Costco an Costco and T d The he Lot Lotter tery y Value P alue Pricin ricing g Par aradigm adigm
Ariz Arizona Lo ona Lotte ttery y Costc Costco Pilot o Pilot
The Costco Member • More likely to be ages 35+ • Have higher household incomes • 22% more likely to do MOST grocery shopping at Costco (Index 122) • 149% more likely to have purchased draw games in the past 30 days (Index 249) • Bigger grocery basket spenders with average baskets of $154.46 (vs. $150.81) • 28% more likely to have children ages 17 or under in the household 50% 160 40% 140 140 139 120 120 117 39% 30% 40% 35% 120 30% 100 111 25% 96 25% 24% 104 24% 100 30% 80 79 79 20% 24% 19% 23% 80 20% 80 17% 19% 60 20% 16% 60 14% 13% 12% 40 46 9% 40 10% 7% 10% 6% 20 20 0% 0 0% 0 18-24 25-35 35-54 55-65 65+ below $25K $25K - $50K $50K - $75K $75K - $100K $100K+ Costco Shoppers (Past 7 Days) Costco Shoppers (Past 7 Days) Costco Shoppers who bought any lottery ticket (Past 30 days) Costco Shoppers who bought any lottery ticket (Past 30 days) Index Index Source: Nielsen Prime Lingo. Market/Release: Phoenix, AZ 2018 Release 2 Total (Aug 2017 - Jul 2018)
Costco’s Perspective Pain Points • Front end employee compensation • Member perception of Lottery • Lottery footprint • Discount requirement Positive Points • Top line sales increase • Community impact
Sales numbers Consistent growth in sales across the 17 Costco locations Holiday Countdown Triple Red 7s Total Sales Total Sales $505,100 $614,600 (3 Month Total) (3 Month Total) Average Sales Average Sales $29,712 $36,153 Per Location Per Location Average Increase $6,441 Per Location (22%).
Lott Lotter ery y Value Pr alue Pricing icing Par aradigm adigm
Pricing Paradigm What if… $100 Ticket $30 Ticket 34% GGR $20 Ticket 22% $10 Ticket GGR 25% 27% GGR 66% GGR 73% 78% Payout 75% Payout Payout Payout While delivering value to players and retailers With increasing ticket prices, Gross Gaming Revenue (%) declines
Pricing Paradigm How do we increase revenues, without reducing Beneficiary Transfers? Instant Games Revenue Distribution 100% Prize Payout Expense % Ticket Price Draw Games 100% Prize Payout Expense % Ticket Price
Value Pricing Other Industry Solutions Bundle and Save
Value Pricing for the Lottery Basket Structure Payout Structures Create basket options with a fixed number of Draw Games and a variety of Instant Games (selected by the player) to hold the Gross Gaming Revenues (GGR) constant Instant Games Prize Pricing Strategy Bundle Expense Offer discounts at targeted, virtual price points designed Option % to drive consumers to the higher price points Draw (with our value offering) Games Distribution Strategy Ticket Price Work with our Vendors to make the bundle options available in every vending machine
Creating the Basket Super Size? Game Selection Game Information Draw Games Value Pricing Basket Price: $50 Price: $90 ($100 Value) Payout: 66% (34% GGR) Payout: 50% Fast Play Price: $20 Payout: 67% Scratchers Price: $30 Payout: 77%
Expected Benefits Overview Once enacted, we expect that the Value Pricing Paradigm will bring significant benefits to both the Lottery, and our players. By driving the players to higher price points, we Increasing Revenues, anticipate an increase in revenue and stable Transfers, and Commissions Beneficiary Transfers We are targeting our frequent players with this Rewarding Our bundle. These players will receive a savings from Frequent Players the bundle, and a diversified playing experience. Requires the player to experience a variety of Cross Selling Opportunities games in order to achieve the value with savings By creating a new virtual price point for our New Virtual Price Points players, we create a new way to engage with them at $0 Additional Cost while leveraging our already-existing products
Costco an Costco and T d The he Lot Lotter tery y Value P alue Pricin ricing g Par aradigm adigm
Recommend
More recommend
