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In simply eleven years, Airbnb has become one of the largest short-term rental businesses worldwide valued at thirty-one billion dollars. In 2007, Joe Gebbia and Brian Chesky, both unemployed, found themselves brainstorming for ways to “make a few bucks” to pay for their San Francisco rent. With a conference scheduled to bring in a large number of visitors to the Bay area and a majority of the hotels booked, Gebbia and Chesky saw an opportunity. They turned their loft into a makeshift bed and breakfast that could be rented out each night for eighty dollars. When the third renter showed up, Gebbia and Chesky knew their business idea was lucrative and the invention of Airbnb begun. Nathan Blecharczyk, who was Chesky’s former roommate and third co-founder developed Airbnb’s website to be used as a platform for peer-to-peer property rental (Capizzani, Kim, & Obersriebnig, 2015, p.2).
Airbnb pursues an innovative business model which involves the integration of collaborative consumption into the firm’s peer-to-peer accommodation rental model. The operation of the Airbnb Company has been employed by various marketing strategies adopted by the firm such promotional strategies, online marketing strategies where the firm significantly utilizes social networks and Google to expand reach as well as increase its target clients geographically. Other marketing strategies include the vertical integration or collaboration to increase brand awareness and minimize competition and promotion strategies among others. This paper will explore the marketing strategies issues in the Airbnb company case and the recommendations on how the marketing strategies issues should be handled to enhance their effectiveness.
Key Marketing Strategy Issues
Legal and regulatory concerns are one of the primary marketing strategies affecting Airbnb firm. According to Ellis-Chadwick and Jobber (2013), one of the marketing strategies of Airbnb Company is to expand globally through vertical integration. However, the expansion through the use of collaboration is limited due to various regulations and legal procedures formulated and implemented by nations that corporations have to comply with for effective operation. Airbnb utilizes the sharing economy model. This model has enabled the company to gain profits and growth through flooding markets by avoiding the various restrictions such taxes imposed by the government of the nation. Capizzani et al. (2015) assert that despite the continuous growth depicted by Airbnb Company, Juan Molas, CEHAT president in Spanish state that the company has been driving down the government taxes. Additionally, issues regarding the rise in illegal employment, violation of consumer rights regarding quality and security, a phenomenon that has lead to harming of the reputation and image of the destination of tourists in Spain. Additionally, the availability of a vast number of unregistered accommodations in varying nations has rendered to the banning of Airbnb Company in their marketplace. This aspect is due to the unregistered accommodations results to health and safety issues as well as tax aversion issues in a nation.
Community integration is another issue of marketing strategies depicted in the Airbnb case. The company has significantly embraced the sharing economy since the corporation was launched to aid in development and expansion of the business. According to Capizzani et al. (2015), the sharing economy in community-level encompasses sharing of services and assets with other individuals emerged at around at the same time. Despite the business model generating high valuation, resulting in high rate of growth and the above the model being disruptive, the approach may result in the firm being perceived as untrustworthy because of the cutthroat handling of business drivers such as platform deactivation and pricing. This aspect may render the company suffers loss due to various actions against the firm may arise such as protest. Uber is one of the corporations that experienced the negative impact of community integration in sharing economy which resulted in significant unionization movement among the firm’s drivers, an aspect that lead to action against the company directly such as protest.
Another key marketing strategy issues highlighted in the case study was the difficulty of facilitating customer service and satisfaction due to the lack of trust between the hosts and the guests. According to Ellis-Chadwick and Jobber (2013), the generation of trust in a business environment is an essential aspect since it helps in the promotion of a friendly relationship between the involved parties. Failure to build trust among the individuals involved in commercial activities acts as a hindrance in the provision of products or services and enrichment of customer’s satisfaction. This assertion is valid since lack of trust creates doubts which may lead to misunderstanding of the involved parties.
Besides, the difficulty of promoting value proposition is another marketing strategy issue discussed in the case study. This assertion is valid since the company did not consistently offer high-quality services and maintain a strong brand. Hence, this failure to facilitate value proposition affected the growth of the market share and the reputation of the organization. Moreover, the difficulty of enhancing value proposition also led to the inability of the firm to attract new clients as well as the provision of a variety of services to the guests. Additionally, the development of customer segmentation was also another marketing strategy issue. This declaration is centered on the fact that the company was unable to categorize its clients by their needs and preferences. As a result, this marketing strategy issue hindered the ability of the organization to explore the market efficiently. Besides, this issue also made it cumbersome for the guests to identify the right host.
Firstly, regarding the regulatory and legal concerns where the Airbnb Company exempted from taxes, existing legal procedures and regulations should be changed. This aspect is due to the existing regulations only serves limited and interests, and also the regulations have outlived their importance. The regulations should be transformed in a manner that they do not exempt any business class from tax and safety regulation among others just because the corporation offers its services over the online (Ellis-Chadwick & Jobber). This aspect will make Airbnb not only to flood to the marketplace in a scam manner but will enable real innovation of the Airbnb company by allowing the services being offered by the firm are subject to tax and other regulation. This action will not only results in the generation of government income through tax collection but also result in maintaining the consumer rights such as health and safety in accommodations and renting services among others.
Secondly, regarding the integration of community in the sharing economy marketing strategy issue, Airbnb Company should consider guiding the behavior the vendors of services would be in an appropriate manner before the issue arises. This practice would involve the company establishing a code of ethics that guides how the vendors would act and how the vendors should be treated. This practice would result in the establishment of a mutually trustworthy association with the vendor, hence, making the pricing favorable to the community. Besides, the formulation and execution of the code of ethics will help define the firm’s culture as well as shape the culture on the company’s platform. This aspect will ensure significant acceptance of the community in their Airbnb expansion target nations.
The enrichment of trust between the involved parties is the optimal initiative mitigating the marketing strategy issue of the difficulty in facilitating customer service and satisfaction. This affirmation rests on the fact that building trust between the hosts and guests will generate an interpersonal relationship. Besides, the provision of the relevant information concerning the involved parties is another way to eradicate the difficulty in facilitating customer service and satisfaction. This assertion is valid since the provision of the relevant information can enhance the understanding and interaction of the involved parties.
On the other hand, it is recommendable for the promotion of the initiative that is focused on the provision of high-quality services as a way to overcome the difficulty of promoting value proposition. This assertion rests on the fact that prioritization in the provision of quality services would ensure a strong brand creation which would generate value to the customers. Moreover, it is recommendable to embark on the undertaking of research of both the hosts and the guests as a means to mitigate the marketing strategy issue of the difficulty in segmenting customers. This assertion is centered on the fact that conduction of research would help in the determination of the needs of each part hence making it easier to group them according to their shared aspects and preferences.
- Capizzani, M., Kim, T., & Obersriebnig, S., (2015). “Airbnb: What´s Next?: Prioritizing Opportunities in Southern Europe“, IESE, M-1339-E, 1-25.
- Ellis-Chadwick, F., & Jobber, D. (2013). Principles and Practice of Marketing. McGraw-Hill Companies Inc.
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