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This information is proprietary to Dr. Minsun Kim. Scanning, copying, website posting, or reproducing and sharing in any form is strictly prohibited. Module 1-Lecture 3 S14 This is lecture 3. In this lecture, we will address 1 question: What external environments can influence hospitality and casino marketing? S15 The hospitality industry has faced diverse situations, such as economic recession, international terrorism, overbuilding of

hotels and casinos, increased competition, increased emphasis on technology and the environment, newer forms of

distribution and sales using technology, increased foreign ownership, changes in dining habits, and globalization.

ᴥ Each of these external forces has greatly influenced the sales of hospitality products and services.

S16 -When marketers consider changes in marketing strategies, they often examine the changes in five major external environments: economic, social, competitive, political & legal, and technological environments.

ᴥ -Individual organizations cannot directly influence their external environments, but they can monitor changes and engage in some level of environmental scanning, so they can take advantage of marketing opportunities while at the same time forecasting any threats to their business. -So, let’s talk more about the five major external environments. S17 First, economic environment. Consumers’ purchasing power, which is an ability to purchase products or services, is directly related to the economic health of the city, state, and country.

ᴥ As marketers study the economic environment, they are concerned about things like inflation, recession, unemployment, resource availability, tax rates, interest rates, personal and business income growth, and consumers’ confidence in the economy.

ᴥ -Marketers in the hospitality industry should also carefully monitor “discretionary income”. Discretionary income is an individual’s income that is available for spending after deducting taxes and necessary expenditures on housing, food, and basic clothing. It is because the hospitality products, such as hotel rooms, casino games, and vacation trips are often not necessary products or services. When consumers have limited discretionary incomes, the needs for the hospitality products or services would be reduced. S18 -Second, social environment. There are constant changes in the social environment as consumers evolve. For example, there have been changes in demographics, such as age, income, education, occupation, family size, marital status, and gender. Also, there have been changes in consumers’ attitudes, interests, and opinions that determine their lifestyle. For example, the proportion of two-income families and the increased time pressures have changed their travel behaviors. These families take more but shorter vacations to fit their busy lifestyles.

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ᴥ -Third, competitive environment. The hospitality industry is highly competitive today, with new companies entering the industry every day. When competition is increased, marketers may need to reduce the price of their products and create a unique and valuable product or service to maintain their market shares. S19 -Forth, political and legal environment. Hospitality organizations must understand not only the current laws and regulations but also any new laws and regulations that might come into play in the future. For example, currently only 23 states can legally operate commercial casino in the US, and there may be some changes in the future.

ᴥ -Finally, technological environment. Although the hospitality industry remains a highly labor-intensive and personal-contact-oriented industry, computers and technology have had and will continue to have an impact, especially on mass customization. Mass customization means that an organization monitors consumers’ purchasing behavior and preferences, and then tailor service offerings to meet their needs and wants. The consumers’ information is often available on the internet through social media and online shopping list.