Professional Documents
Culture Documents
Table of Contents:
1.0 Introduction
2.0 Service Marketing Mix Analysis
2.1 Service Product and Positioning
2.1.1 Competition
2.2 Pricing, Productive Capacity and Demand
2.3 Physical and Electronic Distribution
2.4 Integrated Service Marketing Communication
2.5 Service Process
2.6 Managing People
2.7 Servicescape and Physical Evidence
3.0 Recommendations
4.0 Conclusion
5.0 References
6.0 Appendices
1.0 Introduction
Airbnb offers consumers a different approach to the traditional service of
accommodation which relies on a shared economy. This peer-to-peer (P2P)
marketplace has successfully disrupted the traditional business-to-consumer (B2C)
hotel model (Moore, 2016). It allows individuals to list their own or rented properties for
short-term accommodation. Private rooms within a residence, shared rooms or whole
residence options are available depending on consumer needs. The primary aim is to
provide consumers with a unique and memorable travel experience. By evaluating the
service using Lovelocks (1995) Flower of Service model, each supplementary petal
contributes to the services overall point of differentiation:
Information
Consultation
Order-Taking
Hospitality
Safekeeping
Airbnb provides comprehensive, simple and easily accessible information through their platforms in the
form of;
Listing and personal profile descriptions.
Pricing and availability information.
Confirmation e-mails and text message reminders.
Tips and pre-arrival guides.
Access instructions.
Previous trip and invoice details.
Host expectations and rules.
Can be done swiftly following the creation of an account using Facebook, Google Plus or through email
sign up.
One-step checkout.
Sign up via Facebook, Google Plus or e-mail.
Hospitality is provided by the host, which is quality checked by Airbnb.
Friendliness of host.
Cleanliness of residence.
It is the responsibility of both Airbnb and the host to ensure that the safekeeping of the customer is
maintained. To ensure safekeeping, customer and hosts are able to rate each other, which instils trust
amongst the Airbnb community between potential hosts and customers.
Exceptions
Billing
Payment
Airbnb offers refund policies as well as host guarantees terms and conditions.
Verified ID must be obtained before booking. An account history of bookings is kept and can be viewed at
any time.
PayPal, MasterCard, VISA, American Express are all accepted payment methods.
Payments are deducted 24 hours after check-in.
One-step checkout process.
The purpose of this report is to examine Airbnbs service marketing mix and identify key
strategic opportunities within the organisation. Drawing upon services marketing
theories and frameworks, these opportunities aim to improve the overall efficiency and
effectiveness of Airbnbs service delivery for Australian consumers. Finally,
recommendations for future service development will be presented.
The organisations market capitalisation of US$30B has an active presence in over 192
countries, with over 500,000 listings on its short-term renting platform (Price
Waterhouse Coopers, 2015). Interestingly, the guest to host ratio sits at 6:1. Table 2
and Figure 1 below position Airbnb in reference to various competition
Reliability
Assurance
Expedia (Home-Away)
Global network.
Positive brand reputation.
Assist in facilitating the exchange
between host and consumer.
Ensure secure transaction with
no direct financial outlay
between parties (secure online
portal).
Hilton Network
Global network
Publicly listed company
with privately held
subsidiaries (e.g. HomeAway).
Global reach.
Higher cost for hosts.
Tangibles
Empathy
Responsiveness
Figure 1: Competition
Large brand
Potential to be seen as
faceless or unresponsive
to consumer concerns.
The companys target market is broad and caters for both a diverse demographic and
psychographic consumer base. The brand has differentiated itself by normalizing the
atypical practice. Their focus is centered on creating a sense of community for both the
guest and host (Price Waterhouse Coopers, 2015).
Despite boasting approximately 100 million users, and 640,000 hosts, only 16% of
users are active, leaving a disproportionate number of idle consumers (Moore, 2012).
Brand advocates are considered loyal after 5 or more service interactions. In order to
encourage repeat patronage, the business needs to nurture the customer/host
experience for long-term collaborative consumption (Wegert, 2014). In terms of
consumer psychographics, the only consistently shared theme across its many
offerings, is the need for both the end user and host to have a willingness to engage in
a peer-to-peer transaction, as opposed to more traditional business-to-consumer
exchange (Airbnb, 2016).
transactions are more economical to consumers (reference), there are still instances in
high-visitor volume cities such as Barcelona where consumers will actually pay more
using the service than traditional hotels (please refer to appendix 4).
2.3 Physical and Electronic Distribution
Within tourism services, distribution channels serve as the link between the suppliers of
tourism products and their end consumers (Gartner and Bachri, 1994). Both of Airbnbs
platforms are easy to navigate and allow hosts to post descriptions and photographs
of their spaces, communicate with guests, and take reservations and payments with
ease. Furthermore, Airbnbs online platforms enable hosts to effortlessly enter the
tourism accommodation sector and compete with global accommodation enterprises
for worldwide guests (Guttentag, 2015, pg. 1195).
While Airbnbs customers do not consume their core product, A place to stay, until
they arrive at their accommodation, by using an online distribution method Airbnb are
successfully able to facilitate distribution of all the supplementary service information
petals of Lovelocks Flower of Service (Lovelock and Wirtz, 2015), pg. 129). Airbnb
takes their supplementary services one step further by using them as points of
differentiation, which is important in a competitive industry such as tourism (Naipaul
and Parsa, 2000, pg.68). Airbnbs differentiating supplementary services include
interactive maps, which allow users to see where people are travelling, all around the
world, and blogs showing users experiences, further allowing customers to preview
before they book.
While Airbnbs electronic distribution method is very beneficial to its business model,
not all customers find electronic channels easy to use (Lovelock and Wirtz, 2015, pg.
133). Therefore, an opportunity has been uncovered for Airbnb to improve its marketing
website and app. Not only would this increase Airbnbs market size by allowing it to
reach those who would traditionally struggle to use an online platform, it would also
strengthen the connection the between Airbnbs hosts and consumers.
2.4 Integrated Service Marketing Communication
By using Integrated marketing communications (IMC) Airbnb is able to produce a
strong focus for an offering while accommodating its intangible nature (Grove, Carlson
and Dorsch, 2002). Airbnbs IMC strategy parallels George and Berrys (1981)
recommendation to present a uniform message by continually stressing symbols and
themes to strengthen the services image and differentiate itself from competition.
Airbnb achieves strong synergy throughout its IMC strategy by promoting the essence
of a culture of belonging through three key IMC strategies; branding, overcoming
intangibility, and aligning internal communications.
Firstly, its logo, the Blo aims to unlock the power of belonging by creating a symbol
for the Airbnb community. Airbnbs Blo logo is further reinforced through Create
Airbnb, an online platform where users can create their own unique symbol and tell
their story under their shared banner, thus belonging to the culture of Airbnb (Create
Airbnb, 2015).
Secondly, to overcome one of the issues of intangibility, impalpability, Mittal and Baker
(2002) recommend services present an articulate narration or depiction of a customers
subjective experience. Airbnb achieves this by sharing stories from the Airbnb
community on its website, and through rich imagery and narration. The service process
is demonstrated while spreading a culture of belonging.
Thirdly, internal marketing is an important sector of service IMC as it enables crossfunctional planning across multiple departments and functions, which further improves
the consistency in brand messaging (Luck and Moffatt, 2009, pg.319). Airbnb achieves
Hosts begin the process by creating a free profile to list their property, accompanied by
photos as well as property and personal descriptions. They maintain unilateral control
over available dates, price setting and guest approval. Property owners and lessees
can introduce house rules such as security deposits or cleaning fees as a control
measure.
Figure 2: Availability Options for Hosts
Travelers search by destination, dates and pricing to discover distinctive places to stay
anywhere in the world, ranging from apartments and houses to castles and
houseboats. They may provide a personal description of themselves, but they must
add a profile picture and may be subject to further vetting and identity verification.
Guests and hosts provide reviews for one another that are permanently linked to their
respective profiles. This establishes a degree of mutual accountability (Folger, 2016),
although the procedure is far from infallible. Reports of opportunistic theft, property
damage and legal conflict surrounding leasing agreements are just several of the
brands challenges. The vast majority of stays occur without incident and Airbnb offers
hosts insurance cover of $1,000,000 in damages for protection. However, more
rigorous background and Police checks would more proactively anticipate potential
incidents and would provide the community with greater reassurance and credibility.
While there are strengths for virtual platforms, this means the potential to shape
feelings and reactions about the service is lost due to a lack of physical surroundings.
These emotive responses to tangible elements can help build a positive image and
therefore differentiation, as well as becoming part of the value proposition for
consumers. This service-scape is instead created by the hosts of Airbnb rooms, and
while they are connected to the organisation, ultimately they are outside of their control.
These suppliers could be encouraged to create a positive physical environment, which
could include things such as ambient conditions and signs and symbols, ultimately
they cannot be forced to do those things.
these recommendations are aimed at improving the service-scape and delivery for
both the host and end-consumer, leading to an increased capacity and utilisation of
the service and helping to mitigate the autonomous quality control measures currently
in place.
Although the productive capacity of Airbnb is not limited to staff volumes, there are
instances of supply-capacity outstripping demand and vice-versa in low-demand
periods. Price fluidity to manage consumer demand in a traditional B2C or B2B
framework would traditionally be used to help manage these demand fluctuations,
however, this is not as easily implemented under the Airbnb model. Therefore, the
business can take advantage of the P2P sphere by ensuring effective marketing
campaigns are readily available and easily implemented in order to utilise assets and
adapt to changes in the market place.
This approach does not need to be solely anchored to the residential short-term
lodging sphere, as the existing infrastructure can be expanded into other industries that
are yet to capitalise on the P2P approach such as; spaces for temporary or short term
office rentals, e.g. Share-desk. Airbnb could even look at offering alternative services or
partnership opportunities in similar industries, with non-competing businesses. For
example, leveraging off consumers travel plans by partnering with established travel
facilitators such as Flight-Centre (an adaption of the Expedia / Home Away approach),
whereby Airbnb offers a consumer-centric experience for their holidays, boosting their
single minded proposition of stay with a local - live like a local.
4.0 Conclusion
As regulatory bodies adapt to the dynamic P2P marketplace, service providers will
need to ensure they are able to adjust to shifts in consumer demands and regulatory
frameworks that govern the service. What was once a Cutting Edge disruptive service
delivery model, can quickly become unviable due to shifts in market conditions or
service technologies (Vandermerwe, S, 2014). Therefore, management silos with a
localised consumer centric approach, whilst maintaining the overarching service
delivery promise and goal, is paramount if Airbnb is to remain a market leader in the
long term (Newton, P, 2015)
4.0 References
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5.0 Appendices