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U1435976Identify and Discuss an Example of a Niche Market Which Has Gone From Small and Focused to Much Larger and Profitable: Airbnb

Student ID: U1435976Module Code: TM6010Deadline: 19/12/16Word Count: 3,122 (excluding abstract and citations)

Abstract4Introduction5Campaign Strategies6Further Development9Collaborations | Vertical Integration9Social Content in Real Time Strategies10Competitions | Promotional Tool11Social Media Presence12Challenges | Negative Press12Conclusion13References15


This essay explores the online lodging service company; Airbnb and looks at how the company grew from targeting a very niche market, to a larger, more broad niche market(s). In order to do this, the discussion identifies and analysis the marketing strategies Airbnb have used, including the use of social media, video, vertical integration, cause-related marketing (CRM), collaboration, competitions as a promotional tool and app development. The essay then moves on to discuss the challenges of negative press, and how Airbnb respond, before coming to the conclusion which evaluates the strategies previously mentioned from an overall perspective, as well as briefly discussing the advantages of technology for the company and its consumers.


IntroductionThe online, lodging service company, Airbnb started off by targeting an incredibly niche market: People who were visiting a specific destination within America for a few days during an event, needed an alternative place to stay when hotels were fully occupied, and were tech savvy (millennial demographic). It was only after Airbnb endured some trial and error that they were finally able to obtain the investment they needed in order to pursue their vision and expand beyond the U.S.A and begin adding more hosts to their website, ultimately reaching a much wider audience as illustrated in further detail in the infographic below:

Figure 1 | How Airbnb Started (Vital , 2014)

The unique aspect about Airbnb, is that they are attracting two completely different types of niche markets: The hosts, who want to monetise their spare space, and the consumer, who wants an alternative option to a hotel, which may promise a more authentic experience. This essay determines to identify and discuss what strategies the company have used that have enabled them to successfully expand its audience, from what started as very few individual consumers, to go beyond its niche market potential and begin attracting multi niches and build segments, as illustrated in the bottom-up approach below:

Figure 2 | Niche Building Strategy: Bottom-Up Approach (Adapted from Dalgic, 2005: 6)

Whilst identifying these strategies, the essay will refer to academic research of marketing theory and will apply these to the Airbnb findings by comparing and contrasting them. Furthermore, the essay will explore how Airbnb managed to maintain competitiveness and discuss how they deal with rivals within the same market. The essay will also set out to identify any challenges the company have/are facing before concluding from an overall perspective.

Campaign Strategies Since Airbnb was valued at $10 billion in 2014 (as shown in figure 1 above), the company has since more than doubled to $30 billion this year (2016) making it the second most valuable tech startup in the US (businessinsider, 2016). Airbnb now showcases places to stay in over 191 countries, providing over 60 million customers an alternative to hotels, as illustrated in figure 3.Figure 3 | About Airbnb

So how does Airbnb market itself to its customers? Airbnb have focused on what it is that a tourist desires and noticed a trend that has been a key topic for many academics; that tourists are seeking an authentic experience. Many of these academics have echoed that since the tourist experience has been commoditised, staged and altered in order to satisfy the tourist expectation, the very act of commoditisation strips the experience of authenticity completely, making it virtually impossible for a tourist to gain an authentic experience (for example; Boorstin, 1962, Butler, 1980, Dwyer et al, 2008, Greenwood, 1989, Hughes, 1995, MacCannell,1976, and Redfoot, 1984). However, Airbnb are claiming that by supplying tourists with a locals home, they are essentially providing guests with an authentic experience that is unobtainable from package holiday deals, or from staying within a tourist resort in general. This is the message they are sending with their campaigns such as #BelongAnywhere which they released in 2014:

For so long, people thought Airbnb was about renting houses. But really, were about home. You see, a house is just a space, but a home is where you belongso much of the way we travel has been mass-produced and commoditized. Airbnb is just the opposite - Chesky, 2014

Airbnb continued with this theme after data they had collected showed that 52% of modern tourists felt more overwhelmed at crowded tourist attractions than they did doing their taxes, along with 42% finding it as stressful as visiting the dentist (Roderick, 2016). 86% of their consumers said the reason they used Airbnb was due to them seeking to experience what it was like to live like a local (Chesky, 2016). Airbnb then took this information and used it to their advantage in their largest marketing campaign to date; #LiveThere released in early 2016. The campaign emphasised the authentic experience Airbnb delivers by producing a cinematic video, highlighting stereotypical tourist traits such as huge groups taking pictures, some with selfie sticks and participating in activities a local probably would not do with a voiceover urging its listeners: "Dont go to Paris. Dont tour Paris. And please dont do Paris. Live in Paris. (Airbnb youtube, 2016).

These campaigns have strategically targeted the millennial demographic specifically, as it makes use of the hashtag (#) feature as a marketing tool. Originally used on the social media site; Twitter, the hashtag feature quickly became a global trend that is now used across all social media platforms including Facebook and Instagram (McFedries, 2013). The hashtag feature enables consumer participation as specific subjects are made easier to find by simply using a common, relative and real-time hashtag (Chang, 2010). Another reason these campaigns have become so successful is via the use of videography. Key notes speaker from WTM, Neasa Costin (2016), says that every marketer is using video as part of their 2017 strategy now that video has become such a huge trend (World Travel Market London, 2016). Airbnbs live there video campaign can be considered successful because it distinguishes the brand and creates emotion through the use of telling a story, which is more likely to persuade their audience (Costin 2016, Aaker 2013). Aaker (2012) states that stories are 22% more memorable than facts alone, whilst Cisco predicts that by 2020, 3/4 of the worlds mobile data traffic will be video, which indicates just how significant the use of video as a strategic marketing tool is and will be.

Additionally, Airbnb relaunched their app with three key, updated features: the first feature is the new matching innovation which matches their consumers search results to suit their personal preferences (Chesky, 2016). The second feature allows consumers to define their search results by being given the option to choose what kind of neighborhood they want to stay in, whether that be a quite, scenic or hip one (ibid). For this feature, Airbnb hired photographers to capture real images of numerous neighborhoods, honing their product vision of offering an authentic experience. The last feature, and probably most important; is the guidebook feature - which now has 3.5 million recommendations that the hosts of Airbnb have provided for their guests.

The matching innovation is used to personalise an individuals search results and is recognised as a great marketing strategy for customer relationship management (CRM), in terms of developing the relationship with the customer, as it enables the likelihood of customer loyalty for the company, due to the efforts of personalisation automatically making the customer feel more valued (Pires, Stanton and Rita, 2006). The second feature continues with the use of customer personalisation and reinforces the promise of an authentic experience, as it not only features non-commercialised photos of the area, but gives customers the option of choosing the neighborhood they want to stay in as if they truly are moving house, and provides the opportunity to avoid an area that may be deemed too touristy. This is the key feature which gave Airbnb the competitive advantage, as no other company within the tourism accommodation sector was offering anything like it. Thomas Cook, Thomson, Hostelworld and many more were all offering tourists the same thing; a commoditised tourist experience in a commoditised tourist resort, shared among thousands of other tourists.

The third feature, the guidebook, enhances the authentic experience tourists are demanding, as Chesky (2016) explains that, unlike other tour operators, the host who is a local in the neighbourhood being visited, makes recommendations for the tourist which the consumer can see on the map before booking with Airbnb, whereas Tripadvisor for example, has a list of recommended sites and activities for tourists, by tourists, as shown in figure 3:Figure 4 | Recommendation lists: Tripadvisor v. Aribnb (Chesky 2016)

Further DevelopmentSince their Live There campaign which introduced the new features mentioned above, Airbnb has further developed the company: Airbnb had realised that some potential hosts could be lost due to either not having the time, or sometimes even the confidence to host their own space. Thus, Airbnb took this problem and saw i