43 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2023 Portfolio Management: Best Practices to Revolutionize the Lottery Industry Applied extensively throughout U.S. retail, particularly in large grocery chains and big-box stores, portfolio management (also referred to as category management) has transformed the Consumer Products Industry. Retailers employ category managers to optimize product assortments, pricing, and merchandising strategies for categories like food, beverages, household goods, electronics, and almost every consumer product category you can think of. Like category management for consumer goods, managing the product mix for lottery providers is the key to a successful portfolio to provide the most customer-friendly display and offering as well as the best possible user experience online to optimize efficiencies and ROI. ZEAL has for years pioneered the development of the category management approach for draw-based Games, scratch cards and eInstants. A Lottery Portfolio should incorporate distinct propositions aimed at meeting different player motivations and needs. Therefore, best-practice portfolio management principles help maximize yield, not only for one product category but for the whole bandwidth. ZEAL’s goal is not to create local optimums for certain product categories but to enhance customer satisfaction, give players compelling reasons to play. In the end, this approach optimizes customer lifetime value and business sustainability. It's about shaping an optimal mix of high-quality games, with different themes, gameplay mechanics, and price points in combination with the classical lottery products players know from retail, to meet market demand and attract the widest audience. Transforming an Industry with Holistic Portfolio Management Lottery is not the only sector that could reap great benefits from the targeted application of portfolio or category management. For example, the consumer package goods industry has long recognized that deep category understanding creates a lasting competitive advantage through effective brand positioning and adaptability to market dynamics. It serves as the central platform for brand owners in the consumer package goods industry to engage with retailers, offering the essential language, structured processes, and metrics to convey both strategic and tactical suggestions to the retailer. Furthermore, category management has profoundly reshaped consumer products marketing, market segmentation, and brand management. This strategic approach centers on treating product categories as discrete business units and has revolutionized marketing through data analysis and consumer insights, empowering companies to comprehend consumer behavior, preferences, and trends, enhancing the effectiveness of marketing strategies. Category management also streamlines product assortments, allowing marketing teams to focus on high-performing products, reducing inventory risk and improving resource allocation. The development of brand portfolio strategies is also enabling companies to cater to diverse consumer needs within a category. The approach has also encouraged innovation, ensuring that brands adapt to evolving consumer demands and market trends, securing their relevance and longevity. A valuable example for category management in the consumer package goods industry is the consumer goods group Procter & Gamble, a market leader that boasts more billion-dollar brands than any other competitor in its field and pioneered the implementation of category management back in the 1980s. Applying datadriven category management principles has enabled P&G to optimize their product categories and thereby maximize overall sales and market penetration. By analyzing consumer behavior and market trends, the group makes informed, consumer-centric decisions. This approach, combined with a diverse brand portfolio strategy, enhances brand loyalty and market competitiveness. And for lotteries, this translates into increased diversity of player profiles and overall playership. Fit for Revolutionizing the Lottery Industry Despite the success stories in other industries, category management is not a wellestablished practice in the Lottery industry yet. But as gambling competition intensifies (especially in the USA), consumers are being granted greater access to alternative ways of winning money. For example, the rise of sports betting in the U.S. has been prolific. (Gross revenue reached $6.9bn across 23 active online sports-betting states in 2022. Nationwide, it has soared by 91% YoY.). The availability of non-lottery games widens the competition for consumer’s discretionary dollar. This is why, now more than ever, Lotteries must look to their portfolios and apply best practice category principles to optimize their range, overall sales, and net income returns. The ZEAL Approach to Category Management In our own category management approach, ZEAL places particular emphasis on data analytics to learn more about consumer requirements and preferences, market developments and player behavior before developing and distributing new products. For the ZEAL Instant Games business, we want our products – and by this, I mean every single game – to be a success in the market for the benefit of our clients. Therefore, we invest a lot of time and resources to analyze the market and our target audiences even before launching our first games. We wanted to deeply and thoroughly understand the market for instant games, get familiar with the players and the competitors in the games-of-chance space. Our goal is to offer exactly the products the market wants and needs, and in the quality the players have come to expect from ZEAL. For us, well thought-out category management and regular data collection were a real game changer for the positioning of our instant games. It helps us on a daily basis to make more informed decisions about which games to promote, retire, or update, leading to more effective strategies. ZEAL’s approach also drives synergies between lotteries and instant products. For example, by developing ways to use eInstants as conversion tools to optimize cross-selling, lottery activity can be funneled from draw based to instant products and vice-versa. ZEAL Instant Games achieved strong results by resembling the look and feel of local lottery products with instant draw products that offer players the chance to apply their preferred thoughts, feelings, and play-styles across multiple game categories. For instance, players might like to use the same numbers they just played in a draw-game afterwards in an instant game Continued on page 33
RkJQdWJsaXNoZXIy NTg4MTM=