Airbnb Marketing Strategy Essay Example
Airbnb Marketing Strategy Essay Example

Airbnb Marketing Strategy Essay Example

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  • Pages: 10 (2578 words)
  • Published: December 29, 2017
  • Type: Case Analysis
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Airbag's success in the business relies on establishing a trustworthy framework for both hosts and guests. This framework is created through an effective marketing strategy and specific practices that provide support throughout the rental process. The focus on building trust is not unique to Airbag, but rather a common characteristic of companies operating in the sharing economy.

The sharing economy offers customers the opportunity to access goods when needed, prioritizing access over ownership. For instance, individuals who only require a car once a month can rent from companies like Zipper instead of paying monthly car payments for a seldom-used vehicle.

The economic recession has led to reduced wastefulness in utilizing economic resources among many Americans. Additionally, there is an increasing interest among Americans in supporting green initiatives and other social responsibilities. These trends have led to a greater emphasis

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on shared resources.

Aside from the economic benefits, the sharing economy also fosters goodwill and community development.In light of the challenging economic period, individuals burdened by financial concerns may prefer renting or selling to their peers rather than supporting major corporations.Furthermore, the ICC business model enables individuals to gain additional income by utilizing their own resources without high startup costs and long-term commitment typically required for business sustainability.

The concept of sharing has been present for a while, but its profit-generating potential is relatively recent. The sharing economy draws significant influence from online commerce and social media. Online commerce has facilitated peer-to-peer sharing through trusted financial services like PayPal. Social media has played a crucial role in spreading the economic and personal benefits of the sharing economy, acting as an important marketing tool for collaborative consumption

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companies. These companies actively encourage users to share their experiences on popular platforms such as Facebook and Twitter. Such social platforms have become so integral to web transactions that customers are prompted to immediately share their financial or money-making success on their preferred social media page after confirmation or payment.

The sharing economy, also referred to as collaborative consumption, promotes the notion that people should prioritize using what they already have, borrowing, swapping, making, and thrifting items before resorting to traditional economic enterprises. While these businesses initially focus on specific target demographics, they continuously broaden their reach. Urban areas and members of Generation X and Generation Y play pivotal roles in the sharing economy demographic landscape. Sharing economy companies primarily target Generation Y due to their concern for environmental and social issues, which influences their inclination towards saving and reusing resources.Statistics indicate that Generation Y purchases fewer houses and cars compared to previous generations. However, this generation is inclined towards unconventional practices like the sharing economy and possesses strong social skills, making them effective in spreading information. Conversely, Generation X tends to rent out their goods and services, as it provides additional income to fulfill their responsibilities such as raising children and paying a mortgage. Collaborative efforts within communities are driven by necessity and lifestyle choices.

For a successful sharing economy company, focusing on branding, networking, and delivering an excellent user experience is crucial. Branding plays a vital role in gaining consumer confidence in the company's offerings. The sharing economy has an advantage due to its interconnectedness through online commerce and social media platforms as it is still a relatively new market. Moreover, apart from creating awareness,

the sharing economy fosters a sense of community within its network.

Ultimately, providing customers with a positive experience should be the primary focus of any sharing economy company. Customers prioritize convenience and value when using products or services; fulfilling these preferences increases the likelihood of continued usage and recommendations to others. Airbag serves as an exemplary company successfully incorporating these factors into the sharing economy model.Airbag, founded in 2008 by Brian Cheeks and Joe Gabbier in San Francisco, quickly became a major competitor in the hotel industry. Originally known as Arbitrariness's.Mom and later renamed Airbag, the company began by renting out airbeds in their apartment to people attending local conferences. This was done to generate extra income. They gained traction by serving large conferences like the Democratic and Republican Conventions in 2008, taking advantage of the business boom during an election year. In 2009, with the help of Nathan Bullwhacker, they secured $600,000 in seed funding from Sequoia Capital. Recognizing that many people were uncomfortable renting from strangers online, Cheeks and Gabbier took an unconventional approach for an internet company. They personally flew to New York City to meet hosts and conducted surveys to identify areas for improvement. This strategy proved successful and helped shape Airbag's direction over the next two years. Notable milestones include introducing a broker's payment model and hiring professionals to photograph host homes.Airbag, a global company that expanded by the end of 2011, achieved significant success. In 2012, Forbes estimated that Airbag may have incurred losses to fuel their rapid growth but were able to handle the financial impact with support from Silicon Valley venture capital firms. It is believed that in

2012, Airbag's bookings surpassed Hilton's, accommodating about 2.5 million people. The Wall Street Journal valued Airbag at $2 billion in October 2012 and projected Privacy's revenues for that year to reach $180 million.

To offer customer support, website maintenance, insurance, and security features, Airbag uses a broker-style payment model involving charging guests a percentage (between 6% and 12%) of the rental price and hosts a service fee of 3%. Despite their financial success, Airbag maintains an innovative identity resonating with the generation inspired by innovation. Their branding showcases a casual logo and emphasizes direct interaction with potential users.

The phrase "travel like a human" highlights Airbag's distinction from impersonal corporate travel experiences by offering opportunities for users to connect with hosts in distant places at lower costs. Social media plays a crucial role for Airbag in establishing and maintaining its brand identity with a significant focus on enhancing the travel experience.Airbag promotes their "traveler of the week" on their Backbone, Twitter, and Google Plus pages. They recently held a photo contest using Mainstream and offered Airbag travel credits as the prize. While this may seem opportunistic, it aligns well with the Airbag brand and focuses on travel rather than profit. Any mentions of Airbag in travelers' blog posts are often shared through retweets and posts on the Airbag blog.

In addition to travel, Airbag also emphasizes their interest in the local movement through their "Living Local" shows as part of their "Art's" series. These online episodes feature tours of unique Airbag host properties and interviews with friendly hosts.

Airbag understands that its unique business model attracts engineering and tech enthusiasts. They cater to this audience by providing specialized content

through their engineering blog - nerds. They also offer the Tech Talk Youth series on Airbag.com, where young tech enthusiasts present on new technologies for building businesses. These hour-long videos provide a comprehensive analysis of current technological and business advancements.Airbag strengthens its brand through social media by aligning itself with other organizations such as SSW, TED, Virgin America, Lonely Planet, and Business Punk. This association with Virgin America connects Airbag to a nonconventional travel company and its innovative CEO, Richard Brannon. The affiliation with SSW indicates a cultural affinity with their target audience and complements the demand for accommodation during the festival. Through these efforts, Airbag has established itself as a young, innovative, culturally and technically savvy company that appeals to its clientele. Airbag's business model is centered around consumer-to-consumer transactions based on trust. Similar to eBay's marketplace, buyers and sellers evaluate each transaction based on detailed profiles, history, product, price, and other resources. However, the level of investment for guests and hosts is considerably higher on Airbag as travelers risk their vacation experience and hosts offer their homes and personal privacy.Ensuring confidence, trust, and safety is crucial for Airbag's success. To achieve this, Airbag has implemented various measures. One of these measures is a private messaging system that allows users to interact and get to know each other before booking while keeping personal information confidential. Another measure is the "verified ID" badge which allows users to register their social networks (such as LinkedIn and Facebook) as well as provide official documentation like a photo ID or passport. Once all these resources are verified and match up, users receive a "Verified ID" badge on their

account indicating that their identification has been vetted.

Since April 2013, Airbag has randomly selected users to complete their profiles with plans to expand this globally for all members soon. In the past two years, Airbag has taken steps to enhance security and maintain trust in the marketplace by doubling the size of their customer support staff with xx support, establishing a dedicated Trust & Safety department, and developing tools for verifying user profiles and facilitating better communication between guests and hosts before booking.The usability, consistency, and accessibility are essential for Airbag's service roadman. It is crucial for both hosts and the Airbag support team. When travelers are "shopping," they should make the most of tools available to them. They can evaluate transaction risk by looking at host profiles, reviews, social networks, and staying connected with their host regularly. However, hosts are also customers of Airbag and need to inspire confidence in the Airbag model.

Airbag takes actions and interacts with hosts and potential hosts to project an image of control, confidence, and community. They focus on simplifying and centralizing the hosting process by addressing administrative, financial, and social aspects. Furthermore, they provide support and protection for both the host and their property.

Instead of building a new website for rentals from scratch, Airbag already has a website in multiple languages and currencies. Hosts only need to create a profile on this existing platform. Additionally, Airbag offers free customer service assistance to first-time hosts who may require help understanding the process.

Although tax obligations and legal status remain the responsibility of the host themselves, Airbag provides reference documents as well as answers to common questions on their website.

While Airbag

maintains the site architecture of the platform itself, hosts have complete control over setting rental prices, providing amenities,and establishing house rules according to their preferences.

In certain cases,Airbag even provides free professional photography services for host propertiesThe website also features a secure online payment system that ensures hosts receive full and timely payment directly. It is vital for hosts to feel in control when allowing strangers into their homes, so Airbag has implemented systems to provide protection for both hosts and their property. Hosts have the final say on who rents their listing, and potential guests must submit a reservation request through the online system. Once a request is made, hosts have 24 hours to accept or decline it. During this time, hosts and potential guests can communicate using the website's messaging system and refer to Airbag's ID system for verification purposes. The exact rental address is only revealed once the host accepts the guest, and hosts can also use Airbag's 24-hour customer service hotline. Since most hosts rent out primary residences or rooms, safeguarding against potential damage is especially crucial compared to hotels or businesses. While regular renters' or homeowners' insurance remains the responsibility of the host, Airbag introduced its "Host Guarantee" property protection program in 2011. In May 2012, Load's of London underwrote insurance that extended the Host Guarantee to $1 million in property damages across 23 countries. This coverage includes damages beyond "reasonable wear and tear" and does not require any additional cost or actions from the host. The financial incentive of the Host Guarantee serves as a significant motivator for individuals considering becoming hosts.
According to a survey conducted in November 2012, more

than 90% of hosts in San Francisco rented out their main residences and used nearly half of their income for living expenses. Airbag also focuses on supporting hosts and encouraging more people to become hosts by facilitating the financial aspects of renting. Creating a listing on Airbag is free, and for online payments, guests submit payment which is processed and collected by Airbag after the reservation is accepted. Airbag holds the payment until 24 hours after check-in, acting as a neutral third-party for financial exchange and ensuring adherence to host cancellation policies. Additionally, the Airbag website assists with handling cleaning fees that are held until the property is vacated. The secure payment process is a primary reason why hosts choose to rent through Airbag. Hosts may also have a desire to meet new people, showcase their city, and participate in the shared economy. With Airbag, hosts can rent both primary and secondary residences, with 50% choosing to rent private rooms while they are present. The Airbag website offers forums and guides for individuals interested in becoming hosts, fostering a stronger sense of community within the sharing economy.The social community within Airbag, along with the financial and administrative support systems, encourages both new and repeat hosts to trust the brand and system created by Airbag and open their homes to the world. However, it is important to recognize that Airbag's success has come with expected challenges that are common for startup companies dominating the sharing economy market. Despite its positive impact on tourism, individual income, revenue for small businesses, and economic stimulation, it is crucial not to overlook any negative consequences individuals may have encountered when

using Airbag's service.

The media has raised concerns about the safety, benefits, opportunity costs, and sustainability of Airbag's service. These concerns range from city-issued sanctions to lease violations, vandalism, and identity theft. To address these concerns and maintain a successful business, Airbag should analyze these obstacles and raise awareness within its community. One potential approach could be enhancing the ID verification process to minimize risks associated with dishonest users.

The attention of Airbag hosts in evaluating transaction risks and understanding city-specific regulations directly affects their safety and success as hosts. Consumer forums provide a platform for hosts, guests, and potential users to communicate with each other and learn valuable insights.Airbag should expand its coverage and offer more protections under the "Host Guarantee" to increase security for hosts both locally and internationally. It is important for Airbag to consider the challenges faced by other sharing economy companies in order to progress effectively. According to a study by Campbell Mitten, consumers have expressed concerns about lost or stolen items, lack of trust in others in the network, potential privacy breaches, inconvenience of sharing, and poor quality goods or services. Airbag has taken measures to protect the safety and privacy of its hosts and guests, but as the sharing economy evolves, it may become harder for Airbag to address new safety concerns promptly. Collaborative consumption is undergoing significant changes economically, socially, and culturally as it matures. Companies in this sector must balance utilizing the potential of the sharing economy while complying with government regulations. Traditional businesses such as hotels or rental cars now face competition from sharing economy services that bypass extensive inspection and qualification processes aimed at ensuring public

safety.According to a lawyer, it is essential for companies like Airbag in the shared economy to have effective management practices in order to prevent malicious activities and uphold a strong brand that promotes self-regulation. These companies should also be aware of potential government regulations that could either assist or impede their growth. Therefore, it is vital for Airbag and similar firms to develop a strategy that safeguards their unconventional and lightly regulated services for the future.

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