Round Up: Low Price Point Strategies

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Ammie Smith, Director of Product Development, South Carolina Education Lottery

In FY23, we decreased the number of $1 game launches from 17 to 9 while also decreasing quantity. That allowed for 4 to 5 $1 games to be on sale at any given time. Most average retailers in their planograms sell four $1 games now. We will continue that cadence in FY24 while also bringing the $2 games down from 17 to 8 launches. This will also reduce the number of games for sale to have most retailers selling four $2 games to include two staple games: Jumbo Bucks and Hit $100.

Strengthening “Core” Games

Erin León, Product Manager, Northstar New Jersey

As seen across the industry, player spending continues to migrate towards premium price point games. In New Jersey, this trend has led to an increasingly larger number of lower price point games remaining in distribution for an extended period. Over the last few years, we have adjusted print quantities and reduced the number of games launched at the $1 and $2 price points. Since about 2019, we have been maintaining a $1 “core” game in the portfolio that is refreshed on an annual basis. We view the $1 game as a way for players to round out their purchases at vending machines or over the counter. Additionally, we still launch a $1 holiday game that is in demand during the gift-giving season. We remain committed to the $1 game offering and don’t plan to eliminate it anytime in the foreseeable future.

Launch Cadence

Dale Bowersock, Scratch Ticket Strategy Coordinator, Texas Lottery

The demand for higher price points and the limited bins available at retail has forced the Texas Lottery to evaluate the future of the $1 price point. The Texas Lottery acknowledges that the $1 price point must remain available for several reasons. First, it is a key price point for new players who aren’t ready to play higher price points yet, and it’s a popular price point during the holidays for gift giving. Also, the $1 price point is valuable for completing purchases when a $2 or $3 ticket is purchased, especially with self-service vending machines that don’t make change. However, to address the limited bins at retail and the reduced demand for this price point, the Texas Lottery has made the decision to start implementing a change to the launch cadence. Previously a $1 scratch ticket game was introduced every month. In this current fiscal year, the introductions were reduced to only six $1 games. The introductions will continue to reduce until we get to our new level starting in our 2025 fiscal year when we will settle in with four introductions, which will include one $1 holiday ticket and a $1 game to be included in our families, which are launched in January, May, and September each year. We plan to reduce print quantities for these games, so there will be only one $1 game in market at any time.

Research and See

Christopher Rogers, Deputy Director, Marketing and Products, Arizona Lottery

The Arizona Lottery is closely watching the sales of lower price point scratchers. Internally, a cross-functional team has been established that includes members of research, sales, and products. A group of graduate interns from Arizona State University is also examining the $1 sales as part of their Capstone project. While current findings demonstrate there is an opportunity to remove the $1 scratcher and make way for new additional higher price points, independent retailers still value the $1 game. Additionally, we did see renewed interest in the price point in FY23, which may be a factor tied to inflation and limited discretionary spending. We foresee a day when the $1 price point will be obsolete, but at this time we are continuing to monitor the sales data and retailer sentiment.

Downsizing

Gaylene Gray, Instant Product Manager, Washington Lottery

We have reduced our $1 games in the past fiscal year from three to two in market. Our plan right now is to have two $1 games in market and slowly move to one $1. We haven’t decided yet if we will keep the $1 game the same theme and design, or if we will rotate them. I don’t think we will eliminate the $1 games, but five years from now, who knows?

Appeal

Avi Levy Instant Marketing Director, Mifal Hapais (the Israeli National Lottery)

All lotteries want instant tickets to appeal to new players. A customer who comes to a POS to buy other impulse products may spot and want to try an instant ticket for the first time ever–will they do it with a ticket of $5? $10? $20 or is it too risky?  $1 tickets increase the chance of a new player playing an instant tickets for the first time.

Strategic Player Catering

North Carolina Education Lottery’s (NCEL)

The North Carolina Education Lottery’s (NCEL) scratch-off portfolio plan shows how its response to changes in players’ preferences has changed the mix of scratch-off games in market at any time. Higher price point tickets now represent 48% of total scratch-off sales, a dramatic increase from 32% in FY18. Lower price points have seen a corresponding decrease from 44% to 32%.

“We don’t have any immediate plans to phase out the $1 and $2 price points. We do still feel that they play a role in the overall portfolio, although a much less significant role than they did five years ago. While they account for a relatively low percentage of overall sales, our research indicates that a high percentage of our player base is still playing these price points. Our goal is to find the right balance between new game introductions and the number of games merchandised at retail given the new role those price points are playing in the portfolio. We will continue to evaluate the reduction of the number of new games introduced at those price points to try and optimize our space at retail and the variety of games available to our players,” said Randy Spielman, Deputy Executive Director for Product Development and Digital Gaming, NCEL.

As the NCEL looks ahead to FY24, it has outlined several strategic plans to enhance its offerings and better cater to the preferences of its players. One of the key initiatives involves scaling back the number of $2 game launches. This decision is aimed at giving retailers more room to focus on marketing higher-priced games, which are in demand among their clientele. To diversify their portfolio, two new $30 games and the first-ever $50 game are set to be launched, catering to players looking for more thrilling and high-stakes experiences.

“We have gradually reduced the number of lower price point games on sale and displayed while increasing the number of higher price point games. We find that the gradual shift allows for better retail execution since the changes occur more organically as games sell out and come out of the market. The planogram increased $30 facings from two to three, with only two $1 tickets and three $2 tickets. Our strategy is to build a scratch-off portfolio with a wide selection of games that appeal to as many current and potential players as possible. In simple terms, we want the right games on sale at the right time for the right consumers,” said Terri Avery, Deputy Executive Director for Sales, NCEL.

Additionally, the NCEL aims to promote games that are specifically designed to create engaging winner events, fostering a more enjoyable and rewarding experience for players. The NCEL also plans to maintain its successful strategy of leveraging strong game themes through a carefully curated “family” of games launch, ensuring continued excitement and engagement among its player base.

Balancing Price Points

Susan S. Clayton, Director of Products, Louisiana Lottery

Our marketing strategy for $1 and $2 scratch-off games aims to strike a balance between promoting higher price point games and maintaining sales levels for the $1 and $2 categories. While the Lottery has historically focused on moving players to higher price points, it is crucial to sustain sales in the $1 and $2 price points to uphold an optimal overall prize payout percentage.

To achieve this, we maintain a price point positioning approach and emphasize the value proposition of the $1 and $2 games. These categories serve as an entry level for new and lapsed players, attracting a diverse audience. Additionally, we recognize the appeal of niche and holiday-themed games at the $1 and $2 price points, which further engage players.

Our primary objective remains to fulfill our mission of generating maximum revenues for the state. We do not foresee a point where the $1 and $2 games could be eliminated, as they will always be essential to our operations.

Through strategic marketing efforts, we will continue to support and promote $1 and $2 scratch-off games while expanding our offerings to cater to diverse player preferences. We recently introduced the $20 price point, appealing to players seeking a more premium gaming experience. By effectively managing our product mix and appealing to new and existing players, we aim to maximize revenue and maintain a sustainable and successful product portfolio.


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