on the trip (e.g., food, gaming, drinks) Cl Never receive room offers at Paragon Cl Don’t like their hotel Cl Had a bad experience while staying in their hotel D Ofirer (please specify) If you selected other please specify: 127 51) During fire last 12 monfirs, how many different overnight trips have you stayed in fire hotel firat is owned/operated by Paragon? We are asking about the number of trips, not the number of nights 52) During fire last 12 monfirs, how many different nights have you stayed overnight at fire Paragon Casino and Resort hotel? 53) What nights have you stayed at fire hotel at Paragon Casino and Resort during fire last 12 months? 0 Weekend (Friday and Saturday) nights only 0 Weekday (Sunday, Monday, Tuesday, Wednesday, Thursday) nights only 0 Weekend and Weekday nights 54) Why have you not stayed in fire hotel owned/operated by Paragon on weekday nights during the last 12 months? Cl I have tried but can never get a room when I want to stay El Live nearby and don’t need to stay overnight in fire hotel Ci Too expensive Ci Rather spend my money on other things on the trip (e.g., food, gaming, drinks) Cl Never receive room offers at Paragon Casino Resort D Don't like their hotel Cl Had a bad experience while staying in fireir hotel Ci Cannot stay during fire week due to ofirer commitments D Other (please specify) . If you selected other please specify: 55) Would you ever consider staying at Paragon Casino hotel on a weekday night? OYes O No 56) We are interested in identifying fire different types of direct mail offers (if any) firat would encourage you to take an overnight trip to Paragon Casino Resort during fire weekdays. Please select which offer would enfice you to make an overnight trip to Paragon during weekdays. 0 Cash Offer 0 Free Play Offer 0 Free room Offer 0 Multi-Night Room Offer 0 Discounted Price Room Offer 0 Food Offer 0 Points Offer 0 No Offers 0 Other (please specify) 128 If you selected other please specify: 57) What is fire maximum number of nights you would be willing to stay during weekdays (Sunday to Thursday) at Paragon Casino Resort Hotel? 0 One night 0 Two nights 0 Three nights 0 Four nights 0 Five nights 58) What would be your preferred day to start a weekday overnight stay at Paragon Casino Resort Hotel? 0 Sunday 0 Monday 0 Tuesday 0 Wednesday 0 Thursday 59) During the last 12 monfirs, has firere ever been an occasion when you tried but were not able to reserve a room at Paragon Casino Resort Hotel? OYes O No 60) How many fimes were you unable to make a reservafion for a room at Paragon during fire last 12 months? 61) For what nights were you unable to reserve/book a room at Paragon Casino hotel? 0 Weekend (Friday and Saturday) nights only 0 Weekday (Sunday, Monday, Tuesday, Wednesday, Thursday) nights only 0 Both weekend and weekday nights 62) Did you hear, see, or read any advertisements from Paragon Casino Resort during fire month of October? 0 No OYes 129 63) Please indicate how often you saw, heard, or read adverfisements from Paragon Casino Resort during the monfir of October. Please answer for each of fire four types of adverfising. Sometimes Never elevision Ads Ads Ads 64) Did you recall seeing more, less, or about fire same amount of Paragon Casino Resort adverfising in October than you normally see, hear or read? 0 Much more 0 More 0 About the same amount 0 Less 0 Much Less 65) Did any of fire adverfisements that you saw, heard, or read drange your previous percepfion/ image of Paragon Casino Resort? 0 NO OYes 66) How did it change your image or percepfion? Please cireck all firat apply. CI There is a great deal new about Paragon Casino Resort CI The facilities at Paragon Casino Resort are more modern ' Cl Paragon Casino Resort is now more luxurious Cl Paragon Casino Resort has improved its service Cl Paragon Casino Resort has added moregaming opportunities Ci Paragon Casino Resort is a top gaming destination in Louisiana Cl Other (please specify) If you selected other please specify: 67) Did you learn anything new about Paragon Casino Resort from any of the adverfisements you saw, heard, or read in October? 0 No OYes 68) What new firings did you learn about at Paragon Casino Resort from fire adverfisements you saw, heard, or read In October? 130 69) Based on fire advertising firat you saw, read, or heard in October, please indicate whefirer you agree or disagree wifir fire following statements. Strongly Agree Neither Disagree Strongly Agree Agree or Disagree - Disagree Paragon Casino Resort is “the Pearl of O O 0 Louisiana” Paragon Casino Resort now offers a higher 0 O O O 0 quality gaming experience Paragon Casino Resort has the most exciting ming environment in Louisiana and O O O O O ississippi aragon Casino Resort now has higher-quality menities and services aragon Casino Resort provides its customers real escape 70) Did any of fire advertisements that you saw, read, or heard in October influence your decision to visit Paragon Casino Resort in any manner? 0 No OYes 71) How did the advertising that you saw, heard, or read Influence your decision to visit Paragon Casino Resort? Please cireck all firat apply. Cl Visited Paragon Casino Resort again after not visiting fora long time CI Made additional trips that I would otherwise not have made to Paragon Casino Resort Cl Made fewer trips to other casinos in order to visit Paragon Casino Resort more often Cl Made an overnight trip to Paragon Casino Resort firat I othenNise would not have made CI Attended an event or concert at Paragon Casino Resort that I otherwise would not have attended Cl Other (please specify) If you selected other please specify: 72) Did you receive any mail offers from Paragon Casino Resort in October? 0 No OYes 73) Did you receive more, less or about fire same amount of direct mail offers in October firan you normally receive? 0 Much less 0 Less 0 About the same 131 0 More 0 Much more 74) Did any of these mail offers in October influence your dedsion to visit Paragon Casino Resort in any manner? 0 No OYes 75) How did these mail offers influence your decision to visit Paragon Casino Resort? Please check all that apply. Cl Visited Paragon Casino Resort again after not visiting for a long time Cl Made additional trips that I would othenNise not have made to Paragon Casino Resort Ci Made fewer trips to other casinos in order to visit Paragon Casino Resort more often CI Made an overnight trip to Paragon Casino Resort that I otherwise would not have made Cl Attended an event or concert at Paragon Casino Resort that I othemise would not have attended Ci Other (please specify) If you selected other please specify: 76) Did you learn anything new about Paragon Casino Resort as a result of any of fire mailings firat you received in October? 0 No OYes 77) What new firings did you learn about fire at Paragon Casino Resort from fire mailings you received in October? 78) Which do you consider more reliable in terms of fire informafion provided and dalms firat are made? 0 Paragon Casino Resort Advertisements (e.g., TV, radio, newspapers) 0 Paragon Casino Resort Mail Offers 0 Both advertising and direct mail are equally reliable 0 Neither advertising nor direct mail are reliable 79) Which has fire most influence on your decisions to make a trip to Paragon Casino Resort? 0 Paragon Casino Resort Advertisement (e.g., TV, radio, newspapers) 0 Paragon Casino Resort Mail Offers 0 Both advertisement and direct mail have an equal influence 0 Neither advertisement nor direct mail have any influence 132 80) Are you aware of the new amenlfies now available at Paragon Casino Resort? 0 No OYes 81) What new amenities does Paragon Casino Resort now offer? Please check all that aPP'Y- Cl New atrium Ci New bar 0 New restaurant options El Pool and water-park Ci Spa Ci Movie theater Ci New rooms and suites Cl New stage for concerts and events Cl Other (please specify) If you selected other please specify: 82) How did you become aware of the new amenifies at Paragon Casino Resort? 0 Advertisements 0 Direct Mail 0 Visiting Paragon Casino Resort 0 Grand opening event 0 Word of mouth (Friends/relatives) O Other (please specify) If you selected other please specify: 83) On average, how long do you stay in Paragon Casino Resort each fime you visit? 0 Less than 3 hours 0 3- 6 hours 0 6—9 hours 0 9-12 hours 0 One day 0 Two days 0 Three days 0 More than three days 84) You visit Paragon Casino and Resort primarily: 0 To win 0 For pleasure/entertainment 0 Both to win and for pleasure/entertainment 133 85) What is your average gaming budget per visit? 0 Less than $25 0 $25 to $50 0 $51 to $100 0 $101 - $200 0 $201 - $500 0 $501 to $1000 0 Over $1,000 86) Are you male or female? 0 Male 0 Female 87) How old are you? 88) How many persons in your household are over 21 years old? 89) Do you consider yourself to be more of a table games player (e.g., blackjack, craps, roulette, poker), or do you consider yourself to be more of a slots player? 0 More of a table games player 0 More of a slots player 0 Both a table games player and slots player 0 Neither, I visit Paragon Casino Resort for other reasons 90) How would you describe your current family status? 0 Single without children 0 Single with children living at home 0 Single with children no longer living at home 0 Married/ Partnered without children 0 Married/Partnered with children living at home 0 Married/ Partnered with children no longer living at home 0 Other (please specify) If you selected other please specify: 91) What is fire highest level of formal educafion you have adrleved? 0 Less than high school 0 Completed some high school 0 Completed high school or GED 0 Some college 0 2-year college degree 134 O 4-year college degree 0 Completed some graduate courses 0 Master's degree (MA, MS, MBA, MFA, MPA, etc.) 0 Doctoral degree (PhD, EdD, DVM, MD, JD, DO, DD, etc.) 92) What is your current employment status? 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