pg 1 Marketing Fundamentals - Introduction As part of the Marketing Department,our team have chosen to conduct a marketing study into the Travel and

pg 1 Marketing Fundamentals - Introduction As part of...

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Unformatted text preview: Introduction As part of the Marketing Department,our team have chosen to conduct a marketing study into the Travel and Hospitality industry and we recommend on making an investment on Airbnb. Airbnb is founded in August of 2008 and is situated in San Francisco, California. It is a new startup business in the Travel and Hospitality industry that allows individual home and apartment owners to rent out their properties as holiday accommodation to tourists and travelers looking for a homey twist. Originally, Airbnb’s mission was “Travel like a human”. As every growing company, Airbnb's vision has evolved over time, reaching what today is a very strong cultural identity that encompasses every side of the company. “Belong Anywhere" unifies the vision of the company with every aspect of its product, marketing campaigns, host & guest community and employees relationship. In order to get a further insight of the report, analysis of this report is largely cited and referenced from media. 2. Consumer Behaviour The group of customers identified are backpackers or low budget travellers. Their basic needs would be finding a low priced but comfortable accommodation. 2.1 Psychological Factors In this case, based on the Psychological factors that influences Airbnb’s consumers’ needs are Psychological Needs, Safety Needs, Social Needs, Personal Needs and Self-­actualization Needs. Taking Seth Porges, as an example, he started being a Superhost of Airbnb in order to fund his own start-­up business and rented one of his rooms. By giving guests the room to rent, he earns extra income to satisfy his safety needs Also, renting his room allowed him to meet new people around the world and thus satisfy his social needs. Moreover, travellers to date chose Airbnb over hotels as they have been in pursuit of experiencing a local life and desire to stay longer in diverse neighbourhoods throughout the city. This allowed them to finally be able to satisfy their Social Needs and Self-­Actualization Needs as they are given an opportunity to interact with their hosts and the locals. 2.2 Level of involvement Airbnb is unique as it caters to all customers’ needs;; types of room, price range, amenities along with the given option to opt for Superhost(staying with their hosts). Thus, this gives customers the freedom to choose between high-­involvement and low-­involvement purchases. High-­involvement purchases in Airbnb can be linked to significantly expensive listings;; high-­end housing estates,mansions and castles. Such purchases may be due to travellers’ purchase task like a romantic getaway or a family vacation. Low-­involvement purchases in Airbnb can be linked to more affordable listings;; private room,shared room or even a cheap apartment. These purchases can be due to the travellers’ antecedent state like last-­minute getaways which results in travellers having limited accommodation options and making straightforward purchase decision. WIth the freedom to choose between high-­involvement purchase and low-­ involvement purchases, consumers can skip or minimize the steps in consumer decision process which allows the time taken for consumer purchase decision to differ. 3. Market Segmentation, Targeting and Positioning Our company potential customers are travelers and host, International students and backpackers. 3.1 Unique Characteristics and needs 3.1.1 Travelers and host When tourist come to a certain country, hospitality is a concern for them. They need a place to stay in, therefore hotel might be their alternative. Hotel might be a frequent thought when it comes to place to stay. However, most of the tourists would like to save more money on accommodation therefore Airbnb is more beneficial to them with most of their needs and wants through a cheaper rate which allows travelers to be able to afford it at a affordable price. 3.1.2 International student International students that come over Singapore to study, usually money is already an issue as expenses in Singapore is high. Therefore staying in apartments through Airbnb will give them more freedom rather than staying in school hostel which might be inconvenient as some school hostels restrict students to a certain hours. For example after 10.30 pm they are not allowed to step out of the hostel. 3.1.3 Backpackers Backpackers normally stay in the country for more than two weeks as they would want to experience the daily life of the country instead of rushing like how normal tourist do. Thus, renting a room or apartment is cheaper and more suitable for them instead of staying in a hotel. 3.2 Customer segments 3.2.1 Geographics It is a good choice for the customers is always the most important part for the whole travelling plan finding a convenient place to stay. Customers will tend to look into the places where is convenient for them which are located near train stations, shopping mall, convenience stores by walking distance. However, some customers will look for urban, suburban, small town or rural based on what kind of environment they want to be in and the prices will be also different, providing wide range of choices allows travelers to choose. Airbnb closest competitor are usually are the online booking of hotel website: trivago.sg, hotel.com, agoda.com etc 3.2.2 Psychographic It is a good choice for the customers as in our target segments included international students and most of the international students stay for long period of time having friends that stay near to another sharing the same interests based on the lifestyle, personality, values and attitudes. Among customers, there will be some customers who will want to have some recreational activities like playing basketball, soccer, swimming or even gym. therefore, locating them at the suitable place will definitely brings them convenience. Airbnb also help those overseas working adults , be it short term or long term, to find a cheaper and nearer place to stay. 3.3 Perceptual map Airbnb provide good facilities at a low price in order to suits the needs and wants of our consumers, therefore it is place under high facilities with a low price. Relative house is place under the same with Airbnb as they can choose to stay with their relatives who stay at the country rather than spending a sum of money getting the same facilities they are looking for Castle and 5-­6 stars hotel is position at high price and high facilities as it is of high quality they provided therefore high price is required for the facilities they used. 3-­4 star hotel is position near the middle of our perceptual map which explain that they have the same facilities as 5-­6 stars hotel however consumers are able to pay a cheaper price rate and get the same kind of facilities they used. 1-­2 stars hotel and chalet is position at the high price but low facilities area. Compared to castle, the price is not as high as them but compared to others, they are of a relatively high price with low facilities as it is a budget hotel with low amenities provided and chalet with just bbq pit. Motels and hostel is a relatively low facilities and low price place to stay in, as they have the least facilities or even none with curfew time for hostel as well. 4. Analysis of Product 4.1 Classification of product Airbnb are considered unsought goods as they are products that consumers are aware of but would not be choosing that as their option. Consumers are still more familiar and comfortable with booking hotels during their vacation. Airbnb started their business for 7 years since 2009 and to the consumers, they still think of it as a new product. 4.2 Unique features Airbnb is relatively inexpensive and is able to benefit consumers by making them feel homed and welcomed by the hosts and have unique experience overseas. Travellers then get to socialise with the host and there are even stories of host ending up becoming friends with their guest. This will meet the social needs for both of them. Hosts will share about the local culture, customs and information about the place which will make their stay even more pleasant. By staying in houses of people in the country, it breaks down the cultural barriers and connect people in a real way. ”When someone steps foot in your door, or you step foot in someone else’s door, something powerful is happening – we are breaking down cultural barriers and connecting people in a real way.” Christopher Lukesic, Airbnb employee 4.3 Uniqueness compared to competitors Airbnb’s tagline, “Belong Anywhere” clearly distinguish Airbnb from hotels and other short-­term rental services. Through Airbnb, it allow travellers to experience a stay like a local, feel belonged and immerse themselves into the culture of their destination. It is an experience that they can’t get anywhere else. As stated under the uniqueness of Airbnb, travelers may even end up being friends with hosts which can’t be experienced in hotels. Airbnb facilitates the financial transactions between the host and the guest to make sure that the payment is secured and the information that the guest provides will be confidential. Unlike some competitors like HomeAway, the host and guest are responsible for processing their own payments. Although Airbnb is just selling a home rental service, but it is more of living the lifestyle of people across the world. 4.4 Product life cycle and effects on marketing Growth Stage As shown in the graph on the right taken from Airbnb summer travel report, in the summer of 2010, Airbnb was estimated to have 47,000 guest staying with airbnb hosts worldwide. In 2015, the guests has increased by 353 times as compared to 2010, to 17M. This evidently shows that within 5 years, Airbnb gained more recognition. Referring to the same graph, it is also evident that Airbnb profit and sale revenue is rising. Since the founding of Airbnb,the community successfully expanded to 191 countries and 34,000 cities around the world in 2015. Previously when Airbnb just started, they advertise themselves to inform more people about their existence. Now that Airbnb is in the growth stage, they now have to stress how different they are from the competitors. They rebrand themselves in 2014 and changed their logo and named it “Bélo”, the symbol of belonging. The symbol stands for four things, people, places love and Airbnb. They emphasise on the word “belong” give consumers the feeling of safety and acceptance to the Airbnb community. They made their moto, logo so meaningful that it brings the consumer closer to them personally. They see the transactions of host and guest as a connection between them. Airbnb made themselves very special in way that consumers are able to relate and connect with them and therefore will rent a place through airbnb when travelling overseas to feel “belonged” to that country. This is how Airbnb market themselves to the consumers to differentiate from hotels and technical “renting a place to stay” website. 5. Analysis of promotion AirBnb uses the level of persuading. Enticing Messages To effectively persuade customers to choose Airbnb instead of their competitors, Airbnb uses enticing messages in their advertisement, “We imagine a world where you can belong anywhere”. As mentioned previously under how Airbnb market themselves at the Growth stage, “Belong anywhere“ adds a personal touch to customers. It eventually wins their heart to feel connected to Airbnb. Using a credible presenter AirBnb endorses famous celebrities into the advertising of their accommodation brand. Such famous celebrities include: Lewis Moody, a former world-­cup winning rugby player, lists his memorabilia-­filled home to guests of AirBnb. He also provides complimentary rugby coaching sessions if they book a stay with him. G-­Dragon, singer of renown band, Big Bang rents his studio in Dukyang, Korea. This particular location holds many memories for the singer about his career and philosophies that he would love share with AirBnb’s 5 lucky customers. At the same time, he offers to have dinner and a tour around Korea with these travellers. By endorsing famous celebrities with AirBnb which caters to people of different interests, such as sports and entertainment as mentioned above, it will attract travellers who are also fans of such these celebrities. Hence, this sets a trend as they would like to have similar behaviour and lifestyle as such prominent people. Thus, more people would be more inclined to engage in AirBnb’s services. Luscious Colors AirBnb makes use of luscious colors in their logo as compared to competitors to entice customers. The distinct contrast of pink and white creates a soothing and distinct impression on the customers, that AirBnb is well known for. Hence, consumers are always reminded of AirBnb whenever the color attracts their eye. b. Describe three promotion tools most suitable to reach target customers that appropriately matches the communication (promotion) objectives. Publicity and Public Relations: AirBnb manages public relations and publicity to engage consumers, as well as to attract new travellers on board to make use of AirBnb’s accommodation services. In addition, it increases readerships as many consumers tend to ignore advertising on search engines which may appear as a nuisance to consumers, hence they are more willing to read editorial materials and prefer to hear from a more reliable source. A form of this would be Word-­of-­Mouth. Word of Mouth Categorized as an unsought good in our previous section, many people are uncertain about the benefits and drawbacks of this accommodation service. Hence, the recommendation provided by a satisfied customer, would be more reliable and trustworthy as compared to coming from AirBnb itself which may come from a biased perspective. This is evident as a study by Nielsen’s Global Trust in Advertising report, showed that 92% of consumers say they trust recommendations from friends and family above all other forms of advertising. Word of Mouth is proven as a huge growth source for AirBnb. Through Word of Mouth, which can be spread through blogs, they can show first hand experience of the lodging experiences, and locations. Hence, first-­time travellers can have an idea of their next travelling accommodation which might appeal to them. This can allow them to compare the environment in an AirBnb to a hotel. Referrals and Travel Credits This referral programme encourages friends and families to invite the others who are unaware about AirBnb as it rewards both sender and recipient $25 of travel credit off their next trip when there is a successful booking by the invited recipient. As many people are attracted to the credits they can accumulate off their next trip, they are more inclined to invite more people on board to utilize AirBnb, hence intensifying this promotion effect. Public relations activities in the recent 12 months Naomi Neo providing a feedback after her stay at AirBnb, also a promotion code, which will appeal to new potential travellers who are search for accommodations. By engaging Naomi, who is a third-­party, it is making use of her readerships on social media platforms such as Instagram and Twitter, and conveys a more credible and efficient perspective of the stay in AirBnb. After a successful referral, both parties get to benefit from a $25 accommodation credit. Advertising AirBnb uses outdoor advertisements in both locally and overseas as it is able to convey the message directly to potential travellers. It has a flexible market coverage, and the availability of AirBnb’s information on these billboard advertisements serves as a reminder of the existence of AirBnb whenever they are in need of an overseas accommodation. AirBnb advertising on Singapore’s MRT Advertisements In The Recent 6 Months Closest Competitor: Market Leader, Hotels Marina Bay Sands, Singapore (August 2015) Pan Pacific, Vancouver USA Sales Promotions AirBnb mainly uses deals and coupons to stimulate customer demand by arousing interest in purchasing AirBnb’s products. By collaborating with prominent banks in Singapore, such as DBS and OCBC in the recent 6 months (as shown below). Hence, through the use of leading banks, where majority Singaporeans subscribe to, it will increase the number of travellers who engage the services of AirBnB. (Sales Promotion by AirBnb in the recent 6 months) 6. Analysis of price 6.1 Major Cost component Airbnb major cost components is Direct Product Cost through Marketing and Advertising costs and labour cost. However, there is also indirect product cost being involved such as finance, administration other expenses. The direct product cost of marketing expenses are the cost of advertising online such as advertisement banners on websites, YouTube and billboard advertising. As AirBnb spends highly on advertising through the social media for marketing purposes, it results in them making lesser profits. The indirect product cost of Airbnb is finance expenses, administration expenses. These cost only take up small amount of the total cost. Billboard advertising Review Google Banner Advertisement Airbnb website 6.2 Factors affecting price elasticity The factor that affects price elasticity for AirBnb is availability of substitutes as there are many substitute for AirBnb such as hotel, hostel, villa and castle. 6.3 Price setting used by competitors Price setting method that were used by the market leader or the closest competitor is penetration pricing. Penetration Pricing is the most effective price setting method for Airbnb as it start of with a low initial price is set to appeal immediately to the mass market. They are able to reach out to the mass market quickly, and establish substantial sales volumes and market shares that makes lesser competitors willing to enter into the industry or they might think it is not worth to enter at a later stage to challenge the incumbents.There is also a highly elastic demand which can lead the competitors to lower the price, consumers will immediately switch over to the lower-­priced alternative. Therefore, Airbnb will be able to achieve through large-­scale operations through that they will be able to make a reasonably good profit by selling in volume as most of the traveler nowadays would tend to choose a more cheaper price rate place to stay. 6.4 Adjustment Strategies Adopted The market leader which is the closest competitor to airbnb are hotels. Within the 6 months, the price will be different due to different occasions like chinese new year, christmas or even valentine's day. The hotel will adjust the price according to different festival using promotion price to attract customer. Airbnb do adjust these price adjustment strategies, they uses promotion event or even promotion code , like “Free $50 AIRBNB CREDIT WHEN YOU BOOK YOUR NEXT STAY OF $200 OR MORE!” . However they do have promotion all year round when there are special festival like chinese new year and others. 7. Analysis of Place 7.1 Appropriateness of retail experience Since Airbnb plans to cover and reach out geographically dispersed customers, it would be more efficient to use web-­based platform.Therefore, it is appropriate for Airbnb to use a website for people to list, find, and rent lodging. In comparison the market leaders and Airbnb’s closest competitors is the hotel industry (eg. Marriot, Four Seasons and Hilton), make use many platforms for customers to book their rooms such as the internet as well as face to face booking at the reception or through their 24 hours hotline. This is appropriate as the hotel industry wants to cater to as much customers as possible,even if customers do not have internet access. 7.2 Service provided Airbnb is awarded to be one of the few companies which provides exceptional customer service. For example, when one of Airbnb’s host got their home robbed, trashed, and ransacked, Airbnb has drastically rebuilt their reputation with guaranteed insurance and exceptional customer service...
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