Careful Segmenting Provides New Opportunities for Airbnb

 

About Airbnb

Airbnb has been an important innovator in the accommodation industry. Even though it is still a relatively small player, it is developing rather rapidly. Two years ago, Airbnb was just a newly founded company that very a few people knew. Today, it has become one with quarterly revenue over 1 million (Langfield 2014). Airbnb focuses on helping people renting out their places to visitors. Visitors could also find non-hotel places for a rest. The logo of Airbnb shows clearly the differences between the rooms on Airbnb and hotel rooms.

 

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 (Source: Twitter account of Airbnb )

Airbnb and its target customers

The logo of Airbnb clearly shows the differences between its rooms and hotel rooms. Rooms on Airbnb can offer visitors with people contact, accurate location. People can sense love and have memorable moments during their stay. The rooms on Airbnb are all shared by local residents. Therefore, these rooms can provide visitors with exposures to local elements and culture. Visitors can also gain direct contact with local people and obtain the experience of being “truly there”. Besides, these rooms on Airbnb can provide unique experiences to visitors rather than standard and non-surprising experiences offered by stared hotels.

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 (Source: Twitter account of Airbnb )

According to Wang (1999), experience is critical for the satisfaction of tourists, the experiences demanded by tourists are not the same. While some tourists demand safe and expected experiences, others demand unique and authentic ones. Therefore, by dividing visitors into different segments, businesses like Airbnb could find there is a segment of customers towards whom they can have a competitive advantage in meeting the needs of these customers. It is true that Airbnb may not be able provide room services and safety guaranteed by a stared hotel. However, it has strength in providing visitors with unique experiences, social interactions and close contact with and exposure to local people and local environment. Therefore, through segmenting and targeting, Airbnb avoided to compete with hotels on its disadvantages, and better leveraged upon its advantages.

Can Airbnb secure a place in the corporate market?

One major but controversial step taken by Airbnb is its marketing campaigns targeting the corporate customers. Airbnb has created a system that could automatic generate coupon, bills and receipts for corporate customers. So far about 250 companies have used Airbnb for their employees’ business travel (Newcomer 2015). Such a situation is counter-intuitive because normally business travelers would prefer standard services from starred hotels with little interruption from the landlords and very low risk of service failure (Lo et al. 2002). It is true that Airbnb has incorporated new technologies to facilitate corporate customers to track their employees and better understand the expenses incurred by them. Nevertheless, if Airbnb cannot offer the needed services for corporate customers, these technologies would be meaningless. The key for the initial success achieved by Airbnb in the corporate segment is to divide this segment further into sub-segments. More specifically, Airbnb mostly targeted IT companies in the Silicon Valley and companies whose employees needed to travel to a place for a much longer period time. For these visitors, they are either more willing to try out new things or they needed gain better exposure to the local environment. According to the travel manager of Twilio—a technology company in San Francisco, choosing rooms on Airbnb could offer its employees with more authentic local experiences (Newcomer 2015). Therefore, correct segmentation and targeting strategy could help businesses to find opportunities that may not sound reasonable at first sight.

 

 

References

Langfield, A 2014, ‘Business, luxury travelers turning to Airbnb-type options’, CNBC, available Apr 9th, 2016 from: <http://www.cnbc.com/2014/05/04/business-luxury-travelers-turning-to-airbnb-type-options.html&gt;

Lo, A & Cheung, C & Law, R 2002, ‘(2002). Information search behavior of Hong Kong’s inbound travelers‐a comparison of business and leisure travelers’, Journal of Travel & Tourism Marketing, vol. 13, no. 3, pp. 61-81.

Newcomer, E 2015, ‘Airbnb overhauls service for business travelers’, Bloomberg, available Jul 21, 2015 from: <http://www.bloomberg.com/news/articles/2015-07-20/airbnb-overhauls-service-for-business-travelers&gt;

Wang, N 1999, ‘Rethinking authenticity in tourism experience’, Annals of tourism research, vol. 26, no. 2, pp. 349-370.

                                                                                                                          

Student name: Qianwen JIANG

Student ID:216007129

 

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