This document discusses the marketing environment and its impact on hospitality and tourism companies. It covers both the microenvironment including a company's departments, suppliers, and intermediaries as well as the macroenvironment such as demographic, economic, technological, political, and cultural forces. Understanding trends in these environments is important for market planning and strategic decision making. The document emphasizes the need for companies to engage in ongoing environmental scanning to stay aware of changes.

1. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter 4Chapter 4
The MarketingThe Marketing
EnvironmentEnvironment
Dr. John V. PaduaDr. John V. Padua

2. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter ObjectivesChapter Objectives
• List and discuss the importance of theList and discuss the importance of the
elements of the company’s microenvironmentelements of the company’s microenvironment
• Describe the macroenvironmental forces thatDescribe the macroenvironmental forces that
affect the company’s ability to serve itsaffect the company’s ability to serve its
customerscustomers
• Explain how changes in demographic andExplain how changes in demographic and
economic environments affect marketing andeconomic environments affect marketing and
describe the levels of competitiondescribe the levels of competition
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

3. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter ObjectivesChapter Objectives
• Identify the major trends in the firm’s naturalIdentify the major trends in the firm’s natural
and technological environmentsand technological environments
• Explain the key changes that occur in theExplain the key changes that occur in the
political and cultural environmentspolitical and cultural environments
• Discuss how companies can be proactiveDiscuss how companies can be proactive
rather than reactive when responding torather than reactive when responding to
environmental trendsenvironmental trends
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

4. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The Company’s MicroenvironmentThe Company’s Microenvironment
• The CompanyThe Company
• SuppliersSuppliers
• Marketing IntermediariesMarketing Intermediaries
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

5. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The Company’s MicroenvironmentThe Company’s Microenvironment
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

6. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The CompanyThe Company
• Marketing managers must work with allMarketing managers must work with all
departments of a companydepartments of a company
• All Departments have an impact on theAll Departments have an impact on the
marketing department’s plans andmarketing department’s plans and
actionsactions
• ““Think Consumer”Think Consumer”
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

7. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
SuppliersSuppliers
• Suppliers are firms and individuals thatSuppliers are firms and individuals that
provide the resources needed by theprovide the resources needed by the
company to produce its goods andcompany to produce its goods and
servicesservices
• Suppliers can seriously affect marketingSuppliers can seriously affect marketing
plansplans
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

8. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Marketing IntermediariesMarketing Intermediaries
• Marketing intermediaries help theMarketing intermediaries help the
company promote, sell, and distributecompany promote, sell, and distribute
its goods to the final buyersits goods to the final buyers
• Marketing service agencies helpMarketing service agencies help
formulate and implement marketingformulate and implement marketing
strategiesstrategies
• Financial intermediaries help hospitalityFinancial intermediaries help hospitality
companies finance their transactionscompanies finance their transactions
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

9. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The Company’s MacroenvironmentThe 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. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

10. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
CompetitorsCompetitors
• To be successful, a company must satisfyTo be successful, a company must satisfy
needs and wants of consumers betterneeds and wants of consumers better
than competitorsthan competitors
• A company should monitor three variablesA company should monitor three variables
when analyzing each of its competitorswhen analyzing each of its competitors
– Share of MarketShare of Market
– Share of MindShare of Mind
– Share of HeartShare of Heart
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

11. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Demographic EnvironmentDemographic Environment
• Demography is the study of humanDemography is the study of human
populations in terms of size, density,populations in terms of size, density,
location, age, gender, race, occupation,location, age, gender, race, occupation,
and other statisticsand other statistics
• Demographics change over time andDemographics change over time and
companies must keep up with themcompanies must keep up with them
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

12. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Demographic EnvironmentDemographic Environment
• Baby boomersBaby boomers – 77 Million post-World War
II babies born between 1946-1964
• Generation XGeneration X – 45 million born between
1965-1976, the “birth dearth”
• Generation YGeneration Y (echo boomers) – 72 million
born between 1977-1994
• GenerationGeneration ZZ (techno boomers) – born after
-1996
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

13. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Economic EnvironmentEconomic Environment
• The economic environment consists ofThe economic environment consists of
factors that affect consumer purchasingfactors that affect consumer purchasing
power and spending patternspower and spending patterns
• It is not enough to have people, theIt is not enough to have people, the
people must have buying powerpeople must have buying power
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

14. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The Global EconomyThe Global Economy
Global economic dealings, such asGlobal economic dealings, such as
currency exchange rates, have acurrency exchange rates, have a
large impact on travel and tourismlarge impact on travel and tourism
across the worldacross the world
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

15. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Natural EnvironmentNatural Environment
• The natural environment consists ofThe natural environment consists of
natural resources required by marketersnatural resources required by marketers
or affected by marketing activitiesor affected by marketing activities
• Anyone involved in tourism isAnyone involved in tourism is
responsible for protecting theresponsible for protecting the
environment and ensuring sustainabilityenvironment and ensuring sustainability
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

16. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Technological EnvironmentTechnological Environment
• The hospitality industry is greatlyThe hospitality industry is greatly
affected by changes in technologyaffected by changes in technology
– The Internet, computerized systems, keyThe Internet, computerized systems, key
cards, etc.cards, etc.
• Faces opposition by those who believeFaces opposition by those who believe
it threatens privacy, simplicity, and evenit threatens privacy, simplicity, and even
the human racethe human race
• The most dramatic force affectingThe most dramatic force affecting
tourismtourism
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

17. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Political EnvironmentPolitical Environment
The political environment is madeThe political environment is made
up of laws, government agencies,up of laws, government agencies,
and pressure groups that influenceand pressure groups that influence
and limit the activities of variousand limit the activities of various
organizations and individuals inorganizations and individuals in
societysociety
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

18. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Political TrendsPolitical Trends
• Increased legislation and regulationIncreased legislation and regulation
affecting businessaffecting business
• Changing government AgencyChanging government Agency
EnforcementEnforcement
• Increased emphasis on sociallyIncreased emphasis on socially
responsible actions and ethicsresponsible actions and ethics
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

19. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Cultural EnvironmentCultural Environment
• The cultural environment includesThe cultural environment includes
institutions and other forces thatinstitutions and other forces that
affect society’s basic values,affect society’s basic values,
perceptions, preferences, andperceptions, preferences, and
behaviorsbehaviors
– Persistence of cultural valuesPersistence of cultural values
– SubculturesSubcultures
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

20. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Environmental ScanningEnvironmental Scanning
1.1. Determine environmental areasDetermine environmental areas
that require monitoringthat require monitoring
2.2. Determine how the informationDetermine how the information
will be collectedwill be collected
3.3. Implement data collection planImplement data collection plan
4.4. Analyze data and use in marketAnalyze data and use in market
planning processplanning process
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens