Airbnb Marketing Strategy Essay

INTRODUCTIONAirbnb, founded during the sparing d taketurn of 2008, is 1 of m each an(prenominal) ripe vocationes operating within the growing shargond scrimping. Airbnb completeers an alternative to the traditional hotel blood line and wholeows plaza owners, termed arrays, to advertise and bust their extra space, be it a vacate room, apartment or treeho utilize. Guests search through the Airbnb website, read reviews and connect with hosts to pass less conventional and, often more(prenominal), affordcapable lodging. Key to Airbnbs clientele success is establishing a framework of combining on which both hosts and guests cease rely, a system Airbnb has developed through a strong merchandise schema and through specific practices that hold in host and guest through start the take upal process. Building this framework of institutionalise in the system is a pore not just for Airbnb, but is similarly typical of a partnership operating in the cutting sh be fruga lity.WHAT IS THE SHARING scrimping?The oerlap deliverance is a new economic opportunity for customers to main course goods whenever they are required at that moment with access trumping ownership. For eccentric, if a person only customs a car once a month, they could rent a car from a communion parsimoniousness telephoner care ZipCar instead of paying a monthly car allowance for a car they barely use. Following the economic recession, many Ameri bathrooms shed rick less wasteful in using their economic resources. In addition, more Ameri pukes are expressing an interest in being more neighborlyly assured of green initiatives and different sociable responsibilities (Neilson). These trends submit resulted in a new guidance on shared resources. Beyond just the economic benefits, grace of God and community numbering are important drivers of the sharing economy. Today, slew who tint the burden of the current economic period may prefer to rent or sell to their peers instead of giving their argument to major corporations.Furthermore, the Consumer-to-Consumer (C2C) stemma model is totallyowing many various(prenominal)s to exploit their own resources to gain additional in amaze without the highschool startup cost and long-term commitment for business sustainability. Although the idea of sharing is an old idea, the ability for sharing to generate profit is relatively new. The sharing economy is greatly influenced by online commerce and social media. Online commerce has hold in it easier for peers to share their goods and religious work with one other using trusted pay services through websites such as PayPal. Social media has gartered spread the economic and individualized benefits of the sharing economy and has served as the fundamental foodstuffing machine for the growth of countless collaborative consumption companies. Companies functioning primarily in the sharing economy consistently urge their users to share their experienc es via Facebook, Twitter and other social networks. These social platforms have become so integrated in web transactions that once a customer has confirmed or paid, they are prompted to immediately post their money-saving or moneymaking success right off to their social media page of choice.Also referred to as collaborative consumption, the social economy follows the idea that people will first use what they have, borrow, swap, make and thrift items before they actually buy mostthing brand new (Anderson). The marketers of these sharing economy companies primarily target a few segments but are everlastingly expanding. Urban electron orbits and members of the X and Y Generations are spot demographics for the sharing economy. Demographically, the bulk of sharing economy companies will target Generation Y payable to their concern for environmental and social issues that influence their decision to save and reprocess resources (Kotler, Philip, and Kevin Lane Keller, Chapter 8). St atistics show that the newest generation of adults buys fewer houses and fewer cars than its predecessors (Ciccone). Furthermore, Generation Y is attracted to outlawed practices such as the sharing economy and is highly social, able to spread the word.Generation X is more likely to be those who are lease out their goods and services. As Generation X has more responsibilities, they jazz the extra income that helps them finance their obligations, such as children and paying a mortgage. citizenry are collaborating informally in their communities out of both necessity and as a lifestyle choice. A sharing economy caller-up should narrow on branding, networking and experience to ensure its success (Olson). Branding is key because sharing economy companies want consumers to have arrogance in their brand. The sharing economy is at an utility, being relatively new with a market that is incorporated through online commerce and social media.Outside of spreading the work, a brain of c ommunity is built within the network. Finally, a sharing economy company has to concentrate on customer experience. Customers are looking for ease of use and production value. When these desires are met, consumers will return to use the service as thoroughly as recommend it to others. One very successful example of a company with the sharing economy employing these factors is Airbnb, who in less than a decade has built a major competitor to the centuries old hotel industry.WHAT IS AIRBNB?Brian Chesky and Joe Gebbia founded Airbnb in San Francisco, when they began renting out airbeds in their apartment to people attending a local anesthetic conference to generate additional income in 2008. The early business model for Airbedandbreakfast.com, later renamed Airbnb, revolve abouted on large conferences such as the Democratic and Republican Conventions, which created bustling business in the 2008 election year. In 2009 the founders, now including Gebbias former roommate and tech wiz Nathan Blecharczyk, receive $600,000 in seed funding from Sequoia Capital. In that same year, acknowledging that renting to complete strangers made many people uncomfortable, Chesky and Gebbia flew to New York City, home to many of their users, to meet with hosts in person and survey for say-so improvements.This was an unusual strategy for an internet company but it later proved to be profitable. everywhere the next two years, Airbnb made several key strategic changes that gave it concern and force in the marketplace. Of particular note was the establishment of Airbnbs brokes payment model and the decision to bring in professionals to germinate host homes. By the end of 2011, Airbnb had gone international and reached critical citizenry (Geron). Forbes estimates that Airbnb likely lost money in 2012 in favor of accelerating growth, a hit the company could withstand due to the influx of capital from different Silicon Valley venture capital firms (Geron). Their market pen etration is comparatively strong, according to Tech Crunch, with Airbnbs booking expected to have surpassed that of Hilton in 2012 (Empson), and hosts renting to an estimated 2.5 million people according to the Economist (All look on the sharing economy).The Wall Street Journal value Airbnb at $2.5 billion in October 2012, and Privco projected their revenues for that year to be at $180 million (Melby). In exchange for customer support, website maintenance and heterogeneous insurance and security features, Airbnb employs a broker-style payment model, taking a pct of the rental price between 6% and 12% from the guest, depending on the plaza price, and a 3% service fee from the host (Geron). Airbnb has come into its own financially, while still maintaining an identity that, though not especially anti-corporate, is for certain fresh, young and innovative. From the company logo, with its big, curly lettering and informal design, to its emphasis on restrain interaction with au thorisation users, Airbnb has built its brand for the generation exalt by innovation.The motto travel like a human emphasizes the contrariety between the traditional, impersonal, corporate travel experience and the opportunity Airbnb presents to users to build their personal networks with hosts in far off places, at a lower cost. As is perhaps to be expected with an internet company, Airbnb relies heavily on social media to create and perpetuate its brand identity. A key aspect of the company brand is the travel experience. They post a traveler of the week on their Facebook, Twitter and Google Plus pages, and recently concluded a photo vie using Instagram, with Airbnb travel credits as the abide by. maculation the choice of prize may be a bit opportunistic, the interactive concept to use the mainstream photo-sharing app, and the reward both fit well with the Airbnb brand and kept the focus on travel rather than profit motive. Naturally, travelers blog posts that mention Airbnb, whether they focus on the company or simply mention it in passing, are often promoted through re-tweets and posts on the Airbnb blog.The experience of travel is only one facet of a company identity that is as carefully all-around(prenominal) and addressing as its users. Airbnb withal emphasizes its interest in the popular local movement with its Living Local shows, a part of its AirTV series. Each online case features a tour of a unique Airbnb host property, and interviews with the generally personable host or hosts. Beyond that, Airbnb is aware of the appeal of its unique and tech-centric business model to engineering and tech nerds. The company leads content catering straight off to this audience through its specific engineering blog nerds.Airbnb.com and its Tech reproof YouTube series, where young tech enthusiasts present on innovative new technologies and how they can and are being harnessed to build businesses (YouTube). These videos, generally around an time of day i n length, provide an in-depth review of current technological and business innovations.Airbnb also uses social media to associate itself with other organizations, not unlike cross branding, which establishes Airbnb as culturally present and economically innovative while also eliminating the costs of a major advertising campaign. Their Facebook page, for example, lists SXSW, TED, Virgin America, Lonely Planet and railway line Punk as organizations that Airbnb Likes. Each of these tie-ups strengthens their brand Virgin America connects them to another(prenominal) untraditional travel company and to Virgins maverick CEO, Richard Branson, whose appeal to young professionals has made him by far the most followed Influencer on professional social media site LinkedIn (LinkedIn Today Top minds, big ideas).Similarly, their public association with SXSW reveals a cultural affinity in line with that of their clientele, and functions in tandem with the demand for lodging during the festi val, to which Airbnb has dedicated a specific section of their site. with these efforts, the company has branded itself as young, innovative and culturally and technically comprehendall traits that exist outside of its travel-focused revenue stream, but which are inherently appealing to the clientele, both hosts and guests, on which Airbnb relies.AIRBNB FOR GUESTSAirbnbs business model focuses on consumer-to-consumer (C2C) transactions based on trust. Its model is similar to the popular C2C marketplace of eBay where buyers and sellers engage in transactions that are each evaluated by individuals for their take of essay on the basis of detailed profiles, history, product, price and other resources. in time for Airbnb, the relative level of investment for guests and hosts is significantly higher on a per transaction basis. Travelers are risking their vacation experience, safety and in most cases, a relatively higher dollar value than a single product purchase. entertains are off ering their homes, their personal privacy and their own safety, as well as their living experience for the time that their place is secured by a guest. With these personal investments in mind, the success of Airbnbs ability to instill confidence, trust and safety throughout their network was critical to the success of the company.Airbnbs roadmap to build safety and security for their renters includes a private messaging system that allows users to tick off about each other prior to booking while retention private information to be disclosed at a later time. Another system is Airbnbs verified ID badge where users will  demo their social networks such as LinkedIn, Facebook, Airbnb reviews and official documentation from their photo ID and/or passport. With the verification of all of these resources matching up, those users will receive a affirm ID badge with their account information demonstrating to other users that their identification has been vetted. In April of 2013, Airbn b began every which way selecting users to complete this profile and expect to have this expanded worldwide for all Airbnb members in the near future.Over the last two years, Airbnb has made efforts to subjoin their resources to expand security and sustain the trust in the marketplace by doubling the size of their customer support staff with 247 support, creating a dedicated Trust & Safety department and excogitation tools to verify user profiles and facilitating richer communications between guests and hosts prior to booking. With these basic features, the usability, consistence and accessibility to hosts and the Airbnb support police squad continue to be critical characteristics to Airbnbs service roadmap. Although, when travelers are shopping they also have the responsibility of maximizing their use of these tools and take care in evaluating their own transaction risk by perusing host profiles, reviews, social networks and even connecting with their host on a regular basis .AIRBNB FOR HOSTSHosts are just as much Airbnbs customers as guests so while they must inspire guests to stay in an individuals residence, Airbnb must simultaneously inspire trust and confidence in the Airbnb model for hosts. Airbnbs actions and interactions with hosts and potential hosts are meant to project an go through of determine, confidence and community for the host, with a particular focus on doing so administratively, financially and socially. To simplify and centralize the hosting process, Airbnb manages all the administrative functions of becoming a host, which provides a support system and protection for the host and his or her property. instead than having hosts build a new website for their rental, the site is already created (in multiple languages and currencies) and all he or she must do to get started is create a profile. Airbnb has a free customer service team to help first-time hosts learn the process. While Airbnb makes it clear on their website that unders tanding tax and legal spatial relation for hosts is the responsibility of the host, Airbnb provides fictitious character documents and answers to common questions on their website.Although Airbnb maintains the site architecture, hosts are in complete control over the rental price, amenities and house rules. Airbnb in some cases will even offer free professional photography for host properties. A secure online payment system is built into the website to guaranty complete, on-time payment directly to the host (Why Host). Hosts are fundamentally allowing a stranger into their home (or boat, treehouse, etc.) so a sense of control is key for their confidence in this model. To do so, Airbnb creates systems to offer protection to hosts persons and property. Hosts have total control over who rents their list. A potential guest puts in a reservation request through the online system and then the host has 24 hours to accept or decline the request. During this time the host and potentia l guest can communicate through the website communications system and reference the aforementioned verified ID system. However, the rental address is not given out until the owner accepts the guest and hosts also have access to the 24-hour customer service hotline (Trust).Since most hosts are renting old residences or rooms, protect against potential damage is much more important than if this was a hotel or business. While normal renters or homeowners insurance is the responsibility of the host, in 2011 Airbnb launched its Host Guarantee property protection program. In May 2012, it took insurance underwritten by Lloyds of London to extend the Host Guarantee to up to $1 million in property damages. This covers guest damages beyond the mountain range of reasonable wear and tear in 23 countries. No additional cost or actions are required for the host to have this protection (Guarantee). The financial incentive is a key reason people become hosts. In a survey of members of Airbnb in S an Francisco in November 2012, over 90% of hosts rented their primary residences to visitors and spent almost half the income they made on living expenses (Lawler). To encourage more people to become hosts and to support live hosts, Airbnb also focuses on facilitating the financial aspects of renting. Firstly, it is free to create a listing using Airbnb.For online payments, the guest submits payment and once the reservation is accepted Airbnb processes and collects the payment in full. Airbnb holds the payment until 24 hours after check-in (and after the guest-host paseo through). This helps uphold host cancellation policies and provides a neutral third-party for financial exchange. The Airbnb website also facilitates change fees which are held until the property is vacated. The secure payment of fees and physical exertion is a key way Airbnb builds confidence for hosts in addition to the social and cultural aspects of hosting. While the first reason most hosts decide to ren t their space is financial, another reason is a desire to meet new people, show off their city and be part of the shared economy.Airbnb allows hosts to rent out primary and secondary residences, but 50% of hosts rent private rooms in their residence while they are there ( disembodied spirit). On the Airbnb site, there are numerous forums and guides for people to learn about becoming a host, exchange ideas and form a deeper community within the sharing economy. The social community built in Airbnb, plus the financial and administrative support systems, encourage new and repeat hosts to open their homes and lives up to the world because they trust in the brand and system created by Airbnb.NEXT STEPSAirbnbs success did not come without the expected growing pains of any startup company, and especially one commanding a dominant market share in the new sharing economy. While its impact on the tourist trade, individual income, revenue to small businesses and economic stimulation are remar kable, the personal price some individuals have had to pay using Airbnbs service is important not to overlook. From city-issued sanctions to individuals violating lease regulations, to vandalism of personal property and identity theft, the safety, benefits, opportunity costs, and sustainability of Airbnbs service has been questioned in the media. To alleviate some of these concerns and remain a viable business, Airbnb should examine these obstacles in an effort to shew awareness through its community. They can continue to find ways to provide a more comprehensive and scrutinized ID verification process for all of their users to calumniate the existence of bad apples.The level of care that hosts place on evaluating their individual transaction risk and understanding of regulations specific to their city has a direct impact on their safety and success as an Airbnb host. Through consumer forums, hosts, guests, and potential consumers and guests can communicate on a network to learn f rom their peers. Airbnb should also consider expanding the countries covered and the items covered under the Host Guarantee to sum up host protections locally and internationally. Moving forward, Airbnb has to be conscious of the popular pitfalls crevice sharing economy companies have faced. In a Campbell Mithun study, consumers were concerned with the following, in descending order What I lend could get lost or stolen, I cogency not trust others in the network, my privacy energy be compromised, sharing is not worth the effort, and the goods or services business leader be of poor quality (Olson). As described above, Airbnb has taken needed measures to help defend the safety and privacy of its host and guests. However, as the sharing economy evolves, this could get more difficult and new safety concerns can arise that Airbnb will need to resolve quickly. cooperative consumption represents a major economic, social and cultural shift as it moves out of infancy and toward acc eptance. These companies need to find the balance between the potential of the sharing economy and the standing regulation of the political relation. The current brick and mortar companies that are participating in highly-regulated industries like hotels or rental cars now have to compete with services that do not go through the same rigorous levels of revue or qualifications to ensure public safety (Lawler). Sharing economy companies could make a solid argument for self-regulation. Airbnb should take care that they currently have the proper management to ensure there are no immoral parties in their business dealings and that their brand is strong enough to self-regulate (Lawler). For a well-rounded approach, shared economy companies should look towards or at to the lowest degree be aware of how the government may impose regulations to see how they might help or hinder Airbnbs progress.There will come a time when companies like Airbnb will need to defend their unconventional and minimally regulated services, and should now put into place a team that can defend them. Lobbying municipal and state governments in high usage areas is a more traditional but still relevant area for Airbnb to protect its business model and by extension its users. The greatest advantage that collaborative consumption has when defending their stance to the economy is that they exist to help people in their communities to meet their goals (Metcalf, Warburg).These companies need to leverage their community-based benefits as a way to gain support and appeal to those wanting greater government intervention. Preparation and understanding of user needs, government regulations and economic trends will brace the nascent shared economy into a strong, sustainable economic force. Therefore, if Airbnb continues to focus on building a brand that consumers can trust in and created mechanisms to support hosts and guests then it can be a durable, profitable company for years to come.WORKS CITE DAirbnb. YouTube. Web. 27 June 2013. https//www.youtube.com/user/AirbnbAnderson, Lauren. Collaborative Consumption Directory Visualized. Collaborative Consumption. Collaborative Consumption, 30 May 2013. Web. 01 July 2013. http//www.collaborativeconsumption.com/2013/05/30/collaborative-consumption-directory-visualized.Ciccone, Alicia. The Sharing Economy. The Huffington Post. TheHuffingtonPost.com, 05 Sept. 2012. Web. 01 July 2013. http//www.huffingtonpost.com/2012/09/05/the-sharing-economy_n_1857201.htmlEmpson, Rip. CEO Brian Chesky Says Airbnb result Be Filling More Room Nights Than All Hilton Hotels By The stopping point Of 2012. TechCrunch., 12 Dec. 2012. Web. 29 June 2013. http//techcrunch.com/2012/12/12/cloudera-ceo-mike-olson-by-december-31st-airbnb-will-be-filling-more-room-nights-than-hilton-hotels/Geron, Tomio.Airbnb and the Unstoppable Rise of the fortune Economy. Forbes, 11 Feb. 2013. Forbes.Guarantee. Airbnb. Web 30 June 2013. https//www.Airbnb.com/guaranteeLawler, R yan. Airbnb Our Guests Stay Longer and drop off More Than Hotel Guests, Contributing $56M to the San Francisco Economy. Tech Crunch. 9 November 2012. 30 June 2013. http//techcrunch.com/2012/11/09/airbnb-research-data-dump/Lawler, Ryan. equilibrise Innovation And Regulation In The SharingEconomy.TechCrunch. Crunchbase, 9 Dec. 2012. Web. 01 July 2013. http//techcrunch.com/2012/12/09/balancing-innovation-and-regulation-in-the-sharing-economy.Life Airbnb. Web 30 June 2013. https//www.Airbnb.com/lifeLinkedIn Today Top Minds, Big Ideas. LinkedIn.com. Web. 29 June 2013. http//www.linkedin.com/today/influencers?trk=tod3-top-nav-filterKotler, Philip, and Kevin Lane Keller. Chapter 8 Identifying Market Segments and Targets. Marketing Management. Upper shoot down River, NJ Prentice Hall, 2012.Melby, Caleb. Who Will Get Rich from Sky tall Airbnb Valuation? Forbes. Forbes Magazine, 19 Oct. 2012. Web. 27 June 2013. http//www.forbes.com/sites/calebmelby/2012/10/19/peter-thiel-may-invest-150-mi llion-in-airbnb-at-2-5-billion-valuation/Metcalf, Gabriel, and Jennifer Warburg. A polity Agenda for the Sharing Economy.SPUR.com. The Urbanist, Oct. 2012. Web. 02 July 2013. http//www.spur.org/publications/library/article/policy-agenda-sharing-economy.Olson, Kristine. Campbell Mithun. Campbell Mithun. 8 Feb. 2013. Web. 01 July 2013. http//www.campbell-mithun.com/678_national-study-quantifies-reality-of-the-sharing-economy-movement.Temple, James. Google Places Draws Complaints from Yelp, Others. SFGate. San Francisco Chronicle, 29 June 3011. Web. 27 June 2013. http//www.sfgate.com/business/article/Google-Places-draws-complaints-from-Yelp-others-2352896.phpThe Globally, Socially Conscious Consumers. The Global, Socially Conscious Consumer. Nielson, 27 Mar. 2012. Web. 01 July 2013.