Transcript luxury hotel in Croatia

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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
The Marketing Environment
Foreword:
“It is useless to tell a river to stop running;
the best thing is to learn how to swim in
the direction it is flowing.”
-Anonymous
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
OBJECTIVES
After reading this chapter, you should be able to:
• List and discuss the importance of the elements
of the company’s microenvironment, including
the company, suppliers, marketing
intermediaries, customers, and public.
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• Describe the macroenvironmental forces that
affect the company’s ability to serve its
customers.
• Explain how changes in the demographic and
economic environments affect marketing, and
describe the levels of competition.
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By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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OBJECTIVES
After reading this chapter, you should be able to:
• Identify the major trends in the firm’s natural
and technological environments.
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• Explain the key changes that occur in the
political and cultural environments.
• Discuss how companies can be proactive
rather than reactive when responding to
environmental trends.
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The Marketing Environment
McDonald’s
• In 1955, Ray Kroc, a 52-year-old salesman of
milkshake-mixing machines, discovered a string of
restaurants owned by Richard & Maurice McDonald.
• Kroc saw fast-food concept as perfect for America’s
on-the-go, time-squeezed, family-oriented lifestyles.
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– he bought the small chain for $2.7 million, & McDonald’s
grew to become the world’s largest fast-feeder
• More than 31,000 McDonald’s restaurants worldwide
now serve 52 million customers each day, racking up
systemwide sales of almost $60 billion annually.
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The Marketing Environment
McDonald’s
• The Golden Arches are one of the world’s most
familiar symbols.
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– other than Santa Claus, no character in the world
is more recognizable than Ronald McDonald
• Industry analysts say…
– “the Golden Arches did for greasy spoons what Holiday
Inn did for roadside motels in the 1950s and what Sam
Walton later did for the discount retail store.”
– “McDonald’s is much more than an ordinary fast-food
chain. It is a cultural mirror [that] reflects the evolution
of American eating habits.”- “middle class families”
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The Marketing Environment
McDonald’s
• While a changing marketplace provided opportunities
for McDonald’s, it also presented challenges.
• The company has struggled to address shifting
consumer lifestyles and its market share fell more
than 3% between 1997 and 2003.
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– in 2002 the company posted its first-ever quarterly loss
• What happened? In this age of obesity lawsuits and
$5 lattes, McDonald’s seemed a bit out of step with
the times.
– consumers were looking for fresher, better tasting
food and more upscale atmospheres
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The Marketing Environment
McDonald’s
• McDonald’s was losing share to what the industry
calls “fast-casual” restaurants.
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– Panera Bread, Baja Fresh & Cosi were offering more
imaginative meals in more fashionable surroundings
– even the local supermarket offered a full selection of
prepared, ready-to-serve gourmet meals to go
• Americans were seeking healthier eating options.
– fast-food patrons complained about too few healthy menu
choices, and many were eating less at fast-food restaurant
• As the market leader, McDonald’s bore the brunt of
much of this criticism.
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The Marketing Environment
McDonald’s – Back to Basics
• Reacting, in early 2003 McDonald’s announced a
turnaround plan—the “Plan to Win”—to better align
the company with the new marketplace realities.
• McDonald’s began refocusing on what made it
successful: consistent products and reliable service.
• To compete with the new fast-casual competitors &
expand its customer base, McDonald’s experimented
with new restaurant concepts such as McCafé coffee
shops now open in 34 countries.
– kids can still get their Happy Meals, but parents can feast
on more sophisticated fare
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The Marketing Environment
McDonald’s – Back to Basics
• McDonald’s knows that as a marketing environment
changes, the company must change with it.
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– says McDonald’s CEO James Skinner. “We’re always
evolving to meet the changing needs of our customers.”
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The Marketing Environment
Introduction
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• A company’s marketing environment consists of the
actors & forces outside marketing that affect ability
to build and maintain successful relationships with
its target customers.
– offering both opportunities and threats
• Successful companies know the importance of
watching & adapting to a changing environment.
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The Marketing Environment
Introduction
• Managers who practice marketing will be the trend
trackers and opportunity seekers.
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– also spending time in customer & competitor environments
• Good marketers have disciplined methods for
collecting marketing environment information.
- marketing intelligence & marketing research
• The marketing environment is made up of a
microenvironment and a macroenvironment.
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The Marketing Environment
Introduction
• The microenvironment consists of factors close
to the company that affect its ability to serve its
customers.
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– the company itself, marketing channel firms, customer
markets & a broad range of publics
• The macroenvironment consists of the larger societal
forces that affect the entire microenvironment.
– demographic, economic, natural, technological, political,
competitor, and cultural forces
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The Marketing Environment
The Company’s Microenvironment
• Marketing management’s job is to build relationships
by creating customer value & satisfaction.
• The success of marketing plans requires working
closely with the company’s microenvironment.
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Figure 4-1
Major actors in
the company’s
microenvironment.
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The Company’s Microenvironment
The Company
• Marketing managers must work closely with top
management and the various company departments.
• The finance department is concerned with finding &
using funds required to carry out the marketing plan.
• Accounting has to measure revenues & costs to help
marketing know how well it is achieving objectives.
• Housekeeping is responsible for delivering clean
rooms sold by the sales department.
• Top management sets the company mission, broad
strategies, objectives, and policies.
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The Company’s Microenvironment
The Company
• Marketing decisions must be made within the
strategies and plans made by top management.
• Under the marketing concept, all managers,
supervisors, and employees should work in harmony
to provide superior customer value and satisfaction.
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– all departments impact marketing plans & actions
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The Company’s Microenvironment
Existing Competitors
• The marketing concept holds a successful company
must satisfy the needs and wants of consumers better
than its competitors.
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– every company faces a broad range of existing competitors
• Marketers must adapt to the needs of their target
customers, and also to the strategies of other
companies serving the same target markets.
• Companies must gain strategic advantage by
strongly positioning their product in the minds
of consumers.
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The Company’s Microenvironment
Existing Competitors
• No single competitive marketing strategy is best for
all companies.
• Each firm must consider its size & industry position
in relation to that of its competitors.
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– large firms with dominant positions can use strategies
smaller firms cannot afford
– small firms can also choose strategies that give them
certain advantages
• Both large and small firms must find marketing
strategies that give them specific advantages over
competitors operating in their markets.
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The Company’s Microenvironment
Existing Competitors - Variables
• A company should monitor three variables when
analyzing each of its competitors:
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– share of market: The competitor’s share of the target
market.
– share of mind: The percentage of customers who named
the competitor in responding to the statement, “Name the
first company that comes to mind in this industry.”
– share of heart: The percentage of customers who named
the competitor in responding to the statement, “Name the
company from whom you would prefer to buy the product.”
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The Company’s Microenvironment
Existing Competitors - Identifying
• Managers often fail to identify their competitors
correctly.
• Research has shown only about 40% of customers
that rate a hotel or restaurant as being good return.
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– jumping to 90% when customers give a rating of excellent
• Competitive forces are so strong in our industry that
being good is no longer good enough.
– we must strive for excellence
• It is important for managers to understand how many
of their customers might be at risk if a competitor
opens in their market area.
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The Company’s Microenvironment
Existing Competitors - Four Levels
• Every company faces four levels of competitors.
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• A company can view its competitors as other
companies offering similar products & services
to the same customers at a similar price.
– McDonald’s views its competition at this level as
Burger King, Wendy’s & Hardee’s
• As all companies making the same product or
class of products.
– McDonald’s may competition as all fast-food
restaurants
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The Company’s Microenvironment
Existing Competitors - Four Levels
• A company can see its competitors more broadly as
all companies supplying the same service.
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– here McDonald’s would see itself competing with all
restaurants and other suppliers of prepared food, such
as the deli section of a supermarket
• A company can see its competition even more
broadly as all companies that compete for the
same consumer dollars.
– McDonald’s would see itself competing with the
self-provision of the meal by the consumer
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The Company’s Microenvironment
Existing Competitors - Four Levels
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Figure 4-2 Levels of competition.
Adapted from Analysis for
Market Planning, Donald R.
Lehmann and Russell S.
Winer, p. 22, © 1994 by
Richard D. Irwin.
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The Company’s Microenvironment
Suppliers
• Suppliers are firms & individuals providing resources
needed by the company to produce goods & services.
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– trends & developments affecting suppliers can seriously
affect a company’s marketing plan
– requiring tracking changes in supply availability & costs
• Outsourcing food & beverage operations allows the
hotel to concentrate on lodging.
• Some hotels have contracted with restaurant
companies to supply their food &beverage services
– bringing branded restaurants to their hotels creates value
for their guests and exposes restaurant guests to the hotel
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The Company’s Microenvironment
Suppliers - Outsourcing Problems
• Like any supplier, suppliers of food and beverage
for a hotel have to be chosen carefully.
• When guests complain about poor food service at
the front desk, saying the hotel does not operate the
restaurants is not an acceptable answer.
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– service recovery programs need to be worked out
between the restaurant and the hotel
• Leasing of food-service operations ties up hotel
space through lease agreements.
– this can be a problem if the hotel decides to renovate
and change the design of the public spaces
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The Company’s Microenvironment
Marketing Intermediaries – Wholesaler
• Marketing intermediaries help the company promote,
sell, and distribute its goods to the final buyers.
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– Hospitality intermediaries include travel agents, wholesale
tour operators, and hotel representatives
• A wholesaler creates packages including air fare,
ground transportation, and hotel accommodations.
– promoted through newspaper advertising & travel agents
• Reduced prices through volume purchasing enables
the wholesaler to pay the travel agent a commission
for selling the product, give the customer a good
price, and produce a profit.
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The Company’s Microenvironment
Marketing Intermediaries - The Internet
• The Internet has created both disintermediation and
pricing transparency.
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– disintermediation is the elimination of intermediaries
• Hotels have created their own Internet reservations
systems, making them less dependent on travel
agents and other intermediaries.
• Perishability of hotel rooms means that most hotels
still need help from intermediaries.
– including corporate travel departments, meeting planners,
incentive houses, and other distribution channels
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The Company’s Microenvironment
Marketing Intermediaries - The Internet
• When hotels do sell to intermediaries who use the
Internet, they have to consider price transparency.
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– if a group is given a rate of $229 per night & members can
book on the hotel Web site for $209, they may book online
• The Internet as a booking engine has created many
opportunities, but it has also made interactions with
intermediaries more complex.
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The Company’s Microenvironment
Marketing Intermediaries – The Agencies
• Marketing services agencies are suppliers that help
formulate & implement marketing strategy & tactics.
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– these include public relations agencies, advertising
agencies, and direct mail houses
• They work directly with the company’s marketing
program and also include marketing research, media,
and marketing consulting firms.
• These firms can vary in creativity, quality, service &
price, and the company should regularly review their
performance & replace those no longer performing
well.
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The Company’s Microenvironment
Intermediaries – Financial Agencies
• Financial intermediaries are banks, insurance and
credit companies, and firms that help hospitality
companies finance transactions or insure risks.
• Rising credit costs, limited credit, or both seriously
affect a company’s marketing performance
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– rising insurance costs have forced some hospitality
firms out of business
• The company has to develop strong relationships
with important financial institutions.
• Companies must be careful to avoid unmanageable
growth expectations of their financial intermediaries.
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The Company’s Microenvironment
Intermediaries
• Today’s marketers recognize the importance of
working with intermediaries as partners rather than
simply as channels through which they sell products.
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The Company’s Microenvironment
Customers
• The hospitality company needs to study five types of
general customer markets closely.
• Consumer markets are individuals & households that
purchase hospitality services for leisure, medical
needs & gatherings like reunions and weddings.
• Business markets buy hospitality services to facilitate
their business.
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– individual rooms for travelers representing the company
– group meetings the company or organization may conduct
or produce
• Each market type has special characteristics.
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The Company’s Microenvironment
Publics - Seven Types
• A public is any group that has an actual or potential
interest in or impact on an organization’s ability to
achieve its objectives. We identify seven types:
– Financial publics influence the company’s ability to
obtain funds. Banks, investment houses, and stockholders
are the major financial publics.
– Media publics carry news, features, and editorial opinions.
They include newspapers, magazines, and radio & TV.
– Government publics. Management must take government
developments into account. Marketers must often consult
the company’s lawyers on issues of product safety, truth in
advertising, and other matters.
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The Company’s Microenvironment
Publics - Seven Types
– Citizen-action publics. A company’s marketing
decisions may be questioned by minority groups,
consumer organizations, environmental groups, and
others. Its public relations department can help it stay
in touch with consumer and citizen groups.
– Local publics are neighborhood residents &
community organizations. Many companies appoint a
community relations officer to deal with the
community, attend meetings, answer questions & help
worthwhile causes.
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The Company’s Microenvironment
Publics - Seven Types
– General public. A company needs to be concerned
about the general public’s attitude to its products &
activities. The public’s image of the company affects its
buying.
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– Internal publics include workers, managers, volunteers,
and the board of directors. Large companies use
newsletters and other means to inform and motivate
their internal publics.
• A company can prepare marketing plans for these
major publics as well as for its customer markets.
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The Company’s Macroenvironment
Introduction
• The company and all of the other actors operate in a
larger macroenvironment of forces that shape
opportunities and pose threats to the company.
Figure 4-3 Major forces in the company’s macroenvironment.
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Macroenvironment - Future Competitors
Barriers to Entry, Exit and Competition
• The entrance of future competitors is difficult to
predict & can have a major effect on a business.
• Two forces that affect the competition are the ability
of companies to enter and exit markets.
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– entry barriers prevent firms from getting into a business
– barriers to exit prevent them from leaving
• It takes a relatively small amount of capital to get
started in the restaurant business. (a low barrier)
– this makes it hard to predict future competition as a large
pool of organizations & individuals can open restaurants
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Macroenvironment - Future Competitors
Barriers to Entry, Exit and Competition
• Some restaurant managers open without direct
competition & find themselves with four or five
competitors in a year’s time.
• Restaurant managers should always manage as if
there is strong competition even if there is none.
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– the manager will be prepared when competition arrives
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Macroenvironment - Future Competitors
Barriers to Entry, Exit and Competition
• Hotels have moderately high barriers of entry, due to
costs of building a hotel & scarcity of good locations.
• High barriers to exit from the industry present a
different set of competitive problems.
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– the large capital investment required to build a hotel
becomes a sunk cost
• Hotels that cannot meet their debt payments, taxes,
and other fixed costs, but can produce enough gross
profit to partially offset these fixed costs, may
operate at a loss rather than close their doors.
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Macroenvironment - Demographic Environment
Introduction
• Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics.
• The demographic environment is of major interest
to marketers because it involves people, and people
make up markets
• Changes in the world demographic environment
have major implications for business
• The most important demographic trend in the United
States is the changing age structure of the population.
– the US population contains several generational groups
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Macroenvironment - Demographic Environment
The Baby Boomers
• The post–World War II baby boom produced 78
million baby boomers, born between 1946 and 1964.
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– a powerful force shaping the marketing environment
• Baby boomers account for nearly 30 percent of the
population, spend about $2.3 trillion annually, and
hold three quarters of the nation’s financial assets.
– the youngest are in their forties; the oldest in their sixties
• The maturing boomers are rethinking the purpose &
value of work, responsibilities, and relationships.
☞ DINKs: Dual Income, No Kids
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Macroenvironment - Demographic Environment
The Baby Boomers
• As they reach peak earning and spending years, the
boomers are a lucrative market for eating out, travel
and entertainment, spas & other leisure activities.
• Many boomers are rediscovering the excitement of
life and have the means to play it out.
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– it would be a mistake to think of them as aging & staid
• According to the Travel Industry Association of
America, half of all U.S. adults took adventure
vacations within the past five years. – look for value
– some 56% of these travelers were boomers
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Macroenvironment - Demographic Environment
Generation X
• The baby boom was followed by a “birth dearth,”
creating another generation of 49 million people
born between 1965 and 1976.
• Author Douglas Coupland calls them Generation X
because they lie in the shadow of the boomers and
lack obvious distinguishing characteristics.
• Generation Xers are defined as much by their shared
experiences as by their age.
– having grown up during times of recession and corporate
downsizing, they developed a more cautious economic
outlook
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Macroenvironment - Demographic Environment
Generation X
• Gen Xers care about the environment and respond
favorably to socially responsible companies.
• While they seek success, they are less materialistic
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– they prize experience, not acquisition
– for many of the 30 million Gen X parents, family comes
first, career second
• Gen Xers are more skeptical.
– says one marketer, “Marketing to Gen Xers is difficult,
…they have a lot of ‘filters’ in place.”
– another agrees: “Sixty-three percent of this group will
research products before they consider a purchase.”
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Macroenvironment - Demographic Environment
Generation X
• The Gen Xers have brought us the quality movement
and enjoy menus combining familiar with unique.
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– Starbucks, Chipotle & Panera Bread are Gen X favorites
• Gen Xers look for something different in vacations,
which means they spend more than boomers.
– they have set a higher bar for casual dining, business travel,
and midpriced hotels
• Gen Xers are now evolving from their grungy
twentieth-century adolescence and rapidly becoming
the major market segment for business travel.
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Macroenvironment - Demographic Environment
Generation X
• Xers are notoriously uncomfortable with generic
global brands and demand alternative brands to
those patronized by their parents, the baby boomers.
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– they prefer to seek out local specialties & experiences
• Whereas their parents might prefer hotels with
identical bathrooms from Amsterdam to Zurich,
Xers like to celebrate local differences.
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Macroenvironment - Demographic Environment
Millennials - Y(echo boomers)
• Both the baby boomers and Gen Xers will one day
be passing the reins to the Millennials.
II
– also called Generation Y or the echo boomers
• Born between 1977 and 2000, these children of the
baby boomers number 83 million, dwarfing the Xers
and larger even than the baby boomer segment.
• This group includes several age cohorts:
– tweens (ages 8 to 12),
– teens (13 to 18)
– young adults (the twenty somethings)
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Macroenvironment - Demographic Environment
Millennials - Y(echo boomers)
• Younger Millennials are just beginning to wield their
buying power, while older ones have graduated from
college and moving up in their careers.
II
– significantly expanding both their earning & spending
• Gen Y represents only 9 percent of business travelers
now, but this percentage is rising quickly.
• One thing all of the Millennials have in common
is their utter fluency and comfort with computer,
digital, and Internet technology.
• Each Millennial segment constitutes a huge and
attractive market.
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Macroenvironment - Demographic Environment
Generational Marketing
• One way marketers can segment is by forming
precise age-specific segments within each group.
• Defining people by their birth date may be less
effective than segmenting them by their lifestyle,
life stage, or the common values they seek in the
products they buy.
II
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Macroenvironment - Demographic Environment
Increasing Diversity
• Countries vary in their ethnic and racial makeup.
– at one extreme is Japan, where almost everyone is
Japanese, at the other, the United States, with people
from virtually all nations
II
• Marketers face increasingly diverse markets as
operations become international in scope.
• Diversity goes beyond ethnic heritage.
– there are more than 54 million disabled people in the
United States—a market larger than African Americans
or Hispanics— representing almost $1 trillion in annual
spending power
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Macroenvironment - Demographic Environment
The Changing American Family
• The “traditional household” consists of a husband,
wife, and children (and sometimes grandparents).
II
– the once American ideal of the two-child, two-car
suburban family has lately lost some of its luster
• In the US today, married couples with children make
up only 23% of the nation’s 114 million households.
– married couples without children 29% percent
– single parents comprise another 16%
• A full 32% are nonfamily households— single livealones or adult live-togethers of one or both sexes.
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Macroenvironment - Demographic Environment
The Changing American Family
• Marketers must increasingly consider the special
needs of nontraditional households.
II
– now growing more rapidly than traditional households
• People in their thirties marrying for the first time
have gotten used to going out to eat frequently.
– when they have children they continue to dine out, taking
their children with them
• Those in households without children do not have
the expense of children.
– and more discretionary income for dining and travel
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Macroenvironment - Demographic Environment
The Changing American Family
• The number of working women has increased greatly,
growing from under 40% of the US workforce in the
late 1950s to 59% today.
• Both husband & wife work in 57% of marriedcouple families, spawning the need for takeout food.
II
– prepared by someone else, eaten at the home dining table
• Grocery stores, preparing heat-and-serve entrees and
side dishes, are now seeking graduates of culinary &
hospitality programs as this business grows.
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Macroenvironment - Demographic Environment
Geographic Shifts in Population
• Over the past two decades, the U.S. population has
shifted toward the Sunbelt states.
II
– the West and South have grown, where the Midwest
and Northeast have lost population
• As companies look for new locations, they need to
understand both national and local geographic trends
relating to shifting populations.
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Macroenvironment - Demographic Environment
Better Educated, More White Collar, More Professional
• The U.S. population is becoming better educated.
– in 2004, 86% of the US population over 25 had
completed high school & 28% had completed college
– compared with 69% and 17% in 1980
II
• Nearly two thirds of high school graduates now
enroll in college within twelve months of graduating.
• The rising number of educated people will increase
the demand for quality products including luxury
hotels, travel, wine, and dining at restaurants that
have interesting menus.
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Macroenvironment - Economic Environment
Introduction
• The economic environment includes factors affecting
consumer purchasing power & spending patterns.
• Some countries have subsistence economies.
II
– they consume most of their own agricultural & industrial
output and offer few market opportunities
• Industrial economies constitute rich markets for
many different kinds of goods.
• Marketers must pay close attention to major trends
and consumer spending patterns both across and
within their world markets.
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Macroenvironment - Economic Environment
Changes in Income
• In the 90s, Americans fell into a consumption frenzy,
fueled by income growth, a stock market boom, rapid
increase in housing values & other economic factors.
II
– they bought & bought, seemingly without caution,
amassing record levels of debt
• The free spending and high expectations of those
days were dashed by the recession of the early 2000s.
• The 2008 housing market collapse eliminated the
opportunity for many to borrow home equity.
• This was combined with an increase in gasoline
prices that created financial pressures for consumers.
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Macroenvironment - Economic Environment
The Global Economy
• Today the travel industry operates in a global
environment:
II
– the growth of tourism in Croatia comes at the expense
of other destinations
– when the exchange rate between the Euro and the $US
favors the Euro, fewer Americans go to Europe
– an outcome of currency devaluations in Argentina
is a net gain as a convention & meeting destination
– marketers responsible for destinations must be aware of
travel trends & development of new tourist destinations
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Macroenvironment - Natural Environment
Introduction
• The natural environment involves natural resources
needed as inputs by marketers or that are affected by
marketing activities.
II
– environmental concerns have grown in the past 3 decades
• Marketers should be aware of several trends in the
natural environment.
– the first involves growing shortages of raw materials
– a second environmental trend is increased pollution, as
industry almost always damages the natural environment
• Hospitality companies must be good corporate
citizens and embrace corporate responsibility.
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Macroenvironment - Natural Environment
Sustainability
• The natural environment consists of many amenities
that attract tourists, such as forests, clean beaches,
pristine streams, wildlife, and clean air.
• Anyone involved in tourism has an obligation to
protect the environment and develop sustainable
tourism.
• The concern for sustainability is increasing and has
led to publications such as greenlodgingnews.com
II
– and organizations such as Green Restaurant Association
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Macroenvironment - Natural Environment
Government Intervention
• A third trend is increased government intervention in
natural resource management.
II
– governments of different countries vary in their concern
and efforts to promote a clean environment
Many tourist locations are dependent on
the natural environment. Some scientists
predict some of the Maldive Islands will
be under water at the end of the century,
a victim of global warming. Courtesy of
Fraser Hall/Robert Harding World Imagery.
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Macroenvironment - Technological Environment
Description
• The most dramatic force shaping our destiny is
technology
II
– which has given us wireless Internet, the ability to send
documents around the globe electronically & inexpensive
worldwide transportation
– it has also released horrors as nuclear missiles and
products with mixed blessings, such as TV & the car
• Products taken for granted today were uncommon
or simply did not exist thirty years ago.
– cell phones, copiers, fast-food chains, personal computers,
jet airplanes, all-suite hotels, and DVD players
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Macroenvironment - Technological Environment
Technological Effects
• Technology has affected hospitality in many ways:
– computerized video checkout
services are common in hotels
– electronic guest room locking
systems tell housekeepers which
rooms are occupied
– the minibar lock tells which
guests accessed their minibar,
making restocking easier
– fax machines receive orders
at restaurants, and machines
cook food automatically
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e-Tickets allow customers to check
themselves in at the airport. This
saves time for the customer and
labor for the airlines. Courtesy of
David K. Crow/PhotoEdit.
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Macroenvironment - Technological Environment
The Internet
• Technology has also made communication easier.
• The Internet needs to be monitored to see what
others are saying about your business.
• Word-of-mouth is no longer restricted to people we
know but can be spread to large numbers of people
over the Internet.
II
– the web site for this chapter contains a list of several of
the sites used by consumers to spread word-of-mouth
• The Internet has had a profound effect on the
hospitality and travel industries.
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Macroenvironment - Technological Environment
The Internet
• The Internet has created a new distribution channel
for hospitality and travel products.
• Today, over 60% of all travel bookings & over 40 %
of all hotel reservations are generated on the Internet.
II
– expedia.com sells more than 10 million room nights a year
• Smart CVBs provide detailed information on their
destination for potential visitors on the Internet.
• Business-card-size CD-ROMs provide overviews of
a destination with links to the CVB’s web site.
– hotels also use this type of promotion, which is less
expensive than producing a color brochure
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Macroenvironment - Technological Environment
The Internet
• Cindy Estis Green of the Green Group notes the
control of the media content has shifted from brand
marketers to the consumer.
• Hospitality companies are starting to take advantage
of this new medium by putting videos on YouTube.
II
– Marriott International has a site on microblog twitter.com
• Marketers must understand and anticipate changes in
the technological environment and use technologies
that serve human needs.
– they must be sensitive to aspects of any innovation that
might harm users and bring about opposition
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Macroenvironment - Political Environment
Legislation and Regulation Affecting Business
• Marketing decisions are strongly affected by
developments in the political environment.
II
– laws, government agencies, and pressure groups that
influence & limit the activities of various organizations
and individuals in society
• Governmental agencies have become involved in the
investigation and regulation of everything from fire
codes to food-handling practices.
• Politicians also see travelers as good sources of
revenue because nonresidents spend money but
cannot vote against them.
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Macroenvironment - Political Environment
Legislation and Regulation Affecting Business
• Hotel taxes and restaurant taxes have become popular
sources of revenue for local governments.
II
– in many cases hotel taxes are meant to support tourism
• Hotel managers must make sure that those taxes
designated to promote tourism are used effectively.
– and work with hotel & restaurant associations
to make sure the taxes do not become oppressive
• When New York City hiked a hotel tax to over
21.25%, convention business plunged 37% and
overall tax revenue declined despite the increase.
– the real loser was New York City’s hospitality industry
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Macroenvironment - Political Environment
Legislation and Regulation Affecting Business
• Legislation and regulation affecting business have
been enacted for three reasons.
• First, it protects companies from each other.
II
– while most businesses praise competition, they try to
neutralize it when it affects them
• Second, it aims to protect consumers from unfair
business practices.
– unregulated firms might make unsafe or low-quality
products, be untruthful in advertising, or deceive via
packaging & price
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Macroenvironment - Political Environment
Legislation and Regulation Affecting Business
• Third, regulation also aims to protect society’s
interests against unrestrained business behavior.
II
– regulation aims to make firms responsible for
social as well as private costs of their activities
• Business executives must know the major laws
protecting competition, consumers, and society
when planning their products and marketing
programs.
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Macroenvironment - Political Environment
Changing Government Agency Enforcement
• To enforce laws, Congress has established several
federal regulatory agencies, which can have a major
impact on a company’s marketing performance.
• These agencies have some discretion in enforcing
the laws, and at times, appear overly eager.
II
– lawyers & economists, who often lack a practical sense
of marketing & other business principles, frequently
dominate the agencies
• In recent years, the Federal Trade Commission has
added marketing experts to its staff to gain a better
understanding of these complex issues.
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Macroenvironment - Political Environment
Emphasis on Socially Responsible Actions & Ethics
• The number of public-interest groups has increased
during the past two decades, as has their clout in the
political arena.
II
– these groups take on issues of social responsibility
• Cindi Lamb formed what is now known as MADD
(Mothers Against Drunk Driving).
– MADD has had a major impact on the hospitality industry
by demanding restaurants be more responsible in serving
of alcohol
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Macroenvironment - Political Environment
Emphasis on Socially Responsible Actions & Ethics
• One expert who follows People for the Ethical
Treatment of Animals (PETA) states they would like
to see all fast-food outlets that serve meat closed.
II
– better treatment of animals would
be good, but complete elimination
of animals from human diets is
something that the majority of
people would not embrace
One of PETA’s tactics is to picket restaurants and let people
know what the animals go through to become food. They
would like to see everyone become vegetarians and all
restaurants serve only vegetarian meals. Courtesy of PETA.
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II
See this feature on page 102 of your textbook.
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Macroenvironment - Cultural Environment
Persistence of Cultural Values
• The cultural environment includes institutions and
other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
II
– people in any society hold persisting core beliefs & values
• Core beliefs and values are passed on from parents
to children and are reinforced by schools, churches,
business, and government.
• Secondary beliefs and values, however, are more
open to change.
– believing in marriage is a core belief; believing people
should get married early is a secondary belief
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Macroenvironment - Cultural Environment
Persistence of Cultural Values
• Marketers have some chance of changing secondary
values but little chance of changing core values.
• The hospitality industry is worldwide and cultural
norms & prohibitions may affect managerial roles in
ways quite different from in the US and Canada.
II
– hoteliers in Israel are expected to understand & observe
the rules of kashruth, or keeping kosher
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Macroenvironment - Cultural Environment
Subcultures
• Each society contains subcultures, groups of people
with shared value systems based on common life
experiences or situations.
II
– Episcopalians, teenagers, and working women are
all separate subcultures who share common beliefs,
preferences & behaviors
• To the extent that subcultural groups have specific
wants and buying behavior, marketers can choose
subcultures as their target markets.
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Linked Environmental Factors
Description
• When the first Millennials became teenagers, total
expenditures on food in restaurants & food-service
exceeded grocery expenditures for the first time.
II
– in 1996 people in the United States purchased more
meals outside the home than they ate home-prepared
• Families are purchasing meals at restaurants or taking
prepared food home, as many people still prefer to
eat at home, but do not have time to cook
• The number-one trend in the food service industry
today is the growth of food service in supermarkets
and convenience stores.
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Linked Environmental Factors
Patterns
• Culturally, thirty to forty years ago women were
expected to stay home and cook.
II
– no longer the case
• Thus we have seen a cultural change where men now
participate in home duties and no one member of the
household is expected to prepare all meals.
• The change in food consumption patterns relates to
economic, demographic, technological, cultural, and
competitive trends.
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Responding to the Marketing Environment
Introduction
• Many companies view the marketing environment as
an “uncontrollable” element to which they must
adapt.
II
– they passively accept the marketing environment and
do not try to change it
• Other companies take an environmental management
perspective, with aggressive action to affect the
publics and forces in their marketing environment.
• An element of the macroenvironment that can be
influenced is the political environment.
– large companies hire lobbyists to present their interests
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Responding to the Marketing Environment
Description
• Trade associations also hire lobbyists and form
political action committees (PACs) to represent &
communicate their concerns to government.
II
– by communicating the possible effects on industry and
the community, PACs can sometimes influence legislation
• Marketing management cannot always affect
environmental forces; in many cases, it must settle
for simply watching and reacting to the environment.
• Whenever possible, smart marketing managers take a
proactive approach to the publics and forces in their
marketing environment.
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Responding to the Marketing Environment
Environmental Scanning
• Use of an environmental scanning plan has proven
beneficial to many hospitality companies.
II
– determine the environmental areas to be monitored
– determine how the information will be collected, including
information sources, frequency & who will be responsible
– implement the data collection plan
– analyze the data & use them in the market planning
process
• Part of the analysis is weighing importance of trends
to keep them in proper perspective.
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Responding to the Marketing Environment
Environmental Scanning
• One of the most important tasks, especially in a small
business such as a restaurant, is to assign
responsibilities for the collection of data.
II
– bar managers can look for lounge promotions
– dining room managers can study serving and
promotional ideas
– the staff then feeds ideas to the manager
For an example of environmental scanning,
refer to Table 4-1 on page 106 of your textbook.
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Responding to the Marketing Environment
Using the Information
• It is never sufficient simply to collect data about the
environment.
II
– information must be reliable, timely & used in
decision making
• Researchers must put less emphasis on data & more
on the interpretation of those data.
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KEY TERMS
• Baby boomers. The 78 million people born between
1946 -1964.
• Demography. Study of human populations in terms
of size, density, location, age, sex, race & other data.
• Disintermediation. The elimination of
intermediaries.
• Echo boomers. See Millenials. Born between 1977
and1994, these children of the baby boomers now
number 72 million, dwarfing the Gen Xers and
almost equal in sizeto the baby boomer segment.
Also known as Generation Y.
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KEY TERMS
• Economic environment. Factors that affect
consumer purchasing power and spending patterns.
• Environmental management perspective. A
management perspective in which a firm takes
aggressive actions to affect the publics and forces
in its marketing environment rather than simply
watching and reacting to it.
• Financial intermediaries. Banks, credit companies,
insurance companies, and other businesses that help
finance transactions or insure against the risks
associated with the buying and selling of goods.
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KEY TERMS
• Generation X. A generation of 45 million people
born between1965 and 1976; so named because they
lie in the shadow of the boomers and lack obvious
distinguishing characteristics.
• Generation Y. See Millennials.
• Macroenvironment. The larger societal forces that
affect the whole microenvironment: competitive,
demographic,economic, natural, technological,
political, and cultural forces.
II
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KEY TERMS
• Marketing environment. The actors and forces
outside marketing that affect marketing
management’s ability to develop and maintain
successful transactions with its target customers.
• Marketing intermediaries. Firms that help the
company to promote, sell, and distribute its goods to
final buyers.
• Marketing services agencies. Marketing research
firms, advertising agencies, media firms, marketing
consulting firms, and other service providers.
II
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KEY TERMS
• Microenvironment. The forces close to a company
that affect its ability to serve its customers: the
company, market channel firms, customer markets,
competitors, and the public.
• Millennials (also called Generation Y or the echo
boomers). Born between 1977 and 2000, these
children of the babyboomers number 83 million,
dwarfing the Gen Xers and larger even than the baby
boomer segment. This group includes several age
cohorts: tweens (ages 8 to 12), teens(13 to 18), and
young adults (the twentysomethings).
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KEY TERMS
• Political environment. Laws, government agencies,
and pressure groups that influence and limit the
activities of various organizations and individuals
in society.
• Public. Any group that has an actual or potential
interest in or impact on an organization’s ability to
achieve its objectives.
• Suppliers. Firms and individuals that provide the
resources needed by a company and its competitors
to produce goods and services.
II
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EXPERIENTIAL EXERCISES
Try One !
• View the annual reports of several hospitality
companies.
• How did you find out about how they might be
changing their business to fit the environment
from their annual report?
• If you do not have access to an annual report, visit
the book’s Web site for electronic access to annual
reports.
II
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EXPERIENTIAL EXERCISES
Try One !
• Choose and visit a restaurant, club, or hotel you feel
is designed for one of the generations discussed in
the book (e.g., baby boomers, Generation X, echo
boomers).
• After doing some research on the generation, state
what the business you chose has done to cater to
its target generation.
II
4
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• A. On the Internet, find how ecotourism is being
used to attract tourists by different organizations.
• B. From information you can find on the Internet,
when do you think space tourism will be a viable
form of tourism?
II
– what organizations are working to develop
space tourism?
4
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• C. Go to travel or hospitality Web sites and find
examples of how they are taking measures to
sustain and improve the natural environment.
II
– explain which companies that you examined you
think
have the best programs
4
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
END
II
CHAPTER END
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
4
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458