Airbnb: A Trusted Brand For Accommodation Around The World

1. Conduct a situational analysis of the organisation’s current internal and external marketing environment.

2. Provide evidence of your analyses either as appendices or in the body of the report, remembering to reference all evidence.

3. From the analysis, critically analyse the internal factors and external factors, discussing how they impact on the organisation's marketing strategy and performance.

About Airbnb

Airbnb was founded in the year 2008. This company is located in San Francisco, California and it is a trusted company for the people to discover and book different accommodations all over the world. People can book the accommodations online or from the mobile application. Whether there is a need for the spare bedroom, whole apartment, villa or a private island, Airbnb connects people who are avid travelers. People come from different destinations and various cultures and use Airbnb to connect. These amazing experiences can be taken in 34,000 cities and in 190 countries across the world. This company has served over 50 million people from the moment it was founded. Market capitalization of Airbnb has become $30 billion. There are a huge number of people who are loyal to the brand and exhibits high degree of honesty towards the brand (Zervas et al., 2016).

There are a few reasons that alone or in the combination might explain Airbnb’s strategy of marketing which has ignored the practical motivations for using the service and actually has focused on the experiential motivations. It is always possible that the company gives more importance to the experiential appeal to the accommodations. The CEO of the company has explained the vision by saying that “Just like any other evangelical, he honestly believes in his new-found faith”.  When it was asked from Airbnb’s head of strategy and hospitality that where he sees the brand in next few years, he said: “He wanted to see the company win a Nobel prize as it delivers nice culture understanding and hospitality. The vision of the brand is to create amazing experiences for the travelers so that the marketing and productivity of the brand increases as there are yet many people who have not experienced Airbnb (Schaal, 2012).

The brand has a new mission to make people feel at home wherever they go and stay. Travelers while their stay in the Airbnb accommodations should feel comfortable like they feel at their own homes but still should get all the benefits that they get while staying in a hotel. They want people to feel that they “belong anywhere” (Guttentag, 2016).

SWOT analysis of any organization includes its strengths, weaknesses, opportunities and threats. The SWOT analysis of Airbnb follows:

Great customer services are provided 24 hours a day.One of kind opportunities for the travelers across the world. Safety is guaranteed for host. The insurance covers $1 million per booking these days. The business model is very clear on the basis of the services.It has the potential for expanding and it can also operate internationally as this type of market exists across the world. It is a well-known brand and has a good and stylish public image in the market.Prices from other brands are less in Airbnb.Operates in most of the countries. They have a large number of users in their databases and the number is still going. It is competent, staff is non-controversial. It is trusted and safe and many people have experienced and shared their story about it.

The Experiential Appeal of Airbnb

The lobbyist and other hotel industry people are fighting against it as it hampers their market share. Airbnb is aware of this controversy and they know that it hampers the hotel industry productivity.The idea is easily copied.It acts as the mediator between the host and the tenant. This will generate additional cost and it involves the company in a lot of disputes.It gives the rental prices by increasing the scarcity of the houses in the cities (Lehr, 2015). This brand actually is dependent on the quality the host is providing. If issues arise with the host or by the host then the reviews that the brand will have to face will be bad only.

Airbnb’s productivity can go high if the hotel experience of the people is not good enough. The law and regulations change in San Francisco and Portland have agreed for legalizing most types of the Airbnb listings in the tax exchange and other. Most of the services in the hotels in various countries are expensive and this gives Airbnb a good opportunity for the growth.Press is good because of the support for the activities in charity by Airbnb. For example: it helped in the emergency in Hurricane Sandy, London and Sardinia for people to give the accommodations. It has the mobile app from which people can easily book their accommodations. There is a possibility to expand in the countries across the world as this type of business will work anywhere in the world. The popularity is growing in the related markets like travel guides and user suggestions. The numbers of travelers are growing day after day these days and so will the need for stay in distant places will grow (Lin, 2016).

The competitors in the related market are growing. E.g.: Wimdu.com, travelrent.com. The numbers of issues with the host that are unpleasant are increasing. There is always a threat of lawsuits and fines. There were people who were sued for running the hotel illegally in New York. Then Airbnb had to bare 30,000 Euros for this. An alternative idea might be out in future of sharing the apartments. Operational costs can cause problems as they keep on growing day after day.The number of quality hotels is growing and the idea of budget hotel is also on the peak. This can also be a huge threat (Dyson, 2004).

Political Factors: This idea of Airbnb renting can bring the type of services which are abusing and this might lead to illegal hotels.By increasing the minimum wage, this can lead to the costs which are high and reductions in the services.The terrorists might attack or a conflict of military might happen to frighten people and harm the hotels and people (Bonnici & Galea, 2015).

Airbnb's Mission

Economic Factors: The growth of China in economic terms is slowing.The exchange rates are high in US and are charges in dollars.The ability for people to travel the hotels and live there is decreasing these days.

Socio Culture: Travelers would love to spend the money in this brand as they love traveling and they need different places to stay. The people who are old can always ask for luxury accommodation packages and travel luxuries. Chinese people and Asian people are growing (Rastogi & Trivedi, 2016).

Technological Factors: The services are online which helps people to book online by sitting in their homes.The application of Airbnb can provide all the information on the phone itself.The brand has created smart systems which help in seamless interaction between the sellers and the buyers. This smart system technology also verifies the profiles and makes it easy for the check INS and the check outs (Frue, 2017).

Environment Factors: The prices that are increased for fuel can lead to decrease in the travelling of people.The change of climate can also stop people from travelling to distant lands. Global warming is increasing and this is leading to the climate change and lots of heat across the world. The costs of electricity might cause problems too.

Legal Factors: In case of any clash with the law will make the business to grow in economy.It has faced clash with the law earlier in several cities in US.The taxes and the renting laws have gone under clashes with the law (Pratap, 2017).

The threat of New Entries: Threat to new entries in the market of Airbnb is taken as a weak and flexible thing. On the top of the surface, it does not seem that there will be more barriers to the entry and any other website cannot compete with Airbnb’s. It is just not only well funded but also operates in 200 countries. Any company will have to invest millions to invest in the capital and then will have to make such a large database which Airbnb has(Nurlansa, 2016).

The threat of Substitutes: This threat is quite high in case of Airbnb because switching the costs is nonexistent to the individuals those who utilize this brand. The customers can easily choose traditional hotels and B&B hotels as it can be an alternative in the future.

Bargaining power of customers: The power of bargaining of the customers with the brand is considered to be quite high. Reason behind the bargaining power being so high is because they have a huge range of services to provide from and customers can bargain as per their choice of service. The growth of economy has been helpful in the development of the tourism and hospitality of any country. The buyer power is high in this case of Airbnb(Zhang, 2016).

SWOT Analysis of Airbnb

Bargaining Power of the suppliers: The power of the bargaining of the vendors is meager as Airbnb control the connection between the two parties and this makes it hard for the parties to have an alternative method to connect with the customers by using the app. In this case, the supplier is the host that provides the accommodation and they are the major business drivers.

Industry Rivals:  This is one of the greatest forces but in this case the rivalry is low. It is considered that Airbnb has competitors like tripping.com, homeaway.com etc. but in reality, none company of the same industry or domain can compete with Airbnb till today.

Introduction Stage: At the initial level the launching was hard for Airbnb as had to maintain the prices and build the customer base.  This means that the sale is low at first and the investment is high. Cost of things like research in 2008 for Airbnb was high. Development and testing and the marketing were done at the higher level.

Growth Stage: This stage is typically characterizing by the growth in the profit and the sales as Airbnb was also seeking the benefit of their investments at this stage. They eventually grew a lot within a few years and the sakes went high in just a few months for them(Bhambri, 2015).

Maturity Stage: For Airbnb, one can say that it is at the maturity stage of the life cycle as Airbnb has seen that growth it was looking for. It has built a huge customer data base and in coming recent years it has no threat of new comers in the same industry.

Decline Stage: The product starts to shrink in the decline stage. For Airbnb, it is not the case yet. It even going through the laws and policies breaches is going good for the market and it still has the opportunity to grow in the certain markets(Productlifecycle, 2018).

Conclusion

This report focuses on the brand-named Airbnb and its growth in the market. It has grown a lot within a few years and is loved by the avid travelers who are looking for the accommodations on a cheaper or luxury costs. The SWOT analysis and PESTEL analysis is done to know the internal and the external environment of the brand. The product life cycle is also discussed and it turns out that the brand is at the maturity stage of the life cycle. This report focuses on the market analysis of the brand Airbnb.

References

Bhambri, S., 2015. Product Life Cycle. International Journal Of Business Management, 2(1).

Bonnici, T.S. & Galea, D., 2015. PEST analysis. [Online] Available at: file:///C:/Users/Nidhi%20Vyas_JPR/Downloads/sammut-bonnicipest.pdf [Accessed 16 March 2018].

Dyson, R.G., 2004. Strategic development and SWOT analysis at the University of Warwick. European Journal of Operational Research, 152, pp.631-40.

Frue, K., 2017. PESTLE Analysis of Airbnb. [Online] Available at: https://pestleanalysis.com/pestle-analysis-of-airbnb/ [Accessed 16 March 2018].

Guttentag, D.A., 2016. Why tourists choose Airbnb: A motivation-based segmentation study underpinned by innovation concepts. [Online] Available at: https://uwspace.uwaterloo.ca/bitstream/handle/10012/10684/Guttentag_Daniel.pdf [Accessed 16 March 2018].

Lehr, D., 2015. An Analysis of the Changing Competitive Landscape in the Hotel Industry Regarding Airbnb”. [Online] Available at: https://studenten.tudelft.nl/fileadmin/Files/studentenportal/os/BKspecifiek/Workshops/An_Analysis_of_the_Changing_Competitive_Landscape_in_the_Hotel_In.pdf [Accessed 16 March 2018].

Lin, X., 2016. STRATEGY ANALYSIS OF A BOUTIQUE AND LIFESTYLE HOTEL: A. [Online] Available at: https://broncoscholar.library.cpp.edu/bitstream/handle/10211.3/174609/XiaomeLin_Project2016.pdf?sequence=4 [Accessed 16 March 2018].

Nurlansa, O., 2016. Analysis Porter’s Five forces Model on Airbn. Journal Electronics, Informatics, and Vocational Education, 1(2).

Pratap, A., 2017. Air BnB’s Pestel Analysis. [Online] Available at: https://www.cheshnotes.com/2017/09/air-bnb-pestel-analysis/ [Accessed 16 March 2018].

Productlifecycle, 2018. Product Life Cycle Stages. [Online] Available at: https://productlifecyclestages.com/ [Accessed 16 March 2018].

Rastogi, N. & Trivedi, M.K., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN CONSTRUCTION PROJECTS. International Research Journal of Engineering and Technology, 3(1).

Schaal, D., 2012. Airbnb CEO has a vision of a future where everyone shares — and Airbnb collects a modest fee. [Online] Available at: https://skift.com/2012/11/16/airbnb-ceo-has-a-vision-of-a-future-where-everyone-shares-and-airbnb-collects-a-modest-fee/ [Accessed 16 March 2018].

Zervas, G., Proserpio, D. & Byers, J.W., 2016. The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry. [Online] Available at: https://people.bu.edu/zg/publications/airbnb.pdf [Accessed 16 March 2018].

Zhang, L., 2016. VALUATION OF PRIVATE TECH COMPANIES – A CONCENTRATION ON DISRUPTIVE INNOVATIONS. [Online] Available at: https://studenttheses.cbs.dk/bitstream/handle/10417/6217/Lijing_Zhang.pdf?sequence=1 [Accessed 16 March 2018].