This group report intends to explore Airbnb’s micro and macro environment and develop an efficient combined marketing plan to permit the company to seek growth in the Australian market. The plan’s conclusions show that Airbnb has several competitors in this country, notably Tripping.com, Expedia, Stayz, and Priceline Group. The paper also acknowledges that the companies mentioned above have diverse sources of competing advantage. The majority of industry players are growing using strategic partnerships alongside investments. Innovation is another strategy that Airbnb’s competitors have used in the past to enter the market and expand the share of customers. In addition, the discussion also reveals that “shared economy”, increased use of social media, and advancement in technology are the major developments that can propel the growth of companies in this industry. However, legal issues might still be an impediment for companies such as Airbnb. The SWOT analysis also reveals that Airbnb has a strong brand image as well as many advantages that it can use to enhance growth in the Australian market. Based on these findings, the report has proposed a marketing plan that involves dividing the market into different segments and positioning Airbnb as a reliable company and a forerunner of home-staying in Australia. According to the plan, the integrated marketing mix recommendations will involve creating all types of services that meet clients’ needs and using a combination of advertising, social media, email marketing, content marketing, and sales promotions. Other marketing plan recommendations include the adoption of a mixed pricing strategy and the need to open up new offices in underserved and rural areas.
Table of Contents
Executive Summary ii
1.0 Introduction 1
2.0 Marketing Situation 1
2.1 Microenvironment 1
2.2 Macroenvironment 3
3.0 SWOT Analysis 4
3.1 Strengths 4
3.2 Weaknesses 5
3.3 Opportunities 5
3.4 Threats 6
4.0 Integrated Marketing Strategy 6
4.1 Segmentation 6
4.2 Target Market 8
4.3 Positioning 8
4.4 Marketing Mix 9
4.4.1 Product 9
4.4.2 Price 10
4.4.3 Promotion 11
4.4.4 Place 11
5.0 Conclusion 12
6.0 References 13
7.0 Appendix 15
Marketing Plan for Airbnb in Australia
Airbnb is one of the major privately-held companies within the hospitality industry. The company is an Internet-based marketplace that enables millions of hosts and guests to link up and share assets at a lower cost (Airbnb Inc, 2017). It was founded based on the principle of a shared economy. Airbnb provides a platform where individuals can lease or rent temporary lodging, for instance, homestays, apartment and vacation rentals. Airbnb acts as a broker helping hosts and travellers to list, discover and rent spaces all over the globe (Oskam & Boswijk, 2016, p. 26). From its inception to date, the company has witnessed an increasing number of users and has increased its presence in over 191 countries, including Australia (Airbnb Inc, 2017). This report will come up with a marketing plan for Airbnb’s existing market in Australia. The specific aspects that will be covered include the company’s marketing situation, SWOT analysis, and marketing strategy.
2.0 Marketing Situation
Airbnb was established in 2008 in San Francisco, California (Airbnb Inc, 2017). Since then, the organisation has turned into a major online marketplace and hospitality service in the world. By March the following year after Airbnb was founded, the organisation nearly had almost 10,000 clients and more than 20,000 listings (Airbnb Inc, 2017). At present, the organisation has extended in more than 65,000 cities and 191 countries, serving roughly 200 million guests around the world. Airbnb extended in Australia in 2012 and from that point forward, it has turned into the organisation’s real customer base.
Airbnb works by providing a marketplace for people to list, investigate, explore, and reserve accommodations across the globe. In simple terms, accommodation is the primary service provided by the company. Airbnb utilises channels of distribution where the marketplace is accessed online through the organisation’s site or by smartphone applications. Interested people can register and make accounts. However, on each reservation, visitors and hosts are charged an administration fee (Airbnb Inc, 2017).
Airbnb also partners with hosts to offer guests additional experiences at an additional price. As mentioned earlier, the company works in almost 200 countries across the world. Airbnb’s central goal is to construct a comprehensive stage for visitors and hosts and always work towards enhancing it. The company is also guided by certain values. For example, the mission is established on the idea that individuals are fundamentally good and every community is a place where one belongs.
Airbnb has many competitors across the world, and some of the main competitors in Australia are Expedia, Home Away, Stayz, Tripping.com, and Priceline Group. These companies has different positioning and source of competitive advantage. For example, Stayz positions itself as the leading online marketplace and hospitality services provider in Australia. Stayz’s competitive advantage lies in its extensive piece of the overall industry in Australia and its solid brand image. While Tripping.com positions itself as the main search engine for rentals across the world. The capacity to work with other online marketplace centers is the primary competitive advantage for Tripping.com. Priceline, Home Away, and Expedia positions themselves as the biggest and leading online travel.
Competition in the online hospitality market has been on the rise for the past few years (PwC, 2013). Most industry players have been quick to respond by developing strategies in a bid to remain competitive. For example, Airbnb contenders such as Priceline Group, Expedia, Stayz, and Tripping.com have been growing through strategic associations and financing in related activities.
Innovation is also a strategy that competitors have used to access the market and increase their share of consumers. For instance, it includes the adoption of innovation and technology to guarantee usability and easy access. Airbnb works in the worldwide market. However, in Australia, the organisation’s market segment comprises of hosts and travellers across the country. The traveller’s market mainly involves the people who are interested in travelling but would not to prefer to spend all their cash in a single guest house (Airbnb Inc, 2017). The travellers spend more time by going out and fascinating places than remaining in a guest house. On the other hand, hosts include renters and owners who want to earn from an unused space or those who just want to meet interesting people from different parts of the world.
One of the present macro environment trends is the rise of “shared economy” (The Economist, 2013). Airbnb has a superior position in this industry. Another example of a company working in this industry is Uber. It is a fast-growing trend where assets are shared amongst people and organisations. It is an improvement that could push the development of organisations in this industry (The Economist, 2013).
The use of social media and web is also another pattern that can positively affect the organisation. Travelers regularly use online networking sites to report their encounters, which enable stories to spread. The growth of social networking has permitted organisations in the online hospitality industry, such as Airbnb to grow through word of mouth (Deloitte, 2017).
Growth in innovation is also a macro environment trend that has affected the businesses. Organizations in the online hospitality industry depend on technology without which individuals cannot book rooms or contact hosts. The development of the business rely upon the ability of players to adopt the most recent technology (Deloitte, 2017).
At last, there have been legitimate improvements that could affect the business players, such as, Airbnb. For example, various legal issues have been brought up in Australia, regard to the failure to meet housing regulations (News.com.au, 2017). For this situation, the accomplishment of the business may also depend on the requirement for organisations to address the lawful issues.
3.0 SWOT Analysis
Having a user-friendly website is one of the organisation’s strengths and quality that helps interested travellers to easily locate the places and rooms they want to rent and mobile applications has made it more easier. (Airbnb Inc, 2017). Airbnb’s solid innovative promoting strategy is also one of the company’s greatest vital key of success (Oskam and Boswijk, 2016, p. 26).
Also, Airbnb’s ability to market its platform as one that offers additional benefits for guests as well as the hosts has been a major strength for the company. For example, visitors getting much lower rates compared with hotels, and hosts meeting with people from different nations around the World. Unlike other competitors, Airbnb has also considered the security of visitors by offering them medical insurance. Finally, the organisation has a strong brand image and is considered a leading accommodation firm.
With the company’s image dependent on hosts, Airbnb’s image is always at stake. It is one of the primary drawbacks of the company that the hosts can do anything wrong that will influence Airbnb’s image. In addition, development in specific states can bring about the infringement of specific laws (Oskam and Boswijk, 2016, p. 30). In the meantime, it is difficult to provide overall security to every traveller and host on an online stage. Besides this, Airbnb services are available in big cities, therefore, the company might not provide services to those willing to travel to country areas.
Airbnb has a chance to separate its services and products by offering new services alongside rentals. The organization could also grow its services into different parts of Australia, more to the provincial parts of the country. Airbnb can also collaborate with other tourism companies to offer an entire package to consumers. The move could be an open door for the development. Tourism is extraordinarily adding to the developing economies around the globe, for example, Australia, subsequently extending opportunities for firms, such as Airbnb (Oskam and Boswijk, 2016, p. 28). At last, participating in social causes as a major aspect of corporate social obligation could also be an opportunity to improve Airbnb’s brand image. For instance, offering rentals for displaced people in times of crisis.
One of the major threats confronting the organization is laws in specific states that hamper company. Furthermore, Airbnb is powerless to unlawful postings on its site that can harm the organization’s brand image (Oskam and Boswijk, 2016, p. 30). Competition is also a major threat facing Airbnb, as the more new organizations entering the business with a similar business plans. Also, the fact that the company’s business model gives authority to the hosts or the people selling the spaces is a threat because it leaves Airbnb dependent on the sellers.
4.0 Integrated Marketing Strategy
The process of “segmentation-targeting-positioning” is a strategy that businesses use to establish their brand name in the market. Brand identity is created based on an in-depth understanding of a company’s customers, competitors, and the external environment (Janiszewska & Insch, 2012, p. 9). Segmentation is one of the three-step processes that would help Airbnb enhance its brand name in Australia.
Airbnb’s existing target audience in Australia are not just customers but also hosts (suppliers). It means that there is a mutual inter-reliance and the need to create value from inventory (in this case apartments or spaces). Therefore, this justifies that using market segments is a good strategy when the company wants to identify a section of users to cater for in the Australian market. With the company’s chosen strategy, geographic, demographic, psychographic, and behavioristic variables will contribute to the development of specific segments of customers with the same characteristics. The table below shows the proposed market segments and customer characteristics based on these factors.
Table 1: Table 1: Proposed market segments and customer characteristics
Geographic Demographic Psychographic Behavioristic
Cities All individuals aged 14-55yrs Travelers and hosts who like visiting new places, and meeting new people. Individuals who like visiting new places during holidays and festive seasons.
Towns Single/married individuals Travelers who do not spend much time where they are staying while visiting Individual looking to stay in an average hotel (economy)
Rural areas Individuals from lower middle-income to upper class Owners and renters willing to rent out their places. Travelers looking for, cost efficiency, status, and luxury
Travelers who want variety of rental choices and prices Existing brand-loyal customers
4.2 Target Market
Based on the above customer characteristics, Airbnb will target individuals who have an interest in travelling but would prefer to save on accommodation. The message will be directed to “self-guided travellers” who travel frequently or occasionally and spend more time visiting local attractions. On the other hand, the company will target renters and homeowners who want to earn by renting an unused space or those who just want to meet interesting people. The aim, in this case, is to increase Airbnb’s market share in Australia by sending the message to the right audience (Bose, 2012, p.115).
Another objective is to increase the target market within Australia. Therefore, the company will achieve this by channelling its vision to Australians who want to travel and, at the same time, reducing their travel expenses. Identifying the demand niche will also enable Airbnb to focus on the right group of hosts, who are willing to offer their homes at reduced costs, for an alternate standard pay and are in a position to meet customer demands.
Brand positioning is important as it establishes a mission for the brand and a vision of what the brand must be and do (Kotler & Armstrong, 2012, p. 245). As a result, it allows a company to set its objectives, for instance, the kind of message, product variety, and themes that resonate with the target audience.
An objective of Airbnb is to send a positive message so that the company can appeal to its users. Another objective is to eliminate any potential negative perception about the brand by communicating themes that respond to undesirable discernment and changing consumer needs. For instance, in this case, positioning will come about based on the dependability of the firm. Due to Airbnb’s business model, which focuses on people letting visitors into their place of residence, issues of security may arise. For this reason, Airbnb will position itself as a reliable and safe hospitality brand.
In addition, because the company has been able to serve a niche market that had not been previously satisfied, Airbnb can take a position as a forerunner of home-staying in Australia. Taking these positions will ensure that the firm’s marketing messages resonate with targeted users and reinforce the business’s standing in the hierarchy of the hospitality industry.
4.4 Marketing Mix
Airbnb offers online marketplace and hospitality services. With time, the company can greatly improve and expand its service mix to succeed in the Australian market. For instance, the company will innovate its product mix to capture more market. Through innovation, Airbnb will come up with products that are meant to save the consumer money and some that can make an impression.
In simple terms, the company will create various types of services. This is important because it will ensure that every client’s needs are met. For example, in a city like Sydney, consumers will have an economy option, which will include a low-cost option for customers looking for less expensive accommodation. A low-cost option will include accommodation services ranked as average. There will also be group services where people of the same interest can come together and rent a place at a discounted price. Finally, there will be premium accommodation services where a variety of luxury homes and guest houses available for users who are willing to pay. Having this kind of product mix will ensure that the company serves a larger market. Finally, there will be extra services for travellers who want additional experiences, such as those that expose visitors to the history of Australia, food, and attractions of the community near them.
Airbnb’s concept of hospitality services will be mainly based on availability and affordability. Therefore, the company will not only implement an economy pricing, but also premium options. The economy pricing will be utilised to keep prices low and appeal to a specific segment of the market that is price sensitive. For instance, travellers or guests who do not spend much time in a hotel room, and, therefore, would like to make cost savings. The premium option will be used when there is something unique about the services. It will also be used to target customers who are willing to pay more for luxurious suites, homes, hotels, and other related services. Airbnb will calculate the prices upfront or after offering the service. The costs of services will depend on factors such as duration of stay, base pay, and demand.
Airbnb will adopt a promotional approach that uses various aspects of marketing communication. This tactic will involve the use of advertising, social media, email marketing, content marketing, and sales promotions. The company will advertise through public media, online marketing, and mobile applications. For instance, various television outlets can provide advertising packages that can be used to target the Australian market. Online marketing will entail view-per-click ads on websites and blogs that can be channelled to target audience.
Technology has made consumers more connected than ever; therefore, the company will use banner advertising on mobile phone applications. Social media, on the other hand, will involve the use of sites such as Facebook, Twitter, and Instagram, where Airbnb representatives will interact with users and publicise their services. In addition, the company will send emails to potential customers with information on their latest services. At the same time, Airbnb will create branded content that features stories and experiences of Airbnb users in Australia. Sales promotion will involve gifts to consumers, offering discounted prices, conducting joint campaigns, and giving away vouchers and coupons. Utilization of more than one marketing activity, as in this case, is effective because its total impact will exceed the sum of each activity (Naeem et al., 2013, p. 125).
It is important to evaluate sites that can convert potential customers and homeowners into actual clients and hosts respectively (Al Badi, 2015, p. 137). Airbnb’s online marketplace is currently present and being used in major cities across Australia, for example, Sydney, Melbourne, and Brisbane. However, given that the company relies on networking to conduct its services, there will be no need for many offices in existing markets within Australia. However, it might be a necessity to open up new offices in underserved and rural areas, for instance, in Northern Australia, to enhance the presence of Airbnb in those places and seek more customers and hosts to support growth.
The paper has presented a detailed marketing plan that can be used by Airbnb to appeal to the Australian market. The proposed marketing approach has included a discussion on the company’s microenvironment and factors within its external environment that could have an impact on its operations and growth in Australia. The report has also examined key strengths and weaknesses of the company as well as existing opportunities and threats. Based on Airbnb’s internal and external analysis, the paper has proposed an integrated marketing strategy that will be used to enhance growth in the Australian market. According to the plan, Airbnb will use a combination of advertising, social media, email marketing, content marketing, and sales promotions to attract Australian users.
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