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Services Marketing Airbnb Audit 1 PDF
Services Marketing Airbnb Audit 1 PDF
1.0 Introduction
2.1.1 Competition
3.0 Recommendations
4.0 Conclusion
5.0 References
6.0 Appendices
1.0 Introduction
Airbnb provides comprehensive, simple and easily accessible information through their platforms in the
form of;
Listing and personal profile descriptions.
Information 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.
Order-Taking 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.
It is the responsibility of both Airbnb and the host to ensure that the safekeeping of the customer is
Safekeeping 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.
Airbnb offers refund policies as well as host guarantees terms and conditions.
Exceptions
Billing 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.
Payment Payments are deducted 24 hours after check-in.
One-step checkout process.
The purpose of this report is to examine Airbnb’s 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 Airbnb’s service delivery for Australian consumers. Finally,
recommendations for future service development will be presented.
Airbnb’s scalable P2P model entered the tourism market with a unique value
proposition as cheaper than traditional service providers (Hawksworth, 2014). The P2P
economy is in its infancy, with year-on-year growth outstripping traditional e-commerce
markets. Airbnb has become a market leader within its sector by delivering real-time
accommodation solutions in response to consumer demand.
The organisation’s 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
Table 2: Airbnb vs. Competitors
Figure 1: Competition
The company’s 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).
Australia boasts some of the highest per-capita consumption of the platform globally,
with capital cities Melbourne and Sydney showcasing the highest localised trends
(please refer to Appendix 1). The supplier can set whatever price they choose.
However, supply and demand ultimately shape the free market. Airbnb charges guests
along a regressive sliding-scale fee between 6-12%, as well as charging hosts a fixed
3% fee. This means their revenue is pegged against occupancy volumes, price and
While Airbnb’s 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 Lovelock’s 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). Airbnb’s differentiating supplementary services include
interactive maps, which allow users to ‘see where people are travelling, all around the
world’, and blogs showing user’s experiences, further allowing customers to preview
before they book.
While Airbnb’s 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
mix by introducing a 24/7 ‘live chat’ function into their
website and app. Not only would this increase Airbnb’s 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 Airbnb’s hosts and consumers.
Firstly, its logo, ‘the Bélo’ aims to unlock the power of belonging by creating a symbol
for the Airbnb community. Airbnb’s Bélo 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 customer’s
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’.
Airbnb’s role is both as the facilitator and arbitrator for which they collect a nominal
percentage service fee. The organisation is responsible for verifying personal profiles
and listings, enabling transparent communication and information search, and
processing and settling all financial transactions. Airbnb holds guest’s payment in
escrow until 24 hours after check-in as a means of ensuring both parties contractual
obligations and ensuring mutual satisfaction (Cohen and Sundararajan, 2015).
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.
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
brand’s 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.
Figure 3: Airbnb Service Blueprint
2.6 Managing People
The structural change represents the company’s push to instill a sense of community.
Specialisation teams like compensation and benefits, learning and organisational
development, facilities, safety and security all exist to take care of specific functions in
what they call an “inside out strategy” that seeks to create a sense of belonging. The
strategy is arguably simply part of a branding alignment activity to further embed
stakeholders and enhance word-of-mouth through host and guest advocacy. By
combining human resource management strategy with marketing objectives, the
platform’s existing home-sharing network are able to dispel some of the associated
stigma of the uncommon subletting practice. Hosts in particular, are likely to become
productive resources as they themselves perform an integral marketing function by
advertising their accommodation as a viable substitute to traditional competition.
2.7 Servicescape and Physical Evidence
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.
3.0 Recommendations
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
Appendix 1: Density of Airbnb users and hosts – Sydney (2016)
Appendix 2: Airbnb Economic Impact (2016)
Appendix 3: Vacation Rental Site Comparison (2016)