Airbnb Marketing Mix

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Marketing Mix of Airbnb analyses the brand/company which covers 4Ps (Product, Price, Place, Promotion) and explains the Airbnb marketing strategy. The article elaborates the pricing, advertising & distribution strategies used by the company.

Let us start the Airbnb Marketing Mix:

Product:

Airbnb is a leading website which helps customers and users in booking of hotels, hostels and other type of accommodation. Since Airbnb operates in a business to business market, the platform is the service that they offer to the hosts with value proposition of 'earning money to fund their own passions'. Airbnb has a wide variety of service offerings in its marketing mix. For the travelers, they offer the ease of finding the perfect accommodation such as homestays, hostel beds, hotel rooms, etc. or travel experiences such as scuba diving, cooking classes, art classes, etc. by choosing from a variety of listings available on the platform. They offer two options to the hosts, i.e., host alone by either listing their property for rental or any experience which they wish to offer to the guests or co-host with others by sharing their responsibilities with them. Airbnb also offer enhancing supplementary service of protection plans to the hosts. The hosts can then set the prices for the place or service offered. Since not many hosts have an experience in setting prices, Airbnb also provides an estimate for the same based on similar listing type, location and guest capacity. Thus, Airbnb acts as a broker by facilitating all communications and transactions between the guest and the host through the portal.


Image: flickr.com/photos/opengridscheduler/


Price:

Airbnb generates its revenue by charging a service fees from the hosts. Airbnb does not charge anything for its services offered from the travelers or the consumers directly. Instead, currently it charges 3% service fees on each reservation made irrespective of the listing type or whether it is a single host or co-host from the hosts which is ultimately borne by the travelers or the guests. Also, the hosts have the option of inviting bookings through Ad campaigns such as Google Ads, in which the hosts are charged a service fees of 12-15% based on the type of Ad campaign chosen. Since all the transactions are handled through the platform, the money is transferred to the hosts 24 hours after the guest checks in. The hosts also have various standard cancellation policies which they can choose from with different guidelines for refunds in case either the hosts or the guests cancel their bookings before their arrival or after their arrival.


Place:

Airbnb started in San Francisco in 2007 with the owners turning their living room into bed& breakfast. As this idea grew they created a website offering short-term living quarters to people who found hotel bookings expensive or couldn’t find a booking. By 2009, the website had expanded from air beds and shared spaces to several other properties including entire homes, apartments, private rooms, castles, boats, and other properties and has also started offering various ‘experiences’ as well. Currently, Airbnb provides access to accommodations and experiences in more than 191 countries through its web portal. It can be accessed through all digital platforms and thus has a strong global reach. Thus, Airbnb can be used by anyone in the internet ecosystem.


Promotion:

Airbnb is promoted through a mix of marketing channels. It advertises to the hosts and travelers through traditional as well as modern methods such as TV advertisements, Outdoor Advertising and Digital media marketing. Airbnb is trying to communicate the value proposition of 'living like a local' through its advertisements and uses a geo-localized strategy for these promotion by creating content relevant to a given location. It also uses social media analytics to target the relevant audience for the various properties listed on its portal. The company also undertakes various public relation activities such as extending support and donating to various causes such as offering free accommodation for people displaced by hurricane Sandy in New York in November 2012, thus undertaking cause-related marketing. The logo and website were also redesigned based on the inputs of consumer survey. Airbnb also provides sponsorship to various events and has partnered with other agencies for more brand visibility.


Since this is a service marketing brand, here are the other three Ps to make it the 7Ps marketing mix of Airbnb.


People:

Airbnb platform is used by more than 200 million guests which use the service which is provided at arm’s length. To manage such a large set of customers, Airbnb has 3100 employees worldwide which are responsible for its service delivery. and has offices in several countries such as Spain, Germany, China, UK, Italy, Canada, India, France, USA, Brazil, Australia, Japan, Netherland, UAE. Further, Airbnb offers no direct customer service to either its hosts or guests and they are not exposed to the back end of the service (service operations). So, if the hosts or the guests need to resolve any issue they can do so only through Airbnb help center where several FAQs have been answered. Apart from the help center Airbnb can only be contacted through e-mail in case of an emergency.


Process:

Airbnb service is a combination of people processing and possession processing. The services of Airbnb are tangible and relies of customer experience. The booking at Airbnb involves the guests to verify their respective identities first to avail the services of Airbnb after which the hosts can invite bookings for their listings on the marketplace. The interested guests can contact the hosts for any issues prior to finalizing their booking through the platform itself. Through the platform it is ensured that the hosts and the guests cannot share their contact details since it might lead to loss of revenues for Airbnb. The booking is complete after the guest has paid for it and the payment to the host is made from Airbnb, deducting its service fee, 24 hours after the guest checks in. The guest or host can cancel the booking and relevant cancellation policy is then followed.


Physical Evidence:

Airbnb has no physical location which can be visited for the service encounter. The entire process takes place through the digital Airbnb platform which makes it a low contact service. The application has been rated 4.3/5 on Google play store, and 4.7 on Apple App Store. Only, the hosts and guests provide review for each other at the end of their stay on various parameters which helps the hosts and guests to improve their credibility on the platform. Hence this completes the Airbnb marketing mix.


About Airbnb:

Airbnb is an online marketplace which facilitates the travelers to book accommodations and travel experiences around the world by connecting them to local hosts who are willing to provide it for short term at a price point. They are using a platform business model which is quite different from traditional business models, where huge investments have to be made into building a hotel. Also, since very low investment is required from the hosts in listing their property on the platform, the rents are relatively cheaper for a traveler with an added incentive of experiencing of a 'home' away from home. Airbnb, founded in 2008, has more than 3 million listings on its platform and is used by more than 200 million guests.

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The names and other brand information used in the Marketing Mix section are properties of their respective companies. The companies are not associated with MBASkool in any way. The brand names are used purely for educational/academic purpose only.

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