MARKETING MACRO-ENVIRONMENTAL FACTORS: AN OPPORTUNITY FOR OR THREAT TO THE TRAVEL AGENCY BUSINESS

Lorena Bašan, Ph.D., Assistant Professor Faculty of Tourism and Hospitality Management

Opatija, Croatia e-mail: Lorena.Basan@fthm.hr

ABSTRACT

Enterprises operating on the tourism market are faced with rapid and frequent change that affects their performance from both the tourist demand side and the tourist supply side. The tourist demand side is distinctly heterogeneous with regard to what customers want. Customer demands regarding services involved in tourist trips are becoming increasingly personalised, and market segments with new requirements and habits in satisfying tourism-related needs are emerging. Change in tourist demand directly affects tourist supply. In this context, the ability of tourism enterprises to clearly identify their market position and recognise newly emerging business conditions in their environment is vital to their successful performance. To this end, tourism enterprises need to analyse their environment and, based on this analysis, identify the types of environmental factors that exist, and determine in which way and to what extent these factors affect their performance.

Factors of the marketing macro and micro environment affect the performance of enterprises. The marketing macro environment consists of external factors, which are often referred to as uncontrollable marketing variables, while the micro marketing environment comprises factors of the business environment and internal factors.

The impact of macro-environmental factors on the performance of enterprises can present either an opportunity or a threat. SCEPTICAL analysis was used in analysing the effect of macro-environmental factors on the performance of travel agencies in Primorsko-Goranska County. SCEPTICAL analysis was chosen as a framework for analysing the macro environment of travel agencies, taking into consideration the specific features of the tourist market and the effect of a larger number of different factors in comparison to other types of markets. Using SCEPTICAL analysis, research into the impact of macro-environmental factors on the performance of travel agencies focused on the following groups of factors: social, cultural, economic, physical, technical, international, communication and infrastructure, administrative and institutional, and legal and political. Travel agencies of Primorsko-Goranska County judged the major part of macro-environmental factors as being an opportunity for their businesses.

Keywords: marketing macro environment, external factors, SCEPTICAL analysis, travel agencies

INTRODUCTION

The marketing environment of any enterprise comprises a great number of factors that affect its operations in a variety of ways and to different degrees. Compared with other markets, business on the tourism market has special features. These special features primarily result from the characteristics of tourism services, the “product” that is the object of exchange on the tourism market, as well as from the fact that it is the customer/tourist who travels on the tourism market and not the product, as is the case on other markets. The special traits of the tourism market and the tourism product call for a different concept and a more comprehensive analysis of factors of the marketing environment that impact on the operation of tourism enterprises. Analysing and monitoring how these factors affect operations, and to which extent, is a precondition to ensuring that tourism enterprises are capable of making timely adjustments to new demands and conditions in business.

1. CHARACTERISTICS OF THE MARKETING MACRO ENVIRONMENT ON THE TOURIST MARKET

An enterprise’s marketing environment comprises actors and forces outside marketing that affect marketing management's ability to develop and maintain successful relationships with its target customers. (Kotler 2008:179) When looking at the marketing environment in the context of its nature and how it operates, two levels of the marketing environment can be distinguished: the micro environment and the macro environment. (Kotler 2010:114)

An enterprise’s marketing micro environment can be seen through the enterprise’s internal factors and its so-called close external factors (Meler 1999:36). The marketing literature often refers to internal factors as “controllable marketing variables”, because of an enterprise’s ability to influence and control these factors, which represent its marketing mix. For an enterprise to perform successfully in view of its internal environment, it must have an efficient marketing department that is closely connected to all its departments: (Kotler 2008:180) top management, the financial department, R&D, supply, production and accounting. Unlike its internal factors, a tourism enterprise’s “close external factors” can be influenced upon but cannot be controlled. Also known as factors of the business and industrial environment (Morrison 2002:111), they include suppliers, intermediaries, customers, competition and the public. (Kotler 2008:180)

In the marketing literature, an enterprise’s marketing macro environment is also referred to as “uncontrollable marketing variables”, because an enterprise can neither influence nor control them. These variables include external factors. PEST analysis (Moutinho 2005:35), which includes an analysis of political, economic, social and technological factors, is frequently used to analyse what influence the factors of an enterprise’s macro environment have. This analysis, however, provides too general a framework for the tourism enterprise, considering its special features with regard to other enterprises. These special features pertain primarily to the characteristics of a tourism product relative to the characteristics of products on other markets, as well as to the way the tourism market operates in comparison with other product markets (unlike other markets, on the tourism market it is the customer/tourist who does the travelling and not the product). Hence, SCEPTICAL analysis (Moutinho 2005:35), which includes social, cultural, economic, physical, technological and international factors, communication and infrastructure-related factors, administrative and institutional factors, as well as legal and political factors, is considered as being a more suitable framework for analysing the macro environment of tourism enterprises. Within these categories, a tourism enterprise needs to identify which factors represent an opportunity for its business, and which, a threat. By exploiting the opportunities identified in its marketing macro environment, together with the internal factors identified as its key strengths, a tourism enterprise should seek to reinforce its position on the tourism market based on its competitive advantage and devise marketing strategies that will enable it to accomplish its goals.

It is necessary to view the tourism product, which is the object of exchange on the tourism market, in all three forms in which it manifests itself: (Senečić, Grgona 2006:49) the simple tourism product- a single service; the elementary or basic tourism product – a hotel product consisting of a number of individual complementary products; and the integrated product – a tourism package that consists of a greater number of basic products comprised into a whole. However, services offered by a tourism destination are not the key motivation for travelling to a certain destination. Instead, the key motivation is a destination’s primary offering: (Senečić, Grgona 2006:49) its environmental values, the beauty of its landscape, its pleasant climate, cultural and historical heritage, etc. Components of the macro environment, such as a destination’s physical component, accessibility, cultural component and other specific features, which are not important to enterprises producing products for other markets, are vital to tourism enterprises. Therefore, a more detailed framework for analysing the macro environment of tourism enterprises is required, such as that provided by SCEPTICAL analysis.

An analysis of the macro environment is a procedure consisting of several components. In

analysing the marketing macro environment of a tourism enterprise, it is not enough to merely identify key factors within each segment of the SCEPTICAL analysis and conduct a one-off study of the way these factors affect the performance of the tourism enterprise. Instead, this analysis should be carried out

continuously through all the components that it comprises: (Evans, Campbell, Stonehouse 2003:156) 1. scanning – for warning signs 2. monitoring – for specific trends and patterns 3. forecasting – future direction of changes 4. assessing – current and future trends in terms of effects on the organization

2. MACRO-ENVIRONMENTAL FACTORS AND THE TRAVEL AGENCY BUSINESS IN PRIMORSKO-GORANSKA COUNTY

2.1. RESEARCH BACKGROUND

A study was conducted of the impact of marketing macro-environmental factors on the operation of travel agencies in Primorsko-Goranska County (PGC). The study involved PGC travel agencies that have a well-developed network of branch offices. Based on a list of travel agencies obtained from the Association of Croatian Travel Agencies, the study comprised 19 travel agencies with extensive networks of branch offices, which represent the targeted study sample. The response rate was 52.6 per cent. The instrument used to gather information was a questionnaire sent to all travel agencies in the targeted study sample.

In this study, travel agencies were seen as companies on the tourism B2B market, whose opportunities for improving performance were viewed through the advantages and opportunities gained by applying project marketing, as a type of B2B marketing. A distinction should be made between B2B marketing and B2C marketing. B2B marketing refers to the marketing of products and services by one enterprise to another enterprise, while B2C marketing is about the relationship between a company and an individual as the end consumer. Hence, B2B marketing can be defined (Brennan, Baines, Garneau 2003: 37) as the process of trying to match a company's products and services to the organisational goals of its target customers. Project marketing is a special type of B2B marketing. The concept of project marketing is a marketing theory derived from the specific traits that projects possess in comparison with products of final consumption and business consumption, and in comparison with services provided to individual and business consumers. Projects are seen as the “object of exchange” in which two business entities are involved: one is the project seller, and the other, the project buyer. In light of this, the hotel enterprises involved in the study were considered as being the sellers of projects for developing a new hotel product, and travel agencies – tour operators, the buyers of these products. Projects for developing a new hotel product were based on the assumption that hotel enterprises are focused on business travel.

2.3. RESEARCH RESULTS

SCEPTICAL analysis was used to analyse the marketing macro environment of travel agencies and the impact of its factors, which were classified as social, cultural, economic, physical, technological and international factors, communication and infrastructure-based factors, administrative and institutional factors, and legal and political factors.

The influence of individual factors was identified as being either an opportunity for, or threat to, the operation of travel agencies, based on an ordinal 1 – 5 scale (1 – strong threat, 2 – weak threat, 3 - neither an opportunity nor a threat, 4 – weak opportunity, 5 – strong opportunity).

Concerning the social component, 10 per cent of the travel agencies surveyed failed to respond to the question pertaining to the impact of the relationship of travel agencies with other non-business actors in the destination. Fifty-five per cent of travel agencies rated the impact of most of the social factors as being weak opportunities, giving them scores ranging from 3.5 to 3.8. Travel agencies considered the impact of the other factors of the social component as being neither an opportunity for nor threat to their project-based operations (Table 1).

Table 1 Impact of social factors on the project-based operations of PGC travel agencies

SOCIAL FACTORS Average rating of factor

influence 1. Attitude of residents towards tourism development 3.7 2. Political and social security 3.5 3. Rapid and unpredictable change in the environment 2.9 4. Relations between travel agencies 3.0 5. Relationships of travel agencies with other business and non-business

actors in the tourist destination 3.6

6. Relationships of travel agencies with other complementary enterprises 3.5 7. Relationships of travel agencies with hotel enterprises as business-travel

project sellers 3.8

8. Discontinuity in economic relations between hotel enterprises and travel agencies

2.8

9. Relationships with key actors in the milieu (PGC tourism market) in developing business-travel projects

3.2

10.

Level of development of the network of relationships with business and non-business actors in PGC as a tourist destination

3.0

11.

Level of development of the network of relationships with hotel enterprises as business-travel project sellers

3.5

Travel agencies see the impact of all factors of the cultural component as being an opportunity for their project-based operations, giving them scores ranging from 4.8 to 4.5: : promoting local cultural identity (4.8), cultural and historical heritage (4.7), long tradition in tourism (4.6), distinctive gastronomic offering (4.5). Of all cultural factors analysed, only the impact of the uniqueness of cultural events (4.3) was rated as being a weak opportunity, while all other factors were seen as being strong opportunities.

The average scores obtained for the impact of economic factors on the project-based operations of travel agencies lead to the conclusion that the majority of travel agencies (80 per cent) consider the influences of economic factors as being an opportunity. Factors that travel agencies see as being neither a threat to nor opportunity for their project-based operations are the cost of project marketing managers and the competitiveness of other travel agencies (Table 2).

Table 2 Impact of economic factors on the project-based operations of PGC travel agencies

ECONOMIC FACTORS Average rating of factor

influence 1. The recognition of the destination on markets based on its brand 4.2 2. Integrated quality of PGC as a tourist destination 4.0 3. Opportunity of year-round operations based on business-travel projects 4.4 4. Managing the project-based development of PGC as a tourist destination 3.8 5. Hotel enterprise partnerships at the PGC level in the offering of business-

travel projects 3.6

6. Upward trend of the business-travel market 3.9 7. Profitability of the business-travel segment 4.2 8. Availability of project marketing managers 3.8 9. Cost of project marketing managers 3.0

10. Competitiveness of other travel agencies 3.3

An analysis of the impact of physical factors indicates that 10 per cent of the travel agencies surveyed failed to rate the impact of industrial facilities, environmentally conflicting development options and “green” associations. Considering the importance that the physical

component has for the destination’s tourism product, it should be pointed out that while PGC travel agencies see industrial facilities as a weak threat, they consider rich natural resources and ecologically preserved environment as being key strong opportunities (Table 3).

Table 3 Impact of physical factors on the project-based operations of PGC travel agencies

PHYSICAL FACTORS Average rating of factor

influence 1. Rich in natural resources 4.7 2. Ecologically preserved environment 4.5 3. Industrial facilities 2.0 4. Environmentally conflicting development options 2.5 5. “Green” associations 3.4 6. Sustainable development of tourist destinations 4.0

Of the technological components, travel agencies have rated the destination's tourism facilities (3.9) and the uniqueness of business travel projects (3.7) as being weak opportunities. Travel agencies do not see the complexity of a business-travel project with regard to the number of stakeholders involved in the project (3.2) as posing neither a threat to nor opportunity for their project-based operations.

Of the analysed factors of the international component of the macro environment, travel agencies have rated forming partnership networks with business and non-business operators at the international level as being a weak opportunity (4.4), while they see the growing number of “emerging” business-travel destinations on the international tourism market as being neither a threat nor an opportunity (2.7)

Of the communication and infrastructure-based factors, PGC travel agencies have rated PGC’s favourable position in terms of traffic and the level of road-infrastructure development as presenting weak opportunities for their project-based operations. They consider the influence of the other factors as being neither a threat to nor opportunity for their project-based operations (Table 4).

Table 4 Impact of communication and infrastructure-based factors on the project-based operations of

PGC travel agencies

COMMUNICATION AND INFRASTRUCTURE-BASED FACTORS

Average rating of factor influence

1. PGC’s favourable position in terms of traffic 4.2 2. Level of road-infrastructure development 3.8 3. Level of airport development 3.1 4. Traffic links between the islands and the mainland 3.3 5. Local traffic 2.8 6. Parking lots and car parks 2.5 7. Tourism signage 2.7

An analysis of the factors of the administrative and institutional component of the macro environment reveals that 10 per cent of the travel agencies surveyed failed to rate the impact of strategic documents and plans on their operations. The majority of travel agencies rated the following factors as being weak opportunities: educational institutions for tourism personnel, professional and scientific support, and established responsibility of actors in developing PGC as a tourist destination. The remaining factor of the component of the macro environment is seen as posing neither a threat to nor an opportunity for the project-based operations of travel agencies

(Table 5).

Table 5 Impact of administrative and institutional factors on the project-based operations of PGC

travel agencies

ADMINISTRATIVE AND INSTITUTIONAL FACTORS Average rating of factor influence

1. Strategic documents and plans 3.2 2. Educational institutions for tourism personnel 3.7 3. Professional and scientific support 3.7 4. Established responsibility of actors in developing PGC as a tourist destination 3.7 5. Existence of a central actor in the tourist destination, serving as a single source of

information required by hotel enterprises and other business and non-business operators

3.4

For the most part, travel agencies do not consider the factors of the legal and political component, the last component of the macro environment as being either an opportunity for or threat to their project-based operations. Cooperation with politicians and political bodies at the PGC level in developing business travel-projects is the only factor within this component that travel agencies have rated as presenting a weak opportunity for their project-based operations (Table 6).

Table 6 Impact of legal and political factors on the project-based operations of PGC travel agencies

LEGAL AND POLITICAL FACTORS Average rating of factor influence 1. Opinions, behaviour and actions of politicians and state officials 3.2 2. Acts, regulations and decisions at the national level 3.1 3. Acts, regulations and decisions at the level of local government 3.1 4. Application of specific regulations and standards in relationships

between operators in the destination 3.2

5. Cooperation with politicians and political bodies at the PGC level in developing business-travel projects

3.8

Conducted research demonstrates that the majority of the influence of macro-environmental factors is seen as being an opportunity for the project-based operations of travel agencies in PGC.

CONCLUSION

The performance of enterprises on the market is affected in a variety of ways and to differing extents by a great number of diverse factors. The influence of all factors of the marketing environment falls into two basic segments: the marketing micro environment and the marketing macro environment. The micro environment of tourism enterprises comprises internal factors and factors of the business and industrial environment, while the macro environment encompasses external factors. A specific effect of macro-environmental factors is evident in the operations of tourism enterprises compared with enterprises operating on other markets. This effect is a result of the characteristics of the tourism product and of the specific way in which the tourism market operates. Hence, an analysis of the macro environment must involve an analysis of factors and their effects that is more comprehensive than PEST can provide. PEST analysis is generally used as a framework in researching the macro environment of enterprises on other markets and includes an analysis of political, economic, social and technological factors. Because of the specific traits of the tourism market, SCEPTICAL analysis, which includes social, cultural, economic, physical, technological and international factors, communication and infrastructure-related factors, administrative and institutional factors, as well as legal and political factors, is considered as being a more suitable framework for analysing the macro environment of tourism enterprises.

The SCEPTICAL analysis of the effects of macro-environmental factors on the project-based operations of PGC travel agencies demonstrates that the majority of the influence of macro-environmental factors is seen as being an opportunity for the project-based operations of travel agencies: 55 per cent of the influence of the factors of the social component, 100 per cent of the influence of the factors of the cultural component, 80 per cent of the influence of the factors of the economic component, 50 per cent of the influence of the factors of the physical component, 67 per cent of the influence of the factors of the technological component, 50 per cent of the influence of the factors of the international component, and 60 per cent of the influence of the factors of the administrative and institutional component. An exception are the factors of the communication and infrastructure component: 71 per cent of the influence of these factors is considered as being neither an opportunity nor a threat to project-based operations, while only 29 per cent of their influence is seen as being a weak opportunity. Where the legal and political component is concerned, 80 per cent of the influence of its factors was rated as posing neither a threat nor an opportunity, while only 20 per cent was seen as a weak opportunity for the project-base operations of travel agencies in Primorsko-Goranska County.

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