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Airbnb

Airbnb

Theintensity of competition is continuously increasing in the globalmarket. Companies have to implement different strategies whenadopting new products and services as well as staying competitive. Itis, therefore, vital to have an idea of the specific consumer needsbefore venturing or testing a new service. The needs are usuallybased on the demographics, personality, or buying style. Airbnb is anonline marketplace where people offer, discover, and rentaccommodations across the world. The company focuses on connectingtravelers with property owners to enhance their tenancy experiences.Therefore, castles, villas, and apartments are rented as per theconsumers and renters needs. Currently, it has more than 1.5 millionlistings in 34,000 cities across 191 countries. The company is lessthan a decade old [ CITATION Placeholder3 l 1033 ].

Thispaper will suggest an idea and how it aligns with the company’scorporate mission. In addition to that, the utilizable marketingstrategies will be discussed. To adequately comprehend the marketingstrategies, Porter’s five forces will be utilized. Apart from that,the three core strategies of managing competition as described byPorter’s will be discussed. These aspects are vital inunderstanding the demographics and purchasing style of consumers. Inaddition to that, they are essential in illustrating the appropriatepricing strategy.

Natureof the New Service

Thecompany’s mission is to give their clients more than just a house.Instead, the customers are guaranteed a home i.e. a sense ofbelonging. Ever since the industrial revolution, the meaning ofcommunity has been lost. In other words, people no longer live as acommunity. There is no trust as people are involved in projectsaffecting the communal setting. In that regard, Airbnb embarked onproviding that sense of community by letting people rent anywhereacross the globe. In line with that idea, Airbnb can venture into thehotel industry. The company should expand their services to hotel andcruise industry. Since Airbnb aims to provide homes, it could achievethe same by venturing into the hotel and cruise industry. Most peoplewho rent villas and apartments like to supplement it with otheractivities. The hotel industry could attract more tourists. On theother hand, the cruise industry could increase the range of servicesoffered by the company. Some the activities include casinos, spa,indoor games, and cinema among other events [ CITATION Pat16 l 1033 ].

Featuresof the Services

Thecruise industry is an oligopoly i.e. a small number of companiesdominate a significant market share. In that regard, competition islimited to just a few companies. In such an industry, a slightimprovement in service draws more customers. With the ever increasingconsumer demands, it is vital to be all round i.e. broaden theservices to be accommodative to various clients [ CITATION Placeholder4 l 1033 ].

Withregards to the hotel industry, the company can excel by combiningwith facilities to provide healthier foods. In other words, peopleare becoming more aware of the health hazards brought about by somefoods. The company can, therefore, create a website that helps peopleto choose hotels that match their diets. Since the area iscontinuously expanding, it could suit the company well. In general,the company will be offering a combination of products and services.Customers will want to enjoy the various services from one providerrather different companies. Integration of services is the key aspectof this idea [ CITATION Pat16 l 1033 ].

Marketingthe Service

Airbnbalready has a huge customer base across the globe. Therefore,traversing new grounds with the fresh services will not be thatchallenging. Integrating with the hotel industry will need to beachieved by either mergers or acquisitions. Utilizing such amechanism will not mandate the company to conduct intense marketingto inform the already existing customers. However, the company couldstill use social media as an advertising platform. In the currentglobe, social media such as Facebook and Twitter are the mostutilized advertising platforms. The company employees will also playa significant role in the adverts. Therefore, they will be givenpriority to own shares of the company and share the profits. Thismechanism will boost their morale and ensure they work extra hard toentice more customers.

Accordingto Porter, there are three key strategies for staying competitivei.e. cost leadership, differentiation, and focus. In addition tothat, the three facets were broken down further to include cost focusand differentiation focus. Cost leadership entails the regulation ofcompany costs or market share to gain substantial profits. The focusstrategy mechanism involves targeting a particular niche market,understanding their distinctive needs and the market dynamics beforedeveloping unique products at favorable costs to fit the market. Thedifferentiation approach, on the other hand, demands that a companyproduces products that are distinctive from the competitors. Due tothe extensiveness of this corporation, it can incorporate thedifferent techniques depending on the target market. In this case,Airbnb will provide differentiated services. In other words, theintegration of diverse services will attract more customers. Thepeople renting the hotels and cruise ships prefer to have all theservices within the same deal [ CITATION MDF161 l 1033 ].

Asillustrated above, Airbnb’s mission is to assist in creating theworld where anyone can belong anywhere. Apart from that, the companywants people to live in a place, rather than just traveling to it.The new services will boost these ideologies since the company wouldcreate a place to live in even on sea waters through the cruiseships. The cost leadership approach will be utilized to align themarket prices. For instance, the company could reduce its costs andmaintain the current prices of the services to boost the profits.Also, the company could lower the service costs and increase themarket share. Therefore, widening the market share would ensureAirbnb maintains or heightens its profit margins [ CITATION Placeholder3 l 1033 ].

Needof the Service

Vacationsare becoming synonymous across the globe. People travel across theworld to different countries in search of peace or rather rest. Inmost cases, tourists check in hotels where there are several othervisitors. Sometimes people travel in groups or families. Such groupsvalue privacy. Though they occupy hotels, most of them want the senseof ownership. These aspects are not guaranteed in big hotels wherethe number of visitors is high. However, it would be possible ifAirbnb incorporates this aspect so that it gives the tourists a senseof ownership. Apart from that, the company can provide relevantinformation on different menus across the hotels. Some vegetariansfind it hard to locate places where their respective meals can beoffered. Incorporating these aspects within the hotel industry willimprove the company’s services and scope of operation. As a matterof fact, Airbnb can indulge in any business across the globeutilizing the internet.

Thisservice will also target the independent people. In the currentworld, many people value autonomy at the workplace whereby they canleave for a vacation anytime they feel. Apart from that, they choosethe kind of job they want and when to do it. Such people like to ownplaces temporarily. This is because they move from one location toanother. Providing vacation destinations for such a group would be amajor undertaking of this service. They can rent hotels at the placesof their choosing, perform their tasks as well as enjoy themselves.

Theservice fulfills the sense of belonging need. Through the integrationof different amenities, people’s needs will be met. For instance,some travelers utilize the cruise ships temporarily without feelingthe sense of ownership. Customers can use the Internet to find therequired information. If for example, a client in one of the Americancountries wants to go for vacation, a range of options will beoffered according to the client’s capabilities. He/she will thenchoose the preferred cruise ship or hotel. The service will beprovided on cash with order basis. Since the amenities are in highdemand, they can only be provided after payment. An essentialrequirement of this venture is diversity i.e. appreciation of oneanother’s culture. Since customers come from across the globe, allmust be appreciated. This can be achieved by considering diversityduring employment.

Themain reason for targeting this market is due to the availability ofcustomers. Embracing communal living has been a challenge in manycountries. The demanding lifestyles especially jobs have affectedpeople who are forced to work extra hard to sustain themselves.However, people still need the shared approach to avoid ailments thatemanate from excessive pressure. In that regard, employers aremandated to give their employees vacations to refresh. Integratingall the necessary elements vital in vacations will hence draw morecustomers.

Pricing

Thekey aspects that will drive the pricing can be described usingPorter’s five forces. The forces will determine Airbnb’s marketposition [ CITATION MDF161 l 1033 ].

  1. The bargaining power of buyers: As earlier described, the cruise industry is controlled by a small number of companies. The bargaining power of buyers is moderate to high due to the number of corporations involved in this industry. However, companies are forced to improve their services since just a small tweak in service provision impacts on the customers.

  2. Bargaining power of suppliers. The number of vendors in this industry is quite small. They have high to moderate bargaining power since the industry depends on them. In that regard, the influence the pricings within this industry.

  3. Industry substitutes. The industries i.e. hotel and cruise have several substitutes. For instance, some tourists may prefer to utilize unintegrated amenities just because they are readily available.

  4. Threats of new entrants. The hotel and cruise industries require a substantial amount of capital. Though it has a considerable amount of profit margins, it is not an enticing venture. The available companies are quite dominant.

  5. Rivalry among the competitors. Though the industry is controlled by a small number of corporations, it is quite competitive.

Theabove forces play a significant role in the pricings. The cost ofrenting hotels or cruise ship will remain constant in the respectivelocation. In other words, the costs will vary according to location.However, the additional incentives will vary depending on theclient’s preferences. The pricings will be regarding packages tocover all the necessary aspects.

Full Package

Medium Package

Lower Package

Hotel

Highest prices

Medium prices

Lowest prices

Cruise Ship

Highest prices

Medium prices

Lowest prices

Eachregion will have specific packages influenced by the global prices.

Thecruise lines in America are controlled by seven companies with onlytwo being dominant. Carnival is one of the most dominant cruiselines. In that respect, the prices are high since the quality ofservice is also high [ CITATION Placeholder4 l 1033 ].However, this new venture will be priced even higher due to theincreased level of services. Customers want value for their money.Most of them are not afraid to spend as long as they get qualityservices. In the hotel industry, prices are mainly influenced by thenumber of visitors. For example, when the number of tourists rises,the prices also increase. In that regard, this particular venturewill set a maximum and minimum level by which prices can fluctuate.The most important thing is retaining customers. Therefore,maintaining the prices depending on the season will achieve thelong-term goal of keepingcustomers. Having loyal customers will propel the company to greaterheights.

Thisventure anticipates attracting a substantial number of clients.However, the rate cannot be entirely approximated due to theintensity of competition. Nevertheless, customers will pay for theservice due to social responsibility. It is the duty of every personto maintain the balance between the ecosystem and the economy. Inthat regard, employees are guaranteed vacations. Furthermore, someorganizations pay high amounts of money for the employees to enjoysocial amenities as a means of team building. Therefore, people willhave no problem paying for the integrated services.

Themost appropriate pricing strategy, in this case, is the premiumapproach. This technique requires the service price to be high toencourage favorable views among consumers. Most people renting thesefacilities are wealthy. Most of them have a perception that, thehigher the service price, the better the quality. It is not amisconception in this case since the quality and range of servicesbeing offered are better than most of the rivals.

Conclusion

Improvingan already performing company is sometimes hard. This is because therange of services on offer are already high-class. It is the casewith Airbnb. The company has managed to make significant progressthough it is not even a decade old. However, the range of servicescan be bettered with the inclusion of hotels and cruise industries.The two areas attract a broad variety of consumers. Nevertheless,each industry offers distinctive services at different prices. Thetwo sectors lack a sense of belonging which is the main aim ofAirbnb. The organization champions community living anywhere acrossthe globe. In that respect, Airbnb can improve the sector byintroducing integrated services as well as champion the sense ofbelonging. It will suit many types of consumers such as freelancerswho value autonomy among other employees. It will also serve as amajor destination point for employers who encourage team buildingwithin their companies.

References

Airbnb. (2016). Airbnb. Retrieved from https://www.airbnb.com/?af=43720035&ampc=A_TC%3Dtp5at5zx34%26G_MT%3De%26G_CR%3D77952641063%26G_N%3Dg%26G_K%3Dairbnb.%26G_P%3D%26G_D%3Dc&ampexp=r1&ampgclid=CjwKEAjwl4q-BRDtzJmSk-uGunkSJACmCOY-BkkIDb8akS8vMcpnKXQbFjIu2viSavRB_EEM87gNXBoCblbw_wcB&ampdclid=CPyiy6345M4CFc

Clarke, P. (2016, August 5). Will Airbnb Enter the Hotel Industry? Retrieved from Travel Pulse: http://www.travelpulse.com/news/hotels-and-resorts/will-airbnb-enter-the-hotel-industry.html

FCCA. (2016). Cruise Industry Overview . Retrieved from http://www.f-cca.com/downloads/2015-Cruise-Industry-Overview-and-Statistics.pdf

MDF Tool. (2016, August 28). Strategic options. Retrieved from http://assets.sportanddev.org/downloads/strategic_options.pdf

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