Term End Project: Airbnb (Hotels and

Home stays)
Abhinav Garg – 163004
Anukarsh Chauhan – 163015
Chitrank Bhargava – 163022
Dhruv Gursahani – 163050
Shashank Trivedi – 163007

04th October 2022

Prof. Rajarshi Debnath
(Marketing Management – I)
 TABLE OF CONTENTS
INTRODUCTION ................................................................................................................................................ 1
ENVIRONMENTAL FORCES ........................................................................................................................... 2
ANSOFF MATRIX............................................................................................................................................... 4
PLC STRATEGIES .............................................................................................................................................. 5
SEGMENTATION, TARGETING & POSITIONING ..................................................................................... 7
REFERENCES ..................................................................................................................................................... 9
 INTRODUCTION
Airbnb founders Joe Gebbia, Brian Chesky, and Nathan Blecharczyk developed the business
in 2008. Initially, Gebbia and Chesky started off using their own place as a bed-and-breakfast
to make a few extra bucks to pay rent. With a big design conference coming to the San
Francisco area and a city full of sold-out hotels at the time, they saw a potential market for the
idea and developed a website called airbedandbreakfast.com.

The start-up experienced several ups and downs, and it went through at least three separate
launches. Finally, with new funding Air Bed & Breakfast became Airbnb in 2009, and that was
the company’s turning point. Airbnb went public in 2020 under ABNB.

ABNB for Guests: Airbnb has listings all over the map. The service currently has more than
5.6 million listings in roughly 220 countries around the world. Once you click on a listing, you
can see a range of information about that listing, including the size of the space and its
amenities, check-in, and pricing information, a detailed description of the space, house rules,
safety features, and availability. You will also see reviews from other guests and information
about the hosts. If you like the listing, you can request to book it.

ABNB for Hosts: Airbnb has different hosting options — you can rent out the extra space in
your home, you can rent out your entire home, or you can host experiences in your area. You
can also make money on Airbnb by hosting an experience. “Airbnb experiences are activities
designed and led by inspiring locals. They go beyond typical tours or classes by immersing
guests in a host’s unique world,” says the Airbnb site.

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 ENVIRONMENTAL FORCES

Political Forces:

Airbnb offers a unique service of connecting hosts, who are ready to rent their premises and
guests, who are looking for a place to stay for shorter duration. O the surface Airbnb’s business
model looks rather simple. It’s when you dig deep you find the biggest mess threatening
Airbnb: the unregulated housing market. Every country has different set of rules for renting
properties and Airbnb’s failure to account this, has led to various prosecutions against it in New
York, New Orleans, Barcelona etc.

Economic Forces:

Airbnb was built on the concept of a shared economy. Since Airbnb offers cheaper alternatives
for renting, it has grown exponentially in a short time .Airbnb makes tourism possible for lack
hotels or motels. Simultaneously providing a revenue source for multiple people. In New
York, Airbnb’s economic activity accumulated to $600+ million and provided over four
thousand jobs.

Social Forces:

Airbnb experiences are activities designed and led by inspiring locals. They go beyond typical
tours or classes by immersing guests in a host’s unique world. These experiences have truly
gained traction and are working towards increasing the customer base of Airbnb.

Technological Forces:

Airbnb relies heavily on is app and website for bookings. This heavy reliance on technology
can be a good and a bad thing. It can be good because when tech is involved there is less
chances of human error and miss-communication. However it can be bad thing because when
the technology betrays Airbnb, their entire operation would go down.

Environmental Forces:

Airbnb boasts that it is a environmentally conscious company and it encourages its host to
power their properties with renewable sources of energy. This is indeed a great thing, but it can
drive away potential hosts because they might not want to commit to cost of adding a solar
panel in the future.

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Legal Forces:

As stated above Airbnb has had run in with the legislature, primarily due to its failure to comply
with the local laws of individual country. This has created a serious problem as this is
considered to be bad publicity and negatively affects the business.

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 ANSOFF MATRIX

1. Market Penetration:
It is the act of gaining larger market share in an existing market with existing products.
Online operations of Airbnb gives it a certain edge. Airbnb in the past has successfully
run marketing campaigns where it teaches its users how to use the app for ease of life.
The occasional television ads motivate people to list their properties on the app and also
motivates travellers/renter to seek out properties through the app. The company has
recently started to integrate AR/VR, so that property seekers can experience and
visualize the premises like never before. Finally, the companies strategically placed
discounts around the world during the various festive season in those countries helps
with market penetration as well.
2. Market Development:
The main source of market development for Airbnb is by geographic expansion into
new markets. Once it enters a particular market Airbnb uses the same market
penetration strategies to make its presence known. One thing that bolsters Airbnb’s
entry into a new market is the virtual event it hosts to join hands with others start-ups
for mutual growth. One place where Airbnb loses it sheen is the pricing of properties.
Now this might not be a problem in western nations, but for under developed countries
like India, Airbnb is not an option for everyone.
3. Product Development:
Over the years, Airbnb has transformed from a short term accommodation provider to
a full fledge homestay provider with its offerings ranging from rentals and experiences
to tourism and restaurants. The services it offers also vary from market to market. The
research and development section of Airbnb works to create these new products.
Poaching of Athila Armstrong (head of Experience) by Airbnb from a competing start-
up turned out to be very fruitful.
4. Diversification:
The two types of diversification techniques are vertical and horizontal. Offering small
spaces for short-term accommodations to providing villas, full-fledged apartments and
hotel rooms, company has used horizontal diversification as its mantra. However there
is also potential for vertical diversification. Airbnb can purchase its own properties and
list them on its app. This will increase costs but also increase the earnings of Airbnb.

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 PLC STRATEGIES

Present
2011 Currently
provides 5M
2009 Airbnb
became
unique places
in >81,000
2008 The company
simplified the
available to 89
countries.
cities & 191
countries.
2007 Founders
finished the
name to
Airbnb.
It was just an final version
idea of 2 and went to
roommates to meet the
make extra investors.
money.

1. Introduction & Development: It was a major flop when it began operating since the
idea of a shared economy had not gained traction yet. It was initially rejected by
investors due to same reasons. There was not much marketing involved. Prices were
not high. Since the prices were not high and marketing was not done significantly
Airbnb used slow penetration technique for product introduction where product is
launched at a low price with minimal promotion.
2. Growth: Shifting marketing messages from product awareness to product preference,
skimming product prices if your profits are too low and improving product quality are
some of the product growth strategies and Airbnb followed them religiously. They used
Obama O’Cereal and Cap’n McCain’s to provide information about Airbnb. The
company appeared at Y Combinator, picking up an investment of $600,000. Later on,
the company had hit 1M nights booked on the platform and was recognized break-out
mobile app. Airbnb is currently in the “Growth” stage with an annual sale of $5.9B and
a sales growth of 77.37% (2021) as compared to 2020 annual sales of $3.4B.
3. Maturity: Two strategies to follow during maturity stage are market modification - this
includes entering new market segments, redefining target markets, winning over
competitor's customers, converting non-users and product modification - adjusting or
improving your product's features, quality, pricing and differentiating it from other
products. In view of growing competitors such as FlipKey (subsidiary of TripAdvisor),
HomeAway, Housetrip etc., Airbnb is already facing price wars and should refrain from
competing with them at cheaper rates. This can be detrimental to the company and can

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 prove to be a fast race to the bottom. They need to differentiate their brand form
competitors, as brand is the most important asset. Competitors can and will duplicate
the features of Airbnb’s product, but they cannot replicate the way customers identify
themselves with the brand. This differentiation creates loyalty and prevents emerging
competitors from stealing Airbnb’s customers.
4. Decline: (How Airbnb is likely seen to fall out): Some of the strategies for declining
stage are to reduce your promotional expenditure on the products, implement price cuts
to get the customers to buy the product, find another use for the product, maintain the
product or harvest the product or service before discontinuing it. The company has not
shown declining stage as of yet as it continuously grows in profit. However that day
will eventually come when Airbnb would need to be put out to pasture, so the company
can use one of the given strategies.

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SEGMENTATION, TARGETING & POSITIONING

Segmentation:
1. Demographic Segmentation: Airbnb's target market is diverse, encompassing all
customer age groups. The Airbnb demographic for accommodation is 18-45 years old,
whereas the target audience for experiences is older, ranging from 18 to 60 years old.
This corresponds to the work profile of guests: for accommodation and experiences,
the target market comprises students, employees, and professionals, whilst for
experiences, the target market also includes senior managers and executives. Airbnb's
target market is predominantly female, with 54% of users being female and 46% being
male.
2. Geographic Segmentation: Airbnb is a globalised brand, with around 13 million
listings globally in 2021. Europe is Airbnb's largest market, with almost 5 million
listings that year, followed by Asia Pacific with over 3 million listings and North
America with slightly more than 2.5 million listings. Despite ranking third in terms of
bookings, North America is by far the greatest revenue generator, accounting for
approximately $23 billion in gross sales in 2021, compared to roughly $16.5 billion in
Europe. This is because vacation rental prices in the United States are much higher than
those in Europe and other parts of the world.
3. Airbnb Behavioural Segmentation: The main draws for Airbnb guests are the lower
prices and diversity. Aside from flats, homes, and cabins, Airbnb guests have the option
of staying in farms, boats, yurts, and even private islands. In fact, over 2,500 Airbnb
guests booked castles in December 2019, while over 1000 preferred to holiday in
treehouses. Variety is crucial for individuals booking Airbnb experiences, as is the
activity's 'uniqueness.'
4. Psychographic Segmentation: The usual personality of accommodation visitors is
sometimes classified as 'determined,' an essential trait for seeing the world in a unique
way on a budget. Those who book experiences, on the other hand, are described as
'ambitious.'

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 Targeting:
Targeting can be divided into two parts:

1. Strategic targeting – Focuses on customers whose needs the company can fulfil by
ensuring that its offerings are customized to their needs.
2. Tactical targeting – Identifies the ways in which the company can reach these
strategically important customers.

When we look at Airbnb’s strategic targeting we find that Airbnb’s customers are divided into
two groups: hosts and guests. Airbnb hosts are people who have space available or a home that
may be rented out. Airbnb Guests are the people seeking accommodation or an experience.

For Tactical Targeting, it is using strategies like Build Community and Loyalty Through
Targeted Outreach, Leverage (But Don’t Rely On) User-Generated Content (UGC), Lean Into
Your Hook, Create A Referral Program.

Positioning:
Under positioning strategy of Airbnb we find two things: Point of Parity and Point of
Difference.

Further digging deeper into POP we see that company is not necessarily providing unique
services in India since OYO entered the hotel and hospitality business but Airbnb creates value
proposition for its customers by offering different service packages. For example, the company
has cost-effective apartments for rent specifically low budget customers, whereas Airbnb Plus
package is for customers who value high quality experience and are willing to pay extra.

Analysis of POD we discover that Airbnb uses something called anticipatory positioning. In
anticipatory positioning Airbnb creates services for a market segment that was rather untapped.
For example adventure services being provided by a company in hospitality business is in its
rather nascent stages and Airbnb is trying to make a statement here that a normal stay with us
could turn into your next adventure. Packages such as ‘Around the World in 80 Days’ and
experiences of “Becoming a Beekeeper” can me mentioned as examples of Airbnb services
that separate it from the rest.

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 REFERENCES
Product life cycle. NIBUSINESS INFO. https://www.nibusinessinfo.co.uk/content/product-
life-cycle-strategies
Rawes, E. (2021). What is Airbnb? Digital Trends.https://www.digitaltrends.com/home/what-
is-airbnb/
(2022). Airbnb Target Market Segmentation. start.io. https://www.start.io/blog/