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The Marketing Environment

and Sustainability
Chapter 2
• During the past decade, many changes have had an
impact on the hospitality industry in the United States:
• Economic recession
• Overbuilding
• Increased competition
• Increased emphasis on technology and the environment
• Newer forms of distribution and sales using technology
• Increased foreign ownership of previously American brands
• Changes in dining habits and food consumption patterns
• Globalization of the hospitality and tourism industry
• The impact of international terrorism.
• Destinations must manage the positive and negative
impacts related to their economies, environments, and
The Marketing Environment
• Five major marketing environments
• Economic
• Social
• Competitive
• Political and legal
• Technological

• Environmental scanning
• can be a formal mechanism within a firm, or merely the
result of salespeople and managers consciously
monitoring changes in the environment.
The Economic Environment
• Purchasing Power
• Consumers have the ability to purchase products and
• Consumer Price Index (CPI)
• A measure of the relative level of prices for consumer
goods in the economy
• Disposable Income
• An individual's income that remains for spending after
required deductions such as taxes.
• Discretionary Income
• An individual's income that is available for spending
after deducting taxes and necessary expenditures on
The Social Environment
• The social environment is affected by all of the
other environments.
• Changes in the economy, advances in technology,
competitive actions, and government regulations all
shape the way consumers view the world
• 2 major changes
• A change in demographics
• Characteristics that describe the population such as age,
income, education, occupation, family size, marital status, and
• Changes in consumers' attitudes, interests, and opinions
that determine their lifestyles
The Competitive Environment
• Competitive structure – a combination of buyers and sellers
in a market
• Monopoly
• One seller and many buyers
• Perfect Competition
• With many buyers and sellers of homogeneous products that are
almost exactly the same
• Oligopoly
• With a few sellers and many buyers
• Monopolist Competition
• Many buyers and sellers with differentiated products
• The most common form of competitive structure
• Price elasticity of demand
• A measure of the percentage change in demand for a product
resulting from a percentage change in price
The Political and Legal
• Understanding the political and legal environment
means understanding the rules and regulations by
which the competitive game is played
• At all levels of government—local, state, national,
and international—there are laws and regulations
that businesses must follow
• To compete successfully, a firm must understand
not only the current laws and regulations but also
any new ones that might come into play in the
The Political and Legal
• Most professional hospitality and tourism managers belong to
one or more professional associations.
• One of the goals of these associations is to help members not only
understand developing laws and regulations, but have influence in how
they are written through lobbying efforts with politicians and
government officials.
• Two examples of hospitality industry associations are the National
Restaurant Association (NRA) and the American Hotel & Lodging
Association (AH&LA).
• The idea of a level playing field is critical when governments
evaluate new taxes and regulations.
• It is often difficult for firms to address social issues as a priority
over profits, especially small firms with very limited resources.
• However, governments can make sure that their laws and regulations
do not distort the balance of competition.
The Technological Environment
• Although the hospitality and tourism industry
remains a highly labor-intensive and personal-
contact-oriented industry, computers and
technology have had and will continue to have an
• The area in which technology will have the greatest
impact in the next ten years is in direct marketing
and mass customization
• Direct Marketing
• The firm contacts consumers at home or work with
• Mass Customization
• When a firm customizes the experience for each individual
Sustainable Development
• The focus of sustainable development is on operating
companies and tourism destinations in a way that
ensures future generations will benefit economically,
will have a clean environment, and will preserve society
• It contains within it two key concepts:
• Needs
• Limitations

• Sustainable development
• Development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs.
Triple Bottom Line of Tourism
Environmental sustainability
• Environmental sustainability
• The ability to maintain reasonable levels of renewable
and non-renewable energy, waste, water, and pollution
• Carbon footprint
• The total amount of greenhouse gas emissions caused
by people, organizations, products, and events through
everyday activities.
• Typically, companies that engage in “green” practices
try to reduce their carbon footprint by focusing on
• Energy Management
• Waste Management
• Water Conservation
• Managing Pollution
Economic Sustainability
• Economic Sustainability
• The ability to support a given level of economic
production indefinitely
• Economic sustainability is normally associated with
monetary goals like maintaining adequate profit
margins, providing an acceptable return on
investment for owners and shareholders, and being
able to pay debts
• One of the main criticisms of corporations is that
they sacrifice long-term environmental
sustainability for short-term profits.
Global Economic Sustainability
• From a more global perspective, countries and
regions are usually compared based on gross
domestic product (GDP) per capita, gross national
income (GNI) per capita, or some other measure of
income that can be used as an indicator of the
standard of living
• This type of assessment is more relevant when
looking at tourism destinations and countries as a
• Sustainable development in the tourism industry is
particularly important because destinations use
government funding to generate revenue that gets
Social Sustainability
• Social Sustainability
• The ability of a country or a society to maintain an
adequate standard of living indefinitely
• Two of the underlying themes in social
sustainability are equity and diversity
• Equity focuses on the ability and willingness of a
community to provide opportunities and resources to all
of its members, regardless of race, religion, gender,
income level, etc
• Diversity focuses on the extent to which society
welcomes members from all walks of life. It not only
refers to one’s race and income, but to one’s political
and religious views
Corporate Social Responsibility
• Corporate social responsibility can be defined as
the continuing voluntary commitment by
corporations to behave ethically and contribute to
the economic development, social equity, and
environmental protection of society as a whole
• Some of the key aspects of the definition are:
• It is a continuing commitment, or a long-term initiative.
• It is voluntary, suggesting that organizations need to self-
regulate and encourage participation among both
internal and external stakeholders.
• It focuses on the triple bottom line – economic, social
and environmental impacts.
Managing for Sustainability
Communicating Sustainability
• It is important for organizations to make sure
employees are aware of their sustainability goals in
order to achieve those goals
• In addition, the sustainability initiatives of the firm
should be communicated to external stakeholders
such as customers, suppliers/vendors,
stockholders/investors, the government, and the
• It is the responsibility of firms to educate
consumers and encourage them to purchase
environmentally friendly products and services
Communicating Sustainability
• In addition to words, statistics, and data
measurements, it is important to create more visual
and compelling elements to convey an organization’s
commitment to sustainability
• The following five suggestions were provided in an
article published on the GreenBiz.com website:
• Communications that you can see, touch or even listen to
provide a tangible measure of sustainability success
• Develop a brand/identity to represent and highlight your
efforts in sustainability
• Create a memorable theme and title that ties closely with an
organization’s core competencies
• Many sustainable measures can be taken with a printed piece
• Take advantage of the technology that exists today
The United Nations Environment
Sustainability Programs and
• One other issue for management to consider is whether or
not to obtain some type of sustainability or “green”
certification to recognize the organization’s efforts in this
• The benefit of having a certification is that it lends
credibility to the firm because it has met the standards and
criteria of an objective organization.
• Most of the certification groups provide a logo or “seal of approval”
that firms can display on their web sites and facilities that can add
value to marketing campaigns.
• Also, it encourages firms to track their performance, and it can help
to motivate staff to support the firm’s sustainability initiatives.
• However, there is usually a review process that requires the
firm to keep records and document its performance.
Sustainability Programs and
• Green Restaurant Association
• Boston, MA
• Starts at $300 per year
• Assessment to meet the criteria for the Green Restaurant 4.0 certification
• The Sustainable Restaurant Association
• London, England
• Recently started to provide certifications in the United States
• The certification involves restaurants addressing 14 focus areas across three
sustainability categories: sourcing, environment, and society
• The process is handled mainly online and costs $295
• The U.S. Healthful Food Council
• Washington D.C.
• Starts at $400
• REAL certification includes a nutrition component

© 2016 John Wiley & Sons, Inc.