Sample Group Assignment- Tabcorp Situational Analysis PDF

Preview

Summary

RESEARCH REPORT ON MARKETING ...

Description

GSBS-6005 MARKETING MANAGEMENT AND PLANNING- GROUP ASSIGNMENT (T1, 2019)

SITUATIONAL ANALYSIS

BENJAMIN HASSETT (c3320028) SCOTT RICHARDSON (c3262022) JOANNE RIGBY (c3255013)

2

Contents TABLE OF FIGURES............................................................................................................................... 4 EXECUTIVE SUMMARY .................................................................................................................... 5 COMPANY OVERVIEW ..................................................................................................................... 6 MARKET MIX ANALYSIS .................................................................................................................. 7 PRODUCT- OVERVIEW OF PRODUCT LINE .................................................................................... 7 PRICE ........................................................................................................................................................ 8 CURRENT MARKET PLACE ............................................................................................................... 11 Source: Tabcorp 2018 annual report ................................................................................................... 11 PROMOTION .......................................................................................................................................... 11 MARKET SITUATION ...................................................................................................................... 14 TARGET MARKET ........................................................................................................................... 18 COMPETITOR ANALYSIS ............................................................................................................... 18 MACROENVIRONMENTAL ANALYSIS (PEST) ............................................................................ 22 POLITICAL .............................................................................................................................................. 22 ECONOMIC ............................................................................................................................................. 24 SOCIOCULTURAL................................................................................................................................. 25 TECHNOLOGY ....................................................................................................................................... 27 SWOT ANALYSIS ............................................................................................................................ 28 MARKET SEGMENTATION ............................................................................................................ 29 CONCLUSION .................................................................................................................................. 33 APPENDIX 1 ..................................................................................................................................... 34 REFERENCES .................................................................................................................................. 38

3

TABLE OF FIGURES

Figure 1 Win and a place return ............................................................................ 9 Figure 2 Head to Head return calulation ............................................................... 9 Figure 3 Price position in the market (horses and greyhounds) .......................... 10 Figure 4 Price position in the market (football codes)

10

Figure 5 Combined price position ....................................................................... 10 Figure 6 Tabcorp operations in Australia ............................................................ 11 Figure 7 Tabcorp live stream .............................................................................. 13 Figure 8 Tabcorp promotions .............................................................................. 13 Figure 9 Total gambling turnover ........................................................................ 14 Figure 10 Australian betting distribution .............................................................. 15 Figure 11 Mobile betting distribution ................................................................... 16 Figure 12 Betting placement by state.................................................................. 17 Figure 13 Porters five forces analysis - Tabcorp ................................................. 19 Figure 14 Porter's five forces diagram ................................................................ 21 Figure 15 Australian GDP annual growth rate .................................................... 24 Figure 16 GDP national forecast ......................................................................... 25 Figure 17 Disposal income levels ....................................................................... 25 Figure 18 SWOT table ........................................................................................ 28 Figure 19 Females 18 to 35 gambling distribution .............................................. 31

4

EXECUTIVE SUMMARY Tabcorp is Australia’s largest betting (wagering) business operating in a highly competitive and dynamic environment. Tabcorp’s closest competitors are Sportsbet and BetEasy. The wagering market in Australia is rapidly changing as emergent companies and products all vie for the discretionary dollar. This situational analysis of Tabcorp’s operations focuses on their online racing and sports betting platforms. The report examines the market mix, synthesizing a review of their products, placement, price, promotion, competitors and target markets. A review of the macro environmental factors produces a SWOT analysis which will identify key issues and opportunities.

Tabcorp’s main online wagering product Tab.com.au (App), founded on the racing industry, needs to keep pace with technological changes and improvements, online betting incentives, and the expansion of sports betting if it wishes to stay relevant in this market. Tabcorp needs to build on its strengths as the reputable betting brand, and their product’s ability to live stream racing due to their ownership of Sky racing. The company faces challenges due to potential legislative changes, constraints in their opportunity to increase their sports betting customers. They need to build and retain customer loyalty in this highly competitive market and stay agile and relevant. This analysis will identify the foundations for a renewed marketing mix strategy to enable the longevity of Tabcorp’s current market position.

5

COMPANY OVERVIEW Tabcorp is a publicly listed Australian organisation with annual revenues in excess of $3.8 billion in financial year 2018 (Tabcorp, 2018). Tabcorp was incorporated in 1994 with the privatisation of the Victorian Government’s Totaliser agency board (TAB). Since 1994 Tabcorp has grown significantly with the acquisition of several prominent gambling organisations including; Star city holdings in 1999, Jupiter’s limited in 2003, Tab limited in 2004 (NSW Tab) and Tatts group in 2017 allowing for revenue growth from $5.7 million in 1995 (Tabcorp, 1995) to the current figure mentioned above. Tabcorp operates in every state of Australia, in addition has broadcast commitments in over fifty countries around the globe and wagering operations in the United Kingdom (Tabcorp, 2018). Tabcorp is a diversified company with revenue from three streams classified into wagering & media, lotteries & Keno and gaming services. Wagering and media is the largest overall contributor to revenue providing $2.18 billion in financial year 2018. Tabcorp provides for online, on track and at venue betting across multiple racing and sporting events. Lotteries and Keno provide $1.39 billion to Tabcorp’s revenue, the Lott contains Lotto, Powerball, Oz Lotto, Lucky Lotteries and Keno. Gaming services produces $249 million in revenue comprising TGS, Max gaming and Ebet. These organisations focus on end to end support for client-side services

Tabcorp is the largest gambling company in Australia with products and services offered across various platforms, mediums and industry segments. This however does not ensure continued success as Tabcorp faces increasing competition for its clients’ discretionary spending (Tabcorp, 2018).

6

MARKET MIX ANALYSIS

PRODUCT- OVERVIEW OF PRODUCT LINE The way in which bets are being placed within the Australian betting market has changed dramatically since 2012. A growing number of wagering customers are using the internet to place their bets (34.1%), which is more than double (15.7%) of consumers who chose this method to place a bet in 2012 (Roy Morgan, 2018). Further, online bets placed using a mobile phone have increased fourfold to 22.7%, up from 5.6% in 2012 (Roy Morgan, 2018). With the trend towards online wagering expected to continue, Tabcorp has invested heavily in their e-Commerce products. Consumers have two products to choose from, Tab.com.au and the TAB App. The TAB App will be the focus of future analysis within this report.

Available for download on both the android and IOS platforms, The TAB App has been designed to replicate the traditional betting formats that have existed across Tabcorp’s retail operation for decades. It focuses on two major wagering sectors; racing (horse, trots and greyhound) and main stream sports betting (currently 21 sports). Customers can place wagers on races occurring in countries such as South Africa, England, Hong Kong, Japan, France, the US and New Zealand. The sports betting market is even more wide spread, with events held in almost every developed country across the world (Tabcorp, 2019). Further, the TAB App has followed a trend adopted by most online wagering companies by offering markets in the novelty and exotic categories. Current examples include who will win Channel 9’s reality TV show Married at First Sight, and what will Prince Harry and Meghan Markle name their first child (Tabcorp, 2019).

Along with providing the means for consumers to place a wager on the event of their choice, two unique features have been integrated from their traditional in-venue retail business. These include live content streaming and check and collect race tickets. Live streaming includes races held across Australia through Tabcorp’s ownership of the sky racing network along with NBA games to IOS devices only. Check and collect 7

provides customers the ability to scan their physical race tickets acquired within retail venues and deposit any winnings into their TAB account. Both features are aiming to link the traditional TAB wagering experience with the new E-commerce business that is becoming more important to Tabcorp’s success in the overall wagering business.

PRICE Pricing within the online sports betting market is extremely complex due to the thousands of active markets open to the consumer at any time . Within each event, there is a multitude of markets to place a wager on. For example, when looking at horse and greyhound racing, customers have the ability to wager on traditional markets such as Win and Place (First, second and third past the post), tri-fector market (first three past the post in exact order), Quinella market (first two past the post) and exacta (first 2 past the post in exact order). They also have the ability to wager on more exotic markets such as the daily Jockey challenge (which jockey will have most successful day at an event) and multi bets (multiple bets across different races to form a combined odds price based on likelihood of success). When analysing sports wagering, traditional markets include head to head (winner), line betting (team least likely to win are given a points head start) and margin betting (how many points will a team win by e.g 1-12, 13+). More recently exotic markets have been introduced into all sports betting markets with examples including first points scorer, total points scored in a game, half time score line, team to win both halves, exact winning margin and many more. At present, the TAB app provides 25 exotic markets per game for NRL and AFL games (Tabcorp, 2019). When considering pricing within the wagering industry, it is important to note that customers are looking for the highest price possible for their selected wager as it presents them value through a larger financial return. This pricing analysis has focused on the traditional core markets held within racing and sports wagering; Win & Place betting within the racing sector, along with the head to head market. Returns for these two markets are calculated as follows; 8

Win/place If a customer placed a $10 bet in the win/place market, the formula used to calculate their return is; (a x c) + (b x d)= e

Market odds

Wager placed

Win $10 (a)

$5 (c)

Place $4 (b)

$5 (d)

Customer return = $70 Figure 1 Win and a place return

Head to Head market If a customer placed a $10 bet in the head to head market, the formula used to calculate their return is; (a x b) = c

Market odds

Wager placed

Win $2.23 (a)

$10 (b)

Customer return = $22.30 Figure 2 Head to Head return calulation

Overall, Tabcorp presents the best combined value to customers based on the markets analysed. When comparing odds against their two main competitors, Sportsbet and BetEasy, Tabcorp’s pricing position was the market leader in sports betting and priced slightly behind category leader Sportsbet in the racing industry. In all markets analysed, BetEasy presented the worst pricing value for customers with Sportsbet only marginally behind Tabcorp. This price position indicates that Tabcorp is aiming to increase its customer base in the sports betting market in the short to medium term by providing added value through higher odds, while simply remaining competitive in their more traditional racing markets.

9

Race betting price position (Horse & Greyhounds)

Sports betting price position (AFL & NRL) 100

30

80

20

60

10

40

0

20 Best return Middle return TAB

Worst return Sports Bet

Total 0 Bet Easy

TAB

Figure 3 Price position in the market (horses and greyhounds)

Sports Bet

Bet Easy

Figure 4 Price position in the market (football codes)

Overall market price position (racing + sports betting) 120 100 80 60 40 20

0 Best return

Middle return

Worst return TAB

Sports Bet

total

Bet Easy

Figure 5 Combined price position

Source data - TAB, Sportsbet, BetEasy (2019). Analysis by Benjamin Hassett. Refer Appendix 1 for further source data.

10

CURRENT MARKET PLACE Tabcorp currently holds the largest share of the online betting market with twelvemonth figures to March 2018 showing 17.9% of Australian punters using the TAB App to place a wager (Morgan, 2018b). There are currently almost 720,000 active TAB App customers and in FY 17/18 Tabcorp’s wagering and digital division reported revenue of $2.186 Billion, up 16.3% on FY 16/17 results. Following the major acquisition of Tatts Group in November 2017, Tabcorp now operates wagering services in all states and territories in Australia excluding WA (Tabcorp 2018 financial report).

Source: Tabcorp 2018 annual report

Figure 6 Tabcorp operations in Australia

PROMOTION 11

(Nerilee Hing, Cherney, Blaszczynski, Gainsbury, & Lubman, 2014). There is a positive link between advertising and promotion of online gambling and consumer consumption of these products (N. Hing, Vitartas, & Lamont, 2017). Tabcorp has been extremely active in promoting their online betting products since the NRL, AFL and spring racing carnival commenced in September 2018 which is attributed to the introduction of the point of consumption (POC) tax across all states and territories (excluding Tasmania) in January 2019 along with the brand assimilation program currently underway between TAB and Ubet (Toscano, 2019).Tabcorp’s Chief Executive David Attenborough cited “it is really crucial during transition that we keep going strong so we don’t see market share heavily eroded” (McDonnell, 2018). Promotion of the TAB App and associated TAB offerings is achieved through a combination of cross promotion in live sports and racing events both on television and radio, mainstream and social media, on location advertising, and direct promotions to customers via email, sms, and through sponsorship of sporting and racing organisations. Studies have shown that promotion of perceived non risk products like bonus bets encourage both occasional and regular gamblers to increase their participation rates (N. Hing et al., 2017). The current slogan for the TAB App is “what are you backing” which plays on the colloquial phase of people trackside discussing their tips. This slogan is also acknowledgement of TAB’s racing history, as well as a call to action for punters to think about gambling. Research shows that sports wagering businesses use messaging in marketing that attempts to normalize betting to overcome the social stigma that exists around problem gambling (Deans, Thomas, Daube, & Derevensky, 2016). There are three main products that are promoted within the market. The TAB App and its live streaming capabilities, Bonus bets including multi options, and special in-venue offers. Examples of current promotions are shown below.

12

Figure 7 Tabcorp live stream

Figure 8 Tabcorp promotions

13

MARKET SITUATION Australians have long had a love affair with gambling, and the trend continues according to figures released in October 2018 by the Queensland Government statistician’s office. During the 2016/17 financial year, a combined $208.6 Billion was spent within Australia across all forms of legal gambling, equating to $1,251.39 per capita (Queensland Government Statistician’s Office, 2018). In addition, an estimated $1B was spent on illegal gambling across all forms of gambling in 2015/16 (0.47%) with this figure expected to double by 2020 (Taskforce, 2018). Overall spend on gambling is up 0.7% from 2015-2016, with growth across both racing 12.9% and sports betting 3.9%. Contrastingly gaming declined (1%) (Queensland Government Statistician’s Office, 2018)

Gambling form

2016/'17 Per Capita AUD ($ ($) million)

Market share

Turnover V's 2015/'16

%

Racing

1260.67 23,869.26

11.4

▲12.90%

Gaming

9223.38 174,633.66

83.7

▼1.00%

533.72 10,105.30

4.8

▲3.90%

Sports Betting

Source data (Queensland Government Statistician’s Office, 2018) Analysis by Benjamin Hassett Figure 9 Total gambling turnover

The positive growth trend continued into the 2017/18 financial year with wagering turnover increasing by $3.097 billion (9%). Racing was up by over $1.4 billion (8%) and sports betting up over $1.5b (16%) (Foundation, 2018).

When assessing the Australian betting market, figures provided by JP Morgan for the full year 2017 shows that horse racing is the most popular type of betting (50.9%), followed by greyhounds (12.5%) and (11.4%) harness racing. Sports betting equated 14

to 25% of all money spent in the Australian betting market, dominated by the two major football codes, NRL / State of Origin (6.8%) and the AFL (7.6%). The rem...