INTRODUCTION TO MARKETING

BUMKT 1501 – INTRODUCTION TO MARKETING


Final Assessment

Details of the final assessment structure (i.e. how many questions to answer, question choices, expected length of answers etc.) are provided in the final assignment information document shared on Moodle as well as given below.

Instructions

There are 5 compulsory question you need to answer and all questions worth equal marks (8 marks each). You are expected to write an approximate word count of 400 per question. However, this is an indication only as it is the quality of your answer that would be the main criterion, not quantity.

You are provided with 5 calendar days from the date of making the assessment available to submit your responses.

You don’t need to use essay or report format. Use Q and A style with only the question number mentioned (do not repeat the question)


Final Assignment Case – Questions


Question 1

With reference to the Marketing environment framework, discuss 4 marketing environmental forces (Macro/Micro) that influence the operations of Airbnb. You need to discuss the influence of these Macro and/or Micro environmental forces and the implications of these forces to Airbnb.

Question 2

Apply the consumer Decision Marking Process (DMP) to a typical consumer of Airbnb. Discuss the considerations in each of the DMP stages. With reference to relevant concepts, discuss what can Airbnb do to aid/enhance consumer need recognition.

Question 3

Provide a profile of two target segments of Airbnb. You need to use segmentation bases/variables when describing the consumer profile. You may use a particular service/product of Airbnb or the company (as a single offering) when segmenting.

Question 4

Airbnb’s core service is known as connecting people across the world in the sharing economy. Services differ from physical goods due to intangible, inseparable, perishable and heterogeneous nature of services. Provide recommendations on how Airbnb can overcome some of the limitations arising from these service characteristics.

Question 5

With reference to 4E Framework for social media, discuss how Airbnb uses different social media platforms for their advantage in marketing their offering.

Airbnb: Unleashing the Value of Sharing

By Sebastian Krook, Australian Catholic University, Sydney;

updated by Eugene Chan, Monash University

A widespread misperception is that marketing is simply about advertising and selling products. More refined definitions of marketing, however, highlight the central role that marketing plays in creating, capturing, communicating and delivering offerings that have value for a range of stakeholders, including customers, but also clients, partners and society at large. This, at least, is the way the American Marketing Association defines marketing. The term ‘value’ here is of great significance. Without a sense of value resulting from a transaction, a marketer’s job would be meaningless. Value can be experienced from consuming a beverage, going on a trip, dining out or acquiring the latest technology gadget. Consumers experience value in different ways that go beyond simply purchasing a tangible item. You can think of countless ways in which you experienced ‘value’ without holding a physical item in your hand, or a situation in which your needs and wants were satisfied through a system of planned marketing practices. Because value can be experienced in so many different ways, firms need to be innovative in order to manage and provide offerings that will be competitive in a given market.

One such firm is the accommodation platform Airbnb. Founded in 2008 in San Francisco,

Airbnb provides an alternative accommodation experience aside from hotel websites or travel

agencies by letting people around the world rent out their house or apartment to visitors from

anywhere. In other words, a person can rent out a spare room (as a provider) or a whole house (e.g. if they are going away somewhere) to a traveller who is visiting the area and needs accommodation. The provider can be present, in which case the experience resembles that of traditional bed and breakfast services that have been around for a long time, or they can be away, in which case the visitor gets a completely private dwelling experience. In either case, the visitor will receive an authentic, unique and personal accommodation experience that cannot be matched by any hotel. A provider, of course, is free to determine the rate they will charge a visitor, and can include little perks like breakfast or other add-ons at their own discretion. In a sense, a provider is free to determine the various aspects of the value proposition. All Airbnb does is provide the platform for connecting providers and visitors. But how can simply ‘providing a platform’ be an example of value-driven marketing? To understand this, we need to understand something about the technological environment of the value-based marketing era.

Value-based marketing is said to take place when firms align their market offerings with

consumer wants and needs rather than what the firm needs to sell. In an age of social media and rapid information sharing across time and space, markets have become more ‘social’. On the one hand, customers expect firms to be represented on social media platforms. Air New Zealand, for example, tweets updates about products on its Twitter feed and replies to customer feedback. Most companies have Facebook pages, Instagram feeds, YouTube channels and Pinterest boards to participate in the so-called ‘sharing economy’, where focus is shifting away from traditional notions of ownership to an emphasis on access and community through trust and reciprocity. Through social media, a sharing culture has evolved. People are increasingly turning to their social networks for advice, to sell things, to buy things and to spread things. In this way, social networking presents alternative ways for the distribution of value without the need for traditional companycentred distribution infrastructure.

This is where Airbnb steps in as a particularly illuminating example of how the sharing economy is evolving. Airbnb leverages the peer-to-peer model of consumer engagement. Here, the value is driven by offerings that are ultimately the responsibility of the provider. If a customer/guest is happy, they will write a positive review on the provider’s Airbnb profile page, which is then linked to Facebook. In this way, positive Airbnb reviews are perceived as more genuine, as they take place outside the conventional parameters of a hotel website.

Airbnb is set up very much like a social networking site. A visitor can easily search for accommodation opportunities by location or by the type of accommodation they’re after. While hotels are limited to the physical facilities of their premises, Airbnb’s accommodation options are fuelled by the sharing capacities of millions of users worldwide. Are you interested in a loft apartment in Hollywood, a tree house in Mandalay or a boathouse in New Caledonia? Airbnb can help you find it. How about a private island in the Indian Ocean for a honeymoon? The opportunities for unique accommodation are seemingly endless, and the price tags usually associated with high-end resort like accommodation will make anyone browsing the listings look twice: cost saving is another important feature of the sharing economy. Beneath each listing is a series of reviews. Because reviewers appear in their authenticity via a linked Facebook page, reviews seem particularly genuine. There is a certain transparency in the way social media intersects with accommodation providers in the sharing economy.

So how does Airbnb manage its unique value proposition of creating an unparalleled accommodation experience at the most diverse price points in the accommodation industry? To ensure customers keep using Airbnb for accommodation, the company’s three tech-savvy founders, Nathan Blecharczyk, Brian Chesky and Joe Gebbia, concentrate on three key areas. Nathan oversees the technical strategy at Airbnb, ensuring that the website is functional, operates smoothly and is capable of handling the large volume of monetary transactions that take place every day between accommodation providers and guests all over the world. Brian manages the company’s expansion opportunities into new markets. By continuously extending the reach of Airbnb-powered accommodation, customers are given a wider reach and scope than any rival accommodation provider can offer. Airbnb currently powers accommodation in 191 countries and 65 000 cities and is actively seeking out new home owners to give customers greater flexibility and choice. Joe looks after the sleek user interface design of the Airbnb website and mobile applications. By creating an intuitive and search-friendly site, Airbnb’s users are systematically and thoughtfully taken through the search/booking system. Ease of navigation, payment and reviewing ensures users have a positive online experience, which results in valuable word-of-mouth recommendations across

important social networking communities.

In addition to Airbnb’s core service of connecting people across the world in the sharing economy, the website and smartphone apps also provide other value-adding features that enhance the overall user experience. By publishing a wide selection of neighbourhood guides

for different cities, a user can easily spend hours on the Airbnb website browsing through artistic editorials of exotic neighbourhoods in Tokyo, Berlin or Sydney. The neighbourhood

guides are authored in collaboration with local residents, who also provide stunning photographs, which adds to the unmistakable sense that Airbnb offers a truly genuine and authentic travel experience.

The success of the accommodation sharing platform is evident in the numbers. In the first four years of operation, Airbnb served four million guests. In its fifth year, a staggering nine million users (and counting) are using Airbnb for accommodation all over the world. As of 2017, there are over 150 million users on Airbnb. As it expanded, Airbnb hired boutique hotel veteran Chip Conley to help manage guest expectations and ensure that although Airbnb is a far cry from the standard hotel experience, guests can still expect the standard provision of certain basic amenities wherever they stay, like the guaranteed availability of fresh linen and soap.

As a platform that leverages social media, it is not surprising to find that Airbnb is well represented among the most diverse social media channels. It is like most companies with Facebook and Twitter accounts, but Airbnb surpasses them in its impressive YouTube channel featuring an extensive array of neighbourhood films and other inspirational and engaging video content. It was also one of the first companies to engage in the mobile video-sharing platform Vine, by creating quirky film snippets in the Vine-like looping video format.

So what can Airbnb teach us about value creation? By offering a service that unleashes the

inherent value of a host’s home and connects people across the world, Airbnb is pioneering

alternative forms of consumption. From the uniqueness of its core service to its engaging web and mobile content offerings, Airbnb has already opened up new possibilities for value creation led by a culture of sharing and connecting.

Case Study References

About Us’, Airbnb, 2017, available at www.airbnb.com.au/about/about-us.

E. Ert, A. Fleischer and N. Magen, ‘Trust and Reputation in the Sharing Economy: The Role of

Personal Photos in Airbnb’, Tourism Management, 55 (August 2016), pp. 62–73.

L. Gallagher, ‘Airbnb’s Profits to Top $3 Billion by 2020’, Fortune, 15 February 2017, available at

http://fortune.com/2017/02/15/airbnb-profits/.

D. Ting, ‘Airbnb’s Chip Conley to Leave Global Head of Hospitality and Strategy Role’, Skift,

13 January 2017, available at https://skift.com/2017/01/13/airbnbs-chip-conley-to-leave-global

head-of-hospitality-and-strategy-role/.