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Chapter 4
- 2. Learning Objectives 1. List and discuss the importance of the elements of the company’s microenvironment, including the company, suppliers, marketing intermediaries, customers, and public. 2. Describe the macroenvironmental forces that affect the company’s ability to serve its customers. 3. Explain how changes in the demographic and economic environments affect marketing, and describe the levels of competition.
- 3. Learning Objectives 4. Identify the major trends in the firm’s natural and technological environments. 5. Explain the key changes that occur in the political and cultural environments. 6. Discuss how companies can be proactive rather than reactive when responding to environmental trends.
- 4. 4 Environments • Internal: various departments • Micro: the company (internal), suppliers, marketing intermediaries, customers • Macro: competitive, demographic, economic, natural, technological, political, and cultural
- 6. 6 Levels of Competition (Adapted from Analysis for Market Planning), Donald R. Lehmann and Russell S. Winer, p.22, ©1994 by Richard D. Irwin
- 7. 7 Identifying Competitors (competitive environment) Who are your competitors at the micro level? Monitor three variables Share of Market Share of Mind Share of Heart
- 8. 8 The Company’s Macroenvironment (Adapted from Analysis for Market Planning, Donald R. Lehmann and Russell S. Winer, p. 22, 1994 by Richard D. Irwin.)
- 9. Demographic Environment Age Structure Diversity Family Structure Geographic Shifts Education What else? 9
- 10. 10 Age Distribution of the U.S. Population-Demographic Environment (78 million people born 1946-1964) One of the most powerful forces shaping the marketing environment, 30% of population (45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy success (72 million people born 1977-1994) Fluent and comfortable with computer, digital, and Internet technology (Net-Gens)
- 11. 11 Global Economic Development Global Economic Development Changes in IncomeChanges in Income Changing Consumer Spending Patterns Changing Consumer Spending Patterns Key Economic Concerns for Marketers Key Economic Concerns for Marketers Economic Environment
- 12. 12 Natural EnvironmentNatural Environment Growing shortage of resources/raw materials Growing shortage of resources/raw materials Increased pollution (recycle/reduce waste, ecotourism) Increased pollution (recycle/reduce waste, ecotourism) Increased government intervention Increased government intervention Factors Affecting the Natural Environment Factors Affecting the Natural Environment
- 13. 13 Technological Environment The most dramatic force affecting tourism and hospitality Robots and machines Computerized video checkout services Electronic guest room locking systems The development of the Internet
- 14. 14 Increasing Legislation Increasing Legislation Changing Government Agency Enforcement Changing Government Agency Enforcement Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society Increased Emphasis on Ethics & Socially Responsible Actions Increased Emphasis on Ethics & Socially Responsible Actions Political Environment
- 15. 15 Cultural Environment Cultural Values impact marketing give some examples of how globalization has had a cultural impact on chain restaurants (feng shui) Subcultures the U.S. is becoming more heterogeneous as can be seen in the growth of the Hispanic and Asian populations Teenagers, working women, etc.
- 16. Overlapping environments Most environments do not operate independently from other environments Example: What environments affect your ability to eat out? Go to a theme park? Fly? Stay somewhere over night? Travel abroad? In what ways do they affect you? Be specific.
- 17. Environmental Scanning Analyze Data and Use in Planning Process Analyze Data and Use in Planning Process Implement Data Collection Plan Implement Data Collection Plan Determine How Information will be Collected Determine How Information will be Collected Determine Environment al Areas to be Monitored Determine Environment al Areas to be Monitored
- 18. 18 How will you get information for your environmental scan? Simple data collection is not sufficient Get reliable, timely, useful information What kind of information is available on the Internet? Ex. AHLA, NRA, TTRA, TIA, UNWTO websites Collect and analyze your own data
- 19. Conclusion and Advice Always be aware of all environments and how they overlap Be involved in community to help drive decisions Analyze how environments are affecting your company and your competition Keep evolving 19
- 20. Review 1. Microenvironment 2. Macroenvironmental forces 3. Demographic, economic environments, and competition 4. Natural and technological environments 5. Political and cultural environments. 6. Be proactive rather than reactive when responding to environmental trends.
Editor's Notes
- The success of marketing plans requires working closely with the company’s microenvironment The Company Marketing decisions must be made within the strategies and plans made by top management Existing Competitors Existing customers are part of the microenvironment because we can identify and observe them closely Companies must gain strategic advantage by strongly positioning their product in the minds of consumers (See Slides 5-6) Suppliers Suppliers are firms and individuals that provide the resources needed by the company to produce its goods and services Marketing Intermediaries Marketing intermediaries help the company promote, sell, and distribute its goods to the final buyers (See Slide 7) Customers Consumer markets consist of individuals and households that purchase hospitality services for leisure activities, medical needs, and gatherings such as reunions, weddings, or funerals. Business markets buy hospitality services to facilitate their business. Publics Public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives (Financial public: banks and investment houses, media publics: newspapers, magazines) also include government public, local public and
- Every company faces four levels of competitors: A company can view its competitors as other companies that offer similar products and services to the same customers at a similar price A company can see its competitors as all companies making the same product or class of products A company can see its competitors more broadly as all companies supplying the same service A company can see its competition even more broadly as all companies that compete for the same consumer dollars
- In general a company should monitor three variables when analyzing each of its competitors: 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.”
- The demographic environment is of major interest to marketers because it involves people, and people make up markets the most important demographic trends in the United States Changing Age Structure of the Population Increasing Diversity The United States seems to have become more of a “salad bowl” in which various groups have mixed together but have maintained their diversity by retaining and valuing important ethnic and cultural differences The Changing American Family In the United States today, married couples with children make up only 22 percent of the nation’s 117 million households, married couples without children make up 29 percent, and single parents comprise another 11 percent A full 38 percent are nonfamily households— single live-alones or adult live-togethers of one or both sexes Geographic Shifts in Population Americans, for example, are a mobile people, with about 15 percent of all U.S. residents moving each year Over the past two decades, the U.S. population has shifted toward the Sunbelt states The West and South have grown, whereas the Midwest and Northeast have lost population A Better Educated, More White-Collar, More Professional Population The U.S. population is becoming better educated 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
- Other demographics are what? The single most important demographic trend in the United States is the changing age structure of the population (See Slide 11) The Baby Boomers: Post World War II, 78 million baby boomers, born between 1946 and 1964, Most powerful forces shaping the marketing environment. Today’s baby boomers account for nearly 25 percent of the population, spend about $2 trillion annually, and hold three quarters of the nation’s financial assets. Generation X: another generation of 45 million people born between 1965 and 1976, Having grown up during times of recession and corporate downsizing, they developed a more cautious economic outlook. They care about the environment and respond favorably to socially responsible companies Millennials: Born between 1977 and 2000, these children of the baby boomers number 83 million, dwarfing the Gen Xers and larger even than the baby boomer segment With total purchasing power of more than $733 billion, Gen Y represents a huge and attractive market. One thing all of the Millennials have in common is their utter fluency and comfort with computer, digital, and Internet technology
- 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 Includes economics that effect hospitality including: recession Inflation employment levels personal discretionary income foreign exchange rates Global economic dealings, such as currency exchange rates, have a large impact on travel and tourism across the world
- Includes issues related to our natural environment Ecotourism Disposal Recycling Pollution Anyone involved in tourism is responsible for protecting the environment and ensuring sustainability
- The hospitality industry is greatly affected by changes in technology The Internet, computerized systems, key cards, etc. The most dramatic force affecting tourism Consideration of technology impact from both a consumer and business perspective Potentially a source of competitive advantage Instrumental in hospitality and tourism Have potential to increase customer satisfaction Interactive Customer Experience (ICE) that can be accessed from a number of web-enabled platforms, including SmartPhones and Tablets. Guest services from the hotel such as room service, valet parking, dining room reservations, and spa services can be accessed from the tablet. The leading supplier of video checkout services is Spectradyne Inc. of Dallas, which has installations in 133 hotels. Guests review their charges on the television screen and press a one-digit approval button on the television key pad on top of the set. A front-desk printer produces a copy of the bill, which the guest can either pick up or have mailed.
- The cultural environment includes institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors Persistence of cultural values Subcultures cultural values, consumerism
- Many companies view the marketing environment as an “uncontrollable” element to which they must adapt Other companies take an environmental management perspective Rather than simply watching and reacting, these firms take aggressive action to affect the publics and forces in their marketing environment Smart marketing managers take a proactive rather than a reactive approach to the publics and forces in their marketing environment. Environmental Scanning Determine the environmental areas that need to be monitored Determine how the information will be collected, including information sources, the information frequency, and who will be responsible Implement the data collection plan Analyze the data and use them in the market planning process