APPENDIX A: ASSIGNMENT COVER SHEET
ASSIGNMENT COVER SHEET
Surname
Davis
First Name/s Karriema
Student Number 501094
Subject Strategic Marketing Management
Assignment Number 3
Tutor’s Name Examination Venue Date Submitted 28 September 2017
Submission (?) First Submission ? Resubmission Street Address 012 Hoy Street
Ext 9, Discovery
Roodepoort
1709
E-Mail [email protected] and/or [email protected]
Contact Numbers (Cell) 084 307 8715
Course/Intake PGBM Year 1
Declaration: I hereby declare that the assignment submitted is an original piece of work produced by myself.Signature: Karriema Davis Date: 28 September 2017
Introduction
Situational Analysis
Company Profile
Positioning Strategy
Current Challenges
Disruptive Engaging Strategy
Recommendations
Marketing Objective
Target Market
Service Level Strategy
Marketing Communication Strategy
2. Develop a company profile for you’re an Airbnb provider of your choice. 3. Develop a positioning strategy and value proposition statement for the accommodation provider. 4. Assess the current challenges facing the accommodation provider. 5. Develop a disruptive engaging marketing strategy to market the brand. The following areas must also be addressed in the marketing strategy a) Recommendations to the challengers the accommodation provider faces b) Marketing objective(s) c) Target market d) Service level strategy e) Marketing communication strategy
(10) 5. Develop a company profile for you’re an Airbnb provider of your choice.
(10) 6. Develop a positioning strategy and value proposition statement for the accommodation provider.
(10) 7. Assess the current challenges facing the accommodation provider.
(10) 8. Disruptive engaging marketing strategy to market the brand. The following areas must also be addressed in the marketing strategy
? Recommendations to address the key challengers the accommodation provider faces ? Marketing objective(s) for their marketing plan/strategy (10)
? Define their target market (5)
? Indicate what their service level strategy key areas will be (5)
? Postulate innovative disruptive engaging marketing communication strategies to market the accommodation provider (15)
9. Conclusion (20)
10. References
Introduction
The information used in this report was collated by means of research and gathering related topics about Airbnb. The report will contain references to sites, author specific content indicated by means of italics and paraphrased to ensure context to the topic is maintained.
Airbnb regarded as a trusted community marketplace for people to list, find and book exclusive accommodations around the world. Finding suitable and affordable accommodation can be done on the internet, from a mobile phone or any smart device. Established in 2008 and based in San Francisco, California, Airbnb has become a market trend leader, in a competitive environment, which has become a serious threat to the traditional model of accommodation. Whether you require a room for the night, a house, tree house or a villa for a week, Airbnb connects people to unique travel experiences, at an affordable price, in more than 65,000 cities and 191 countries. Doing things differently, it has become a radical approach with technology as the platform to drive it. This has provided Airbnb an edge over the hotels and various listed bed and breakfasts worldwide.
The concept emerged when two university graduates used a simple website to advertise their apartment as “AirBed and Breakfast” to conference delegates looking for affordable accommodation to avoid high hotel prices.
It has become the easiest way for ordinary people or hosts as they are called to rent out their residences as tourist accommodation to travellers and in turn offers a booking service for these accommodations to the public all over the world looking for affordable and comfortable accommodation. It has officially disrupted the market and redefined how people engage with each other when travelling. People do not want to see the world as tourists any longer but instead they want to experience it like a local, focusing on the lower-end market, the study will investigate how Airbnb has successfully infiltrated the market.
Figure 1 – How Airbnb started (Vital, 2014) extracted from the internet, cite https://www.airbnb.com/about/about-us
Marketing Objective
Regarded as the rise of a disruptive innovation and emerging market leader Airbnb, officially transformed and disrupted the traditional accommodation sector. Growing at a rapid pace, the rise of Airbnb is said to be “examined” through the lens of disruptive innovation theory. It describes how “products that lack in traditionally favoured qualities but offer alternative benefits can, over time, transform a market and capture mainstream consumers.” As referenced by Christensen, C.M., Raynor, M.E. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press. Google Scholar) Airbnb can be considered a ‘disruptive innovation’ due to their innovative internet-based business model as well as their exclusive offering to tourists.
With reference to an on-line article, dated 28 May 2016, by author Radhika Rastogi, “Airbnb’s phenomenal growth using digital Marketing ; Innovation Strategy,” reference is made to the business objective of Airbnb. The author refers to the need for Airbnb to expand beyond home and room rentals, to offering a more full-service offering including local recommendations to ensure they soon become a more inclusive hospitality brand. The goal is to create all-inclusive travel planning guides which is easier and less complicated. This allowing for the efficient promotion of your not so common and difficult to plan tourism destinations which benefits the less developed countries or cities.
Key to their success will be to ensure that they continue to strengthen their international presence, by making each city more accessible which will allow it to be more affordable to visit new locations. The upside to this will be job creation for people like local tour guides, chefs, photographers etc, and will support this new Sharing Economy ecosystem, where services or assets are shared between individuals for free by means of the internet. This ecosystem allows everyone to participate in.
An example of an on-line Airbnb snapgood of sharing economy ecosystem, website link reference
https://www.forbes.com/pictures/eeji45emgkh/airbnb/#271d38162f52
Situational Analysis
The current accommodation model involves high hotel prices which only certain high to middle income earners can afford which limits the opportunity for many low-income earners to enjoy.
With reference to the case study, despite their growing popularity, municipality revenues in the form of special taxes and rates, e.g. bed taxes have put a strain on the emerging market leader. Airbnb is contributing to this dilemma due to the influx of thousands of extra “beds” where no direct tax is being paid to the municipality and with that threatening the hotel industry.
The article further elaborates that some cities are going to the extent in banning Airbnb and in instances capping the number of rooms available on the internet. Unfortunately, this approach will not work as it would be difficult to command and control the internet, which is the platform used by Airbnb. The City of Cape Town will be faced with this same issue soon enough, whether it is to ensure that residents let their spare rooms on Airbnb or perhaps giving in to the demands of hotels which would require them to cap the number of beds they can load on the internet or even scrapping of bed taxes in totality. These kinds of issues make it twice as hard for Airbnb to successfully deploy this business opportunity for low-income earners to market in Cape Town.
An emerging market opportunity exists for Airbnb in Cape Town. The gap to position your more rural experience, can include the consideration for listings from a more wealthier suburb to then also include three listings from a listings from a poorer community. This will assist in tackling a massive social problem in Cape Town, the issue of housing. The influx of migrants from rural communities flocking into the metros for economic opportunity worsens the situation as there would not be an opportunity for respectable landlords and tenants to find one another. Airbnb has assisted in solving this problem by using the internet and reputation ratings. By allowing Cape Town to use Airbnb to tackle housing shortages in poor communities will provide residents with additional rental income, and at the same time increasing the availability of tourist accommodation. This will create the opportunity for a model that Airbnb can duplicate in emerging markets around the world.
According to Kotler and Keller, 2012:64, “Marketing Opportunity Analysis Access growth opportunities, involves planning for new businesses and downsizing or terminating old businesses.” It is important to begin with an external analysis, scan the macro-environment to ensure that the opportunities and threats have been identified, this will then be followed by an internal analysis to ensure the company’s strengths and weaknesses have been identified, this will ensure that possible opportunities have been determined and minimising the threats associated.
The SWOT analysis discussed below provides the overall impact of the external environment.
Strengths
By the aid of user friendly websites which entices the buyers into finding the place they want to rent without any hassle. Clever and innovative advertising, strong brand awareness. The platform that they use has dual benefits, that for the host/people renting the accommodation and for their guests who get the rates at low costs, better than what you would get at hotels. Offering insurance to their guests where security in a new place is of great concern. Recognised as one of the leading businesses in the hospitality industry. High growth rate. Accommodation guaranteed. Customer service 24/7.
Weaknesses
Reputational risk as their image is dependent on the hosts. If the host does wrong it affects the brand’s image. Depending on the country, expansion can result in tourism laws being violated. Businesses offering the same or similar services, fail to work on offering new services to remain competitive. They are unable to provide complete security to their sellers and buyers due to their online platform. Only available in your bigger cities, the option to have the rural experience of any country is not available to travellers. Safety and security issues not as clear and transparent as they hoped it would be.
Opportunities
New services along with rentals can be explored to differentiate them from their competitors. The opportunity to expand their services into rural areas they operate in and into wider global territories. As part of CSR activities there is an opportunity to collaborate for social causes, this can be achieved by means of offering rentals where countries are in crisis. Airbnb can partner with tourism companies to offer complete tourism packages to travellers. Due to massive growth in the tourism industry, there is an opportunity to expand that to include Airbnb.
Threats
The business model can be easily copied. Companies coming into the market with the same model poses a threat. There are laws that govern and exits in certain countries that will affect the operations in another country. Increased cost of service industries being offered globally can decrease their profitability. Illegal listings on the website as well as harming the brand makes the business vulnerable.
PESTLE Analysis – Porters 5 Forces and Competitor analysis
Political factors – Unregulated housing laws – legal issues encountered due to state housing regulations and laws. Some states require the hosts/owners to stay on the property to be allowed to legally rent their apartments. Hotel and tourist taxes must be charged out for their homes. Countries such as New Orleans, Barcelona and New York faced fines and court proceedings due to not following local tourism laws. Due to the lack of consistency with regards to these housing laws Airbnb need to that they follow each state’s housing guidelines.
Economic Factors – High exchange rates for the US dollar. The constant increase of fuel prices hikes could reduce travel. As a result of significant growth, Airbnb has grown and is currently a major competitor to hotels. Regarded as a cheaper alternative for renting, they have grown exponentially in a short period of time. They are leaders in the industry called Shared economy, a developing trend in which resources are shared between individuals and corporations. Job opportunities created for the average earner, opportunities to be your own small business owner. More and more people are not able to pay the exorbitant hotel prices and as a result people are not able to travel and stay at hotels.
Social factors – regarded as one of the up and coming social platforms, people offer their homes in exchange for money as a result meeting new people as well. Social media platforms are used for people to share their experiences with the world, word of mouth advertising.
Technological factors – the business model is centred around technology. Websites are used for booking, review on past experience and most importantly an opportunity to see what Airbnb has to offer in various countries. Automation critical, an automated message/text will be sent to the host to advising him/her of the booking made by the potential individual/s. On-line services, smart apps created for streamline and efficiency for bookings and query resolution. In the absence of technology Airbnb would not be able to operation efficiently.
Legal factors – the infamous terms and conditions fine print. Unregulated housing laws due to non-compliance of housing regulations. Legal documents in place, which all hosts are required to agree to terms and conditions such as taxation, housing and tourism regulations.
Environmental factors – increased environmental awareness key to Airbnb’s business mode, the constantly advocate lowering greenhouse gases, waste avoidance and water consumption
Environmental factors: healthier than hotels
Airbnb boasts they reduce energy usage within America and Europe compared to hotels. This includes lowering greenhouse gases, less water consumption, waste avoidance, and increased environmental awareness.
It seems the firm is keen on lowering traveling impact and chemical usage too.
Develop a company profile for you’re an Airbnb provider of your choice.
(10) 6. Develop a positioning strategy and value proposition statement for the accommodation provider.
(10) 7. Assess the current challenges facing the accommodation provider.
(10) 8. Disruptive engaging marketing strategy to market the brand. The following areas must also be addressed in the marketing strategy
? Recommendations to address the key challengers the accommodation provider faces ? Marketing objective(s) for their marketing plan/strategy (10)
? Define their target market (5)
? Indicate what their service level strategy key areas will be (5)
? Postulate innovative disruptive engaging marketing communication strategies to market the accommodation provider (15)
9. Conclusion (20)
10. References
Disruptive Engaging Strategy (can also be used for last bit marketing objective)
The changed marketplace is characterised by the following:
New Company Capabilities
Efficient use of the internet as an important information and sales channel;
Collecting of fuller and richer information about customers, markets, prospects and competitors;
Reaching customers quickly enough via new and improved distribution channels, social media and mobile marketing
New Consumer Capabilities
new Company Capabilities,
new Consumer Capabilities,
New Digital Age, and
Rapid Globalisation, heightened awareness on Ethics and Social Responsibility
Growth of Non-Profit Marketing. Expanding on a few of the characteristics:
? New Company Capabilities Companies of present day can: 1. Use the internet as a powerful information and sales channel; 2. Collect fuller and richer information about markets, customers, prospects and competitors; 3.; 4. Send targeted ads, coupons and informative relevant content; 5. Improve purchasing, recruiting, and internal and external communications; 6. Improve on cost efficiency from all areas in business; 7. Adapt, change and integrate business model in quick time frame; and 8. Be solution vehicles and partners to their customers.
? New Customer Capabilities Customers of present day: 1. Can use the internet as a powerful information, purchasing and comparison aid; 2. Can search, communicate and purchase on the move; 3. Can tap into social media to share opinions and express loyalty; 4. Can actively interact with companies; 5. Can become brand advocates and product developers of companies; reject marketing/content they find inappropriate; 6. Can inform companies strategies; 7. Can communicate to different people, using different mediums at the same time; 8. Want the products they want, to their specifications; want to be contacted when they want, in the medium they want and want value for money; 9. Are technologically savvy and communicate more using mobile, social media and their fingers. Word of mouth and finger talking is king! 10. Are experts now and not ignorant anymore, hence you cannot fool them; 11. Are disloyal and switch companies/products as and when they feel; 12. Want answers to their questions or queries within minutes; and 13. Are the hunters and the company is the hunted.
? New Digital Age The explosive growth in computer, telecommunications, information depth and access, transportation etc. has had a major impact on the ways firms bring value to their customers. 1. Connected and always on consumer and business market; 2. Instantaneous communication; 3. Innovative ways to learn about and track customers and create personalised/customised products and services; 4. Effective and efficient means of distribution channels. Omni-channel distribution is taking forefront; 5. Improved communication methods to customers, within organisations and stakeholders; 6. Creation of effective online databases that are available 24/7; 7. Creation of or improved on CRM or MIS databases thereby providing for better informed decision making and direct marketing initiatives; 8. New wave of communication and advertising tools: cell phones, iPods, etc.
Due to the Internet, the consumer buying decision process happens on the couch of the consumer or as the consumer is on the move, with delivery taking place within 24 hrs to the customers door step. 10. More than 80% on internet users are using their mobile phones to access the internet.
In conclusion
Airbnb is a leader in the sharing economy. They offer jobs for “hosts”, people who rent their rooms or homes to visitors. But every state and country have their own rules for housing: the need for permits, licenses, and taxation depends on location. Because Airbnb has failed to address these, they have faced backlash and legal trouble.
A marketing strategy details the means by which an organisation’s marketing will be achieved. Marketing strategies and their supporting implementation plans need to be developed so that they support the organisation’s overall strategy (Du Plessis, Strydom & Jooste, 2012: 17). The integration of marketing strategy with the organisation’s overall strategy management process is shown in Figure 1.7 below. Refer to the prescribed text book for detailed information. Typical components of a marketing strategy include: 1. Company’s mission statement, marketing objectives and target market 2. A situation analysis (taking into account a SWOT analysis, PESTLE analysis, Porters 5 Forces and Competitor analysis), 3. The actual marketing strategy (8 Ps), and 4. Financials and controls (Kotler & Keller, 2012: 82 – 86).
Bibliography
http://www.businessinsider.com/why-airbnb-reviews-are-a-problem-for-the-site-2015-6https://www.airbnb.com/about/about-ushttps://www.smartertravel.com/2017/06/19/7-airbnb-problems-solve/Kotler, P. & Keller, K.L. (2016) Marketing Management. 15th Edition. Essex: Pearson Education.
Cant, M.C., Van Heerden, C.H. & Ngambi, H.C. (2014) Marketing Management. A South African Perspective. 2nd Edition. Cape Town: Juta.
https://www.similarweb.com/blog/airbnb-and-their-proposed-new-marketing-strategieshttp://www.digitalvidya.com/blog/airbnbs-phenomenal-growth-digital-marketing-innovation-strategy/https://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economyDaniel Guttentag (2015) Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector, Current Issues in Tourism, 18:12, 1192-1217, DOI: 10.1080/13683500.2013.827159
http://www.tandfonline.com/doi/full/10.1080/13683500.2013.827159 Kiesha Frue May 31, 2017 PESTLE Analysis of Airbnb
http://pestleanalysis.com/pestle-analysis-of-airbnb/
