Introduction
Tourism and hospitality enable cultural exchange, employment opportunities, and infrastructural development. Tourism and hospitality require a business-friendly environment to thrive. Favorable legal regulations and a calm political environment allow tourism companies to stay afloat in the business. Furthermore, stable suppliers and reliable customers promote tourism among different countries. Natural scenery, beautiful flora, and fauna, among other tourist attractions, positively impact tourism. Environmental factors that affect flora and fauna significantly impact the industry. Abercrombie & Kent, a hospitality and luxury travel services provider, is affected by the external business environmental factors. A service marketing mix that includes the ‘seven Ps’ model benefits tourism and hospitality. The InterContinental Hotels Group (IHG) applies the service marketing activities to attract potential client. This research paper explores external environmental factors affecting Abercrombie & Kent and (IHG) service mix marketing analysis.
Abercrombie & Kent LLC Overview
Abercrombie & Kent LLC offer luxury travel services to tourists internationally. Furthermore, the company offer additional products such as foreign currencies exchange, clothing, and global phones (Abercrombie & Kent, 2019). Tourists’ traveling services is the company’s primary product allowing individuals explore the world. With its headquarters in the US, the company received recognition among the top tourism and hospitality companies globally. Abercrombie & Kent enables tourists to visit different destinations and make holiday plans (Abercrombie & Kent, 2019). The company competes with other travel agencies such as Black Tomato, Nomad Hill, and Scott Dunn.
External Environmental Factors Affecting Abercrombie & Kent LLC
A business’ external environment include factors outside a business’s internal environments affecting a company’s operations. External environmental factors present either opportunities or challenges to a business. Companies often have no control over the external environment but can use the setting to identify growth opportunities (Pulka et al., 2021). The external environment includes political, legal, economic, social-cultural, technological, physical, and ecological factors: PESTLE analysis. While the government can control legal, political, and economic elements, physical and environmental factors are natural and cannot be controlled by businesses and the government (Torgler, 2021). Like any other business, various external environmental factors affect Abercrombie & Kent’s operations.
Political Factors
Politics includes the activities associated with a country’s effective governance, including improving people’s standards. Politics is significant for tourism and hospitality industry growth since it determines new laws and infrastructural development. Countries like China and Egypt have the most attractive tourist attractions and supportive governments (Habibi, 2022). Abercrombie & Kent’s operations have been stifled by the political differences and disagreements among the European Union members (Phan & Stachuletz, 2022). Tourism and hospitality thrive in a calm political environment. The company’s operations were negatively affected during the unstable political climate between the US government and other develop countries like China. Abercrombie & Kent has its main operations in the US that has stable political climate enabling the organizational survival.
Legal Factors
Abercrombie & Kent is a multinational company that is affected by international laws on business, environment, and labour rights. The company enjoys the dependable and favorable US commercial legal system. However, the company also operates in countries with harsh tax laws making it difficult for the company to thrive (Khan, 2020). Meanwhile, favorable tax laws in the US and other developed countries like Canada encourage Abercrombie’s & Kent’s business growth and expansion (Khan, 2020). Furthermore, friendly immigration laws in the US, Canada, and China boost the company’s operations since the tourists easily obtain travelling documents (Morgan, 2021). The international laws prohibiting poaching and deforestation help protect the natural environment that attracts the company’s clients. Therefore, favorable laws and regulations are beneficial to Abercrombie & Kent’s operations in the various countries.
Social-Cultural Factors
Abercrombie & Kent operates in different countries with different social and cultural values. The cultural values and social norms are critical for tourism and hospitality since they create distinctiveness in the crowded industry (Lehto et al., 2020). Countries such as India and South Africa have multifaceted communities with distinguished cultures attracting tourists. Social norms shape the interaction among the locals and the tourists and determine the likelihood of tourists’ visitation (Osipova & Kazmina, 2021). Consequently, the company’s operations thrive in countries with distinct culture and social values that attract visitors. Abercrombie & Kent makes more profits in countries with distinct social activities and cordial culture.
Technological Factors
Technological developments have significantly contributed to the growth of the tourism and hospitality industries. Technology has made communications and transportation easy within the tourism industry. The advancements in information technology have led to website development among hotels that allow remote bookings and reservations (Borges-Tiago et al., 2021). For instance, companies like Abercrombie & Kent have advanced websites to make reservations and feedback on their services. Furthermore, technology has significantly contributed to the company’s advanced marketing activities (Borges-Tiago et al., 2021). Technology-led marketing activities enable Abercrombie & Kent to advertise their services locally and internationally. Technology help Abercrombie & Kent save on operational costs and enhance customer service and experience among tourist companies.
Physical Environmental Factors
The physical environment encompasses mineral formation, climatic conditions, vegetation coverage, and other ecological factors. The physical environment is crucial for tourism and hospitality since it helps determine travel patterns among tourists (Lehto et al., 2020). Adverse weather conditions such as storms negatively impact tourism since air transportation is risky during storms (Proebstl-Haider et al., 2021). Meanwhile, countries’ calm weather conditions attract tourists due to smooth movements to tourist destinations. Favorable climatic conditions such as rain and fresh air enable wild animals’ growth, attracting tourists. Therefore, Abercrombie & Kent receives more tourists in areas with favorable climatic conditions than in countries with harsh climate. Furthermore, the company receives more clients during summer holidays than Winter.
Economic Factors
Abercrombie & Kent is a multinational company affected the trends in the global economy. Economic factors include interest and tax rates, governmental activities, wages, and other factors determining a country’s financial status. High tax rates negatively affect tourism and hospitality since the companies record less return on investment (Habibi, 2022). Favorable tax rates attract tourists due to affordable travel and accommodation costs. Furthermore, changes in the inflation rate affect products and service prices among countries (Phan & Stachuletz, 2022). An increase in the inflation rate leads to increased raw materials and products costs crucial for tourism (Phan & Stachuletz, 2022). Government policies on employee wages can also affect the tourism industry, mainly depending on human resources. Economic factors affect Abercrombie & Kent’s operations since they determine service and product costs.
Abercrombie & Kent’s Micro Environment
The microenvironment consists of the factors affecting business operations, but the companies can control them. Customers, suppliers, and competitors form the microenvironment are significant to tourism and hospitality (Leyva & Parra, 2021). The micro-environment factors determine the competitiveness of the tourism and hospitality industry. The tourists’ choice of travel destination determines the profitability among countries. Alternatively, stable and dependable suppliers among tourist companies help boost business profitability. The microenvironment is significant for competition and business growth.
Customers
Tourists are attracted by various sites, cultures, and sceneries among multiple countries. Therefore, countries with the most attractive tourist attraction sites receive many tourists. The tourists’ travel choices are influenced by factors like political stability, climate, and cultural values among their destination countries (Gidebo, 2021). Consequently, Abercrombie & Kent has invested in marketing its services in the global market to attract potential customers. The majority of the company’s clients are from the highly developed countries such UK, US, and Canada bringing high revenues. While Abercrombie & Kent has a broad consumer base, the company invests in the various marketing activities to attract more clients.
Suppliers
The suppliers include those people and organizations supplying hotels and other tourism-related companies with raw materials, food, and other products. Abercrombie & Kent also rely on the motor service industry that provide and repairs its vehicles. The suppliers boost the industry by providing quality and international standard goods (Hoe & Mansori, 2018). However, the suppliers are affected by factors like economic and political. An unstable economy with increased taxes would increase supply prices (Al-Thaqeb et al., 2020). Furthermore, the suppliers would supply companies that pay well, increasing competition. Increased supplier power affects the business since the suppliers provide their goods and services at their desired prices that are expensive. Therefore, suppliers affect operations in the tourism and hospitality industries.
Competitors
The tourism industry is highly competitive due to unique tourist attraction sites among the different countries. Furthermore, the advancing technology has increased competition among tourism-related companies. Consequently, many competing companies adopt e-commerce and digital marketing to sell their services and goods. For instance, Black Tomato, Nomad Hill, and Scott Dunn have adopted e-commerce giving them competitive edge over Abercrombie & Kent. Companies that have adopted the technology receive many tourists due to efficient and affordable services. Abercrombie & Kent’s dependable suppliers enable the company remain competitive in the global market (Abercrombie & Kent, 2019). Increased competitors in the industry reduce revenues among companies.
Abercrombie & Kent-Competitive Environment Analysis: Current Global Situation
Tourism and hospitality are highly competitive but profitable during the peak seasons. The global market remains dominated by high-end hotels and luxurious traveling agencies in countries with the most beautiful sceneries. Abercrombie & Kent has taken advantage of the favorable business environment in the US and other developed countries. Unfortunately, the onset of the novel coronavirus greatly affected the company’s local and global operations. Various governments-imposed travel bans restricted tourism activities among the countries (Riady et al., 2021). The closure of industries that promote tourism affected the sector due to the limited supply of products and services needed by the tourism company.
The hospitality businesses, including Abercrombie & Kent, were hit hard, leading to jobs and increased financial losses. According to an American Hotel & Lodging Association survey, about 71% of American hotels could not make it without federal relief (2020). Therefore, the covid 19 negatively impacted the tourism and hospitality industries leading to the closure of the businesses and stifling the economy. However, the discovery of covid-19 vaccines has led to economic recovery, and the industry is stabilizing.
Abercrombie & Kent-SWOT Analysis
SWOT analysis is used to determine the competitive environment of a business. Therefore, the analysis will help understand Abercrombie & Kent’s strengths, weaknesses, opportunities, and threats in the industry. The analysis help understand the company’s position in the global market.
Table 1: Abercrombie & Kent SWOT Analysis
IHG Service Marketing Mix Activities
Marketing is crucial for business growth since it helps attract potential customers and maintain existing customers. Technology has significantly improved marketing activities and has assisted in analyzing consumer behaviors. Furthermore, the invention of social media platforms has dramatically improved digital marketing activities. Companies like Trek Trave LLC and IHG have utilized digitization to enhance their marketing activities. A successful marketing activity considers the ‘7Ps’ model: product, price, place, promotion, people, process, and physical evidence (Parra-López & Martínez-González, 2022). The ‘7Ps’ marketing model is adequate for tourism and hospitality since the marketing activities are carried out by considering the critical business factors.
Product
Product means goods or services offered by a company to its consumers. The tourism and hospitality companies provide a wide range of products and services, including tour guides, guest rooms, and food. For instance, the IHG offers services including luxurious accommodation, conference venues among other hotel services. When marketing companies present their products or services to potential consumers, the marketed products and services ought to be unique and of high quality to attract potential customers (Parra-López & Martínez-González, 2022). Furthermore, the companies should have a broad product category from which the potential consumers can choose. Clients are often attracted to affordable, unique, and high-quality products.
Price
The price corresponds to the customers’ money for products or services. Companies identify effective pricing strategies that suit their brand positions. For instance, a penetrative pricing strategy is suitable for marketing products to a new market. Meanwhile, a value-based pricing strategy can be applied if the company’s products are considered valuable compared to other companies in the industry. A competitive pricing strategy is used when the company is in a competitive industry (Pholphirul et al., 2021). IHG has adopted competitive and value-based pricing strategies since it offers quality hospitality services. The competitive pricing strategy aims at selling products or services at prices similar to the competitors. Therefore, price and a pricing strategy are crucial during marketing since they can either attract or scare potential customers away.
Place
The place refers to the location where the products are available to the customers. A company’s physical location and look determine the buyers’ purchasing decisions and could be influenced by the products or service availability (Pholphirul et al., 2021). IHG operates in countries like Dubai that have beautiful sceneries attracting more clients. The hospitality industry involves the availability of hotels near tourist attraction sites and accessible roads. For instance, hotels in coastal regions attract many tourists compared to those far away from the coastline. When deciding on the location of a hotel, tourist attraction sites should be considered.
Promotion
Promotion involves the activities carried out by the companies’ marketing departments to advertise their products and services. Furthermore, it requires communication and strategies supporting products and services. Integration of technology has bolstered promotional activities through social media. IHG has taken advantage of international trade fairs and sporting activities to promote their products and services (Pholphirul et al., 2021). The use of international communication media such as global Television and radio channels helps the company reach out to many potential customers. When choosing a product promotional activity, a company should consider its effectiveness and affordability.
People
The people are the core target of any marketing strategy and help determine the profitability of a business. Therefore, a marketing strategy should meet consumer needs and fill the market gaps. Marketing activity should involve an analysis of consumer behaviors and help determine purchasing patterns among the buyers (Parra-López & Martínez-González, 2022). Furthermore, a company’s employees should present the company’s values and culture that is attractive to consumers. IHG attracts high-end tourists, and takes advantage of the summer holidays and international conferences that encourage different stakeholders to market its services. IHG’s astute management and clients that are invited to luxurious services boost the company’s business operations in various countries.
Process
Business processes involve activities that result in product and service delivery. Companies invest in technology to improve product quality and service delivery. The use of e-commerce among hotels allows customers to choose their desired products and services. IHG has automated and digitized websites that allow clients from different countries choose their preferred services. Furthermore, the excellent IHG’s brand image helps the company attract many potential customers due to strong trust in the service and product delivery (Parra-López & Martínez-González, 2022). Effective business operations involve technology integration and quality products or service delivery.
Physical Evidence
Physical evidence promotes companies’ brand images since the customers can give feedback from their point of view. Many hotels invest in landscaping and other decorative activities to attract tourists. Furthermore, the adoption of an eco-friendly environment attracts clients that are concerned about nature. The physical evidence can also include a representation of a country’s culture that attracts tourists. Eco-friendly and attractive hotels support excellent brand images.
IHG Marketing Activities’ Analysis and Effectiveness
When it comes to product promotion, the company utilizes digital marketing and public relations. The company runs its adverts on various social media platforms, including global Tv and radio stations. Public relations are a vital marketing strategy of the company. The company has adopted customer loyalty programs that allow loyal customers to get free vacations and reservations. The company awards its clients with free flights and discounted services depending on how many times they use the company’s assistance.
The adoption of practical marketing activities has boosted the company’s brand image and positioning. The company is viewed as high-end and providing quality services to its consumers compared to its competitor Hilton (Figure 1). The excellent brand reputation has enabled the company to gain consumer-based brand equity (IHG, 2019). Consequently, the company records profits making it sustainable to acquire non-imitable products and services (Antikainen et al., 2018). The company should utilize the growing use of technology among the hotels to improve its innovativeness, expansion, partnerships, and service delivery.
Innovation involves identifying new ideas and business gaps and the use of sustainable solutions. Technological advancements have led to development of artificial intelligence that hotels can use to improved their service delivery. Formation of partnerships could help the IHG become competitive in the hospitality industries. The partnership would also help the company increase its products and service categories (Antikainen et al., 2018). Partnering with global hotels would help the company expand to new countries and attract more clients. Furthermore, adoption of digital marketing and introduction of customer loyalty programs would help the company attract more loyal customers and retain its consumer-base. While the InterContinental Hotels Group adopts an effective marketing activity, the company can improve on its innovativeness, expansion, and partnership formations.
Conclusion
The tourism and hospitality industries are among many countries’ highest foreign income earners. Like any other business, the industry is affected by external and micro factors. External factors include political, legal, environmental, economic, technological, and social-cultural factors. Companies have no control over the external environment and can do very little to improve the environment. Factors like technological developments have boosted the industry’s innovation. The companies can control Micro-environment factors like customers, suppliers, and competitors. Marketing is crucial among hotels and other hospitality companies since it helps attract potential clients. When marketing, the companies should consider the ‘7Ps’ model. The hospitality and tourism industry is lucrative and can be effective if the companies adopt efficient marketing strategies.
References
Abercrombie & Kent. (2019). The Pioneers of Luxury Travel. Web.
Al‐Thaqeb, S. A., Algharabali, B. G., & Alabdulghafour, K. T. (2020). The pandemic and economic policy uncertainty. International Journal of Finance & Economics.
American Hotel & Lodging Association. (2020). Survey of hotels on financial crisis [review of survey of hotels on financial crisis]. AHLA. Web.
Antikainen, M., Uusitalo, T., & Kivikytö-Reponen, P. (2018). Digitalisation as an enabler of circular economy. Procedia Cirp, 73, 45-49.
Borges-Tiago, M. T., Arruda, C., Tiago, F., & Rita, P. (2021). Differences between TripAdvisor and Booking. com in branding co-creation. Journal of Business Research, 123, 380-388.
Gidebo, H. B. (2021). Factors determining international tourist flow to tourism destinations: A systematic review. Journal of Hospitality Management and Tourism, 12(1), 9-17.
Habibi, N. (2022). The Belt and Road Initiative in the Eastern Mediterranean: China’s Relations with Egypt, Turkey, and Israel. Web.
Hoe, L. C., & Mansori, S. (2018). The effects of product quality on customer satisfaction and loyalty: Evidence from Malaysian engineering industry. International Journal of Industrial Marketing, 3(1), 20. Web.
IHG. (2019). InterContinental Hotels Group PLC. Web.
Khan, S. (2020). COVID-19: Tourism at Crossroads! What Next. J. Tour. Sustain, 3, 32-40.
Lehto, X., Davari, D., & Park, S. (2020). Transforming the guest–host relationship: A convivial tourism approach. International Journal of Tourism Cities.
Leyva, E. S., & Parra, D. P. (2021). Environmental approach in the hotel industry: Riding the wave of change. Sustainable Futures, 3, 100050.
Morgan, D. (2021). Safety Management in the Adventure Tourism Industry. In Tourist Health, Safety and Wellbeing in the New Normal (pp. 373-387). Springer, Singapore.
Osipova, Y., & Kazmina, L. (2021). Arts and crafts, decorative and applied arts as a growth driver of educational tourism. In E3S Web of Conferences (Vol. 273, p. 09004). EDP Sciences.
Parra-López, E., & Martínez-González, J. A. (2022). Service Marketing Mix. In Encyclopedia of Tourism Management and Marketing. Edward Elgar Publishing.
Phan, T. H., & Stachuletz, R. (2022). Bribery—Export Nexus under the Firm’s Growth Obstacles. Economies, 10(2), 28.
Pholphirul, P., Rukumnuaykit, P., Charoenrat, T., Kwanyou, A., & Srijamdee, K. (2021). Service marketing strategies and performances of tourism and hospitality enterprises: implications from a small border province in Thailand. Asia Pacific Journal of Marketing and Logistics.
Proebstl-Haider, U., Hoedl, C., Ginner, K., & Borgwardt, F. (2021). Climate change: Impacts on outdoor activities in the summer and shoulder seasons. Journal of Outdoor Recreation and Tourism, 34, 100344.
Pulka, B. M., Ramli, A., & Mohamad, A. (2021). Entrepreneurial competencies, entrepreneurial orientation, entrepreneurial network, government business support and SMEs performance. The moderating role of the external environment. Journal of Small Business and Enterprise Development.
Riady, R., Fita, G. A., Utami, A. N. F., & Tahawa, T. H. B. (2021). Global Trade Restrictions during Covid-19 Pandemic. International Journal of Educational Research & Social Sciences, 2(1), 173-177.
Torgler, B. (2021). The power of public choice in law and economics (No. 2021-04). CREMA Working Paper. Web.