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Chapter 4 The Marketing Environment ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Hospitality and Tourism, 4th edition Kotler, Bowen, and Makens “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 ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Chapter Objectives • List and discuss the importance of the elements of the company’s microenvironment • Describe the macroenvironmental forces that affect the company’s ability to serve its customers • Explain how changes in demographic and economic environments affect marketing and describe the levels of competition ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Chapter Objectives • Identify the major trends in the firm’s natural and technological environments • 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 ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens The Company’s Microenvironment • The Company • Suppliers • Marketing Intermediaries ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens The Company’s Microenvironment ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens The Company • Marketing managers must work with all departments of a company • All Departments have an impact on the marketing department’s plans and actions • “Think Consumer” ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Suppliers • Suppliers are firms and individuals that provide the resources needed by the company to produce its goods and services • Suppliers can seriously affect marketing plans ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Marketing Intermediaries • Marketing intermediaries help the company promote, sell, and distribute its goods to the final buyers • Marketing service agencies help formulate and implement marketing strategies • Financial intermediaries help hospitality companies finance their transactions ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens The Company’s Macroenvironment (Adapted from Analysis for Market Planning, Donald R. Lehmann and Russell S. Winer, p. 22, 1994 by Richard D. Irwin.) ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Competitors • To be successful, a company must satisfy needs and wants of consumers better than competitors • A company should monitor three variables when analyzing each of its competitors – Share of Market – Share of Mind – Share of Heart ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Demographic Environment • Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics • Demographics change over time and companies must keep up with them ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Demographic Environment • Baby boomers – 77 Million post-World War II babies born between 1946-1964 • Generation X – 45 million born between 1965-1976, the “birth dearth” • Generation Y (echo boomers) – 72 million born between 1977-1994 ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Economic Environment • The economic environment consists of factors that affect consumer purchasing power and spending patterns • It is not enough to have people, the people must have buying power ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens The Global Economy Global economic dealings, such as currency exchange rates, have a large impact on travel and tourism across the world ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Natural Environment • The natural environment consists of natural resources required by marketers or affected by marketing activities • Anyone involved in tourism is responsible for protecting the environment and ensuring sustainability ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Technological Environment • The hospitality industry is greatly affected by changes in technology – The Internet, computerized systems, key cards, etc. • Faces opposition by those who believe it threatens privacy, simplicity, and even the human race • The most dramatic force affecting tourism ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Political Environment The political environment is made up of laws, government agencies, and pressure groups that influence and limit the activities of various organizations and individuals in society ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Political Trends • Increased legislation and regulation affecting business • Changing government Agency Enforcement • Increased emphasis on socially responsible actions and ethics e.g. MADD and PETA ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Cultural Environment • The cultural environment includes institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors – Persistence of cultural values – Subcultures ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Linked Environmental Factors • Environmental factors can also work together to bring about change – Americans now eat more meals prepared outside than inside the home – Low-carb diets – Grocery stores competing with restaurants ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Responding to the Marketing Environment • Many companies feel the marketing environment is uncontrollable • An environmental management perspective takes action to sway the marketing environment • Take a proactive rather than a reactive approach ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Environmental Scanning 1. Determine environmental areas that require monitoring 2. Determine how the information will be collected 3. Implement data collection plan 4. Analyze data and use in market planning process ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Using Marketing Information • Simple data collection is not sufficient • Information must be: – Reliable – Timely – Used in decision making ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Best Practices • 59 million Americans (28% of the population) restricting carbohydrate intake • Chipotle served burritos in bowls • Atkins friendly wraps by Subway • Is Low-carb dieting a passing fad? ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Key Terms • Demography • Echo boomers (baby boomlet generation) • Economic environment • Environmental management perspective ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Key Terms • Financial intermediaries • Generation X • Macroenvironment • Marketing environment ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens Key Terms • Marketing intermediaries • Marketing services agencies • Microenvironment • Political environment • Suppliers ©2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism,and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens