Digital Marketing Project

Digital marketing is a new philosophy and business practice emerging due to improvements in technology. It involves promoting any product through a minimum of one form of electronic media and vastly differs from traditional marketing. This type of marketing has various methods and channels that enable any company or organization to study and find out what works out best (Guttentag, 2019). Internet is the core of this form of marketing. It enables sellers to promote their products worldwide, thereby making shopping easier for the consumers while enhancing the growth of various organizations and companies. An example of an organization that effectively applies digital marketing within its operations is the AIRBNB. The company connects travelers with local hosts through its online marketing place. It ispresent in over 34,000 cities and 190 countries worldwide, catering to the on-demand travel industry (So et al., 2018). It helps travelers book homestays from local hosts on a short-term basis, offering them a chance to interact with the locals and save them money. The websitealso enables the hosts to list their space and earn rent. In this light, the paper aims to:

1. Discuss the primary business of AIRBNB and how its platform is unique.
2. Know the Consumers and the types of products and services offered.
3. Understand the marketing strategies that the company is using to grow and expand its business.
4. Explain how marketing plays a critical role in the company’s success.
5. Discuss the foreseeable trends in the next five years.
6. Recommend appropriate strategies for the company.

The primary business of AIRBNB and how its platform is unique

AIRBNB Company, located in San Francisco, California, USA, began as an online platform that offered mattresses and homemade breakfast. It has revolutionized the way people travel in recent years due to the uniqueness of the platform and profitability. It has developed to a level that it is the most loved online brand within the hospitality industry (Andreu et al., 2020). The company is a community-based marketing place that allows travelers to connect with private hosts. It snowballed into this massive venture when its founders could not pay rent. On overage, AIRBNB sees over 140,000 visitors on its homestays every day. It is recorded that the number of nights booked overtook Hilton Hotel in 2012. In March 2017, the company was worth $31 billion (Busca &Bertrandias, 2020). Its founders, Joe Gebbia, Nathan Blecharczyk, and Brian Chesky, received one billion US dollars each. Currently, the company is valued at 110 billion US dollars and has served over 1 billion guests.

AIRBNB platform is currently a fully digital platform operating via apps and website only. There are no face-face interactions, no physical space where customers can go, and does not own any property. Its primary business is connecting people who have something to offer with others who require what they are offering (Chang, 2020). The company operates like Uber, which can have one million drives in a day without owning any car. AIRBNB makes over 75000 reservations daily without owning any room.

The company connects people with places and things to do around the globe. It is a marketplace that connects hosts with travelers via the website or app. Individuals with underutilized space and property can rent them (Joseph & Varghese, 2019). At the same time, travelers or other people who require accommodation can rent directly from the owners via the platform with a guarantee of a lower price compared to hotels and hostels. The guests get the opportunity to interact and live like that host communities.

The platform is unique in many ways. It uses an Aggregator Business Model, unlike the traditional hotel chains ofHilton and Marriott, which use a linear business model. Such conventional business models have to spend a lot of money building and maintaining their properties. However, AIRBNB does have to do any of that because its essential resources are people. For this reason, it grows incredibly so fast at zero marginal cost. As a platform, it enables people to list their available space and earn money in rent (Jiao & Bai, 2020). Besides, travelers can easily book homestays from local hosts at cheaper fees instead of expensive hotels, saving them some cash and allowing them to interact with the local hosts. It does not own any of the properties. The platform has a system that reviews travelers’ profiles, thereby helping them decide about the hosts and the product on offer. On the other hand, hosts can also choose who to rent out their space to build trust and reputation in the community. It is more of a home-sharing concept that continues to change how people feel about staying in strangers’ homes while traveling.

The platform also has several freelance photographers distributed across major cities worldwide. Their main task is to go to a property, take high-definition photographs of the property, and upload them to the company’s website. The pictures facilitate click rate and increase more responses from users. The company pays these photographers directly.

Consumers and the types of products and services offered.

The last updated AIRBNB statistics in February 2022 indicate that users of the platform are likely to be millennials. They broadly cite ease and convenience as the main reasons for staying at Airbnb.Consumers between 18 and 24 years are 15 %. The majority of its guests are female consisting of 54%. The statistic also indicates that36% of the guests are between 25 and 36. Guests aged 55 and above are 13% (Guttentag, 2019). The consumers of AIRBNB choose it for ease and security of payment,convenient location, the desire to live like the local hosts, and the fact that sharing homes is more ecological and environmentally friendly. 43% of the consumers believe that functionality is the amenity they value most. They also think that the worthiness of social media plays a significant role in booking decisions. The study indicates that the majority of the consumers come from the US  with a percentage of 59%. 46%  of those from Australia, and 39% from Italy, prefer air conditioning to Wi-Fi. Consumers from Canada, the US, and Australia prefer free parking to a pool.

Travelers choose AIRBNB because they want to live like the local hosts. They do not want to live like tourists who have to queue in long lines and struggle to see the same things as other people. Hosts at AIRBNB offer more than just hospitality- they integrate travelers worldwide into their communities(Joseph & Varghese, 2019).Some of its products include Bespoke Matching, Guidebooks-Authentic Recommendations, Live There, Distinct Design, and Get to knowNeighbors.

Bespoke Matching enables travelers to feel that they live in the hosts’ communities. Guides book -Authentic recommendations showcase the best that the hosts’ offer, plus the best bars, restaurants, attractions, and off-the-beaten-track ideas. The guidebook helps guests find local gems in every city block. It offers travelers a passport to the culture of the local communities(Jiao & Bai, 2020). The Live There product enables travelers to reimagine what it is to travel and showcase the magical and authentic experiences made possible by AIRBNB. Distinct Design is evident through its system, which creates iconic and consistent designs that can enliven apps across all devices. Its app also enables travelers to find perfect neighborhood matches, which gives them a true feeling of living like the hosts.

Marketing strategies

AIRBNB’s marketing strategy analyses the brand with the framework of a marketing mix that covers the product, price, promotion, and place. The company uses several marketing strategies such as product innovation, pricing methods, and promotion planning. The success of the AIRBNB brand heavily depends on thebusiness strategies and marketing mix (So et al., 2018). The company also uses its marketing strategy to position itself competitively in the market and achieve its business goals and objectives. The paper begins by analyzing the product strategy.

The marketing mix of AIRBNB consists of a wide variety of products and services. The company leads in helping its consumers to book hotels, hostels, and other accommodation services. The company is operating in a business-to-business market. It hence offers its platform as a product to the local hosts with the value proposition to earn money and build and grow their passion. One of the services that it offers travelers is the simplicity of finding the perfect accommodations, such as a homestay, hotel room, or hostel beds (Andreu et al., 2020). They also provide travel experiences such as art classes, scuba diving, cooking classes, and others by selecting a different listing availed on the platform. The company has the hosts have two options. It enables hosts to list the property they are willing to rent or any other experiences they are eager to offer as a service to the guests or co-hosts by sharing every responsibility with them. AIRBNB also provides protection plans to the hosts as supplementary services. After that, the hosts are left to decide what prices they want to set for the service offered or the place (So et al., 2018). However, most of them do not have experience developing prices for their property. Hence, the company helps estimate the costs according to other similar types of listings, the capacity of guests, and location. It acts as a broker that facilitates communication between the guests and the hosts via the platform. The COVID 19 pandemic rapidly reduced bookings, but it has started regaining track. Below is the pricing strategy that AIRBNBuses in its marketing strategy.

The primary source of revenue for AIRBNB is the fee that it charges the hosts. It does not charge travelers directly for its services. It charges fees on any reservations made via the platform. It does not matter whether the property is listed or is a single host (Busca & Bertrandias, 2020). The platform also allows the host to invite booking through online advertisements. After the guest has checked in, the money is deposited into the host’s account within one day. The hosts are also provided with standard cancellation policies. They can choose from various refund guidelines if the guest or the host cancels a booking before or after their arrival.

Another strategy used is the distribution strategy.The company started in 2007 when its founders turned their living room into a breakfast and a bed. Later the idea spread and compelled them to build a website that could offer short-term living quarters to travelers who could not afford bookings in the hotels or could not find any bookings (Busca & Bertrandias, 2020). Two years later, the website had grown from offering air beds and shared spaces to other properties, including private rooms, apartments, entire homes, boats, and various experiences. The company has expanded to over 190 countries by simply using its online portal. It has a solid global reach because people can easily access it through all media platforms. For this reason, it can be used by anyone in the internet ecosystem. Below is the promotional and advertisement strategy of AIRBNB.

How marketing and technology play a critical role in the success of AIRBNB

The primary role of marketing is to ensure that the company is driving growth through digital marketing, promotion through the internet, connecting communities, and referring and marketing local partnerships. The company has various marketing channels that it uses to promote its brand.It reaches consumers through traditional and modern advertising methods, such as television, outdoor, and online marketing (Jiao & Bai, 2020). The company is committed to communicating its proposition of value – to live like the local hosts- via its adverts and applies a strategy that is more geo-localized for such promotions through the creation of content relevant to a given location. Several properties are often listed on its platform; hence it has to analyze the social media to target the appropriate audiences. Some of the public relations activities it undertakes are extending support and donation to different groups by providing accessible accommodations in 2012 to individuals affected by Hurricane Sandy in New York. Doing so undertakes cause-related marketing (Chung & Sarnikar, 2021). It also redesigned its website and logo according to the results obtained from the consumer survey. AIRBNB has extended its partnership to other agencies and offers sponsorship to various events to promote its brand’s visibility.

Marketing plays a critical role in building a strong relationship between the consumers and AIRBNB. It provides confidence to the company to introduce a new product or service in a market, unlike when a product or service entered the market without any publicity. This is why marketing function is essential in any company, regardless of profit or nonprofit (So et al., 2018).Marketing has been helping AIRBNB shape its image, improve customers’ association with its product and services, and enable customers to have confidence in the products and services. Since AIRBNB is a profit-led company, marketing helps it increase its revenue and increase its profitability. Besides, it facilitates the growth of hosts and other platform users because it deals with numerous corporate and individual customers where decisions involve more than one party.

Another critical role of the marketing function is to brand the company, participate in publicity activities, advertise, and promote customer interaction by collecting their feedback. Every service that the company launches starts from marketing and ends with marketing, where the marketing department determines the consumers’ needs and figures out if the needs of their guests were met after the successful introduction of the service (Busca & Bertrandias, 2020). AIRBNB competes to stay at the top of the customers’ minds and to maintain its position in the market as well.Digital marketing can create customer loyalty and retention. Consequently, the function carries out campaigns and promotions from time to time across all online platforms. This is a successful initiative that uses digital technology to attract more customers.

AIRBNB has significantly changed travelingacross the world through the use of digital technology that connects millions of guests with localhosts. It has come when most companies use technology to replace people at workplaces, but AIRBNB uses it to economically empower people. The technology enables new travel experiences while increasing the earnings of the local hosts, thereby helping them sustain the communities they come from (Guttentag, 2019). Technology is at the center of AIRBNB’s operations, from bookings to guest arrival at their reservations. Every reservation made interacts with artificial intelligence technology that they have built. AI technology reduces the friction inherent in the platform, such as preventing fraud, improving search, and enabling hosts in price optimization. Technology also helps them match customers with the listings that aremost relevant, services, and experiences across the globe.The company’s goal is to find perfect homes for the guests.

AIRBNB has built new ways that promote smart pricing. They predict the probability that a new listing will be booked at a given price on a given date. The technology enables them to drive their search engines and allows the hosts to price their listings according to what they are optimizing for, like occupancy rate against price per stay (Andreu et al., 2020). Technology also enables AIRBNB to improve its flexibility, creativity, and responsivity. The   COVID 19 pandemic did not stop it from operating because its product isdigitalized and also exists in the physical world. By doing so, it improves its revenue and maintains its position in the digital market, indicating that the future of AIRBNB will be much better than it is today.

Foreseeable trends in the next five years

During the pandemic, it was difficult to predict where AIRBNB would be in the next five years. Trying to forecast its numbers was folly, especially when faced with the uncertainty of coming out of the COVID 19 pandemic. But, two important trends are foreseen to shape the company’s operations in the next half a century (Busca & Bertrandias, 2020). They include the rise in remote work and an increase in profitability. The company’s management has reported that the guests are not just traveling on its platform; rather, they live on it.24% of nights booked within the first quarter alone were to be stayed in for 28 nights or longer. Even though that was during the pandemic, it is a trend that is most likely to last. Now that offices have reopened, a hybrid remote work model persists, and the trend is projected to continue for a long time (Chung & Sarnikar, 2021). An increasing number of the guests do not want to be bothered to live and work in one location.The trend in remote work is an important tailwind for AIRBNB because it also indicates an advantage over the traditional hotel chain.

On the other hand, the company has been posting a trend of increasing profitability in adjusted EBITDA and cash flow. However, in 2019 it posted a huge loss because it expanded its operations and invested most of its revenue in products and marketing. But it was solidly profitable because the companyended 2018 with 179 million US dollars in adjusted EBITDA on a 2.6 billion US dollars income. Its marketing model is also highly profitable as the company takescommissions on every booking (Andreu et al., 2020). AIRBNB only needs to ensure that the platform is running and its consumers are wellsatisfied. It does not have to spend money on real estate and cleaning like other hotels. Currently, AIRBNB has a market cap of 80 billion US dollars. Even though this might look expensive, the company still has a long way to grow as it dominates the travel industry and enjoys new trends in the market, such as remote work. It has an abundant competitive advantage due to its strong brand, leading to the fast-growing home-sharing industry.

Recommendations

The emergence of digital marketing was one of the latest changes in traditional marketing. It has caused most companies to reinvent their marketing strategies to adapt to this major change in traditional marketing. A digital marketing company, AIRBNB heavily depends on ever-evolving and fast-changing technology (Jiao & Bai, 2020). Therefore, the same features should be reflected in every strategy it develops. One of such strategies that it should consider is segmentation. It will enable it to target specific markets in the business-to-business market and increase its customers. The company can also consider the influencer marketing strategy. It involves the identification of vital nodes within the related communities known as influencers. It is a concept that is becoming so important in digital marketing. The best way to reach the influencers is through paid advertisements on Facebook and Google or by managing social customer relationships usingsoftware such as Microsoft Dynamics.

To summarize, digital marketing involves promoting any product through a minimum of one form of electronic media and vastly differs from traditional marketing. One perfect example that this paper has analyzed is AIRBNB, headquartered in San Francisco, California, USA. Its primary business is to connect travelers with local hosts through its online marketing platform. The platform is unique because it uses an Aggregator Business Model, unlike the widely used hotel chains such as Hilton and Marriott, which use a linear business model. Over 190 countries use the platform across the globe by consumers of all ages. The company primarily uses three strategies in its operations: product strategy, pricing strategy, and distribution strategy. Marketing plays a critical role in building a strong relationship between the consumers and AIRBNB. The company also uses marketing for branding, participating in publicity activities, advertisements, and promoting customer interaction by collecting their feedback.

AIRBNB has significantly changed travel across the globe, using digital technology to link various guests with private hosts. The technology enables new travel experiences while increasing the earnings of the local hosts, thereby helping them sustain their communities. Technology also helps them match people with the most relevant listings, services, and experiences across the globe. Nonetheless, it enables them to drive their search engines and allows the hosts to price their listings based on what they want to optimize for, like occupancy rate against price per stay. Two significant trends are foreseen to shape the company’s business over the next five years. They include the rise in remote work and an increase in profitability. Since AIRBNB is a digital marketing company, it should consider embracing a segmentation strategy and the influencer marketing strategy that evolves and changes according to the trends in the market and technology.

References

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Chung, Y., & Sarnikar, S. (2021). Understanding host marketing strategies on Airbnb and their impact on listing performance: a text analytics approach. Information Technology & People.

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Jiao, J., & Bai, S. (2020). An empirical analysis of Airbnb listings in forty American cities. Cities, 99, 102618.

Joseph, G., & Varghese, V. (2019). Analyzing Airbnb customer experience feedback using text mining. In Big Data and Innovation in Tourism, Travel, and Hospitality (pp. 147-162). Springer, Singapore.

So, K. K. F., Oh, H., & Min, S. (2018). Motivations and constraints of Airbnb consumers: Findings from a mixed-methods approach. Tourism Management, 67, 224-236.