• Name: Claudia Cipressi

  • Degree: Bachelors of Engineering/Commerce

  • Year: 3

  • Claudia Cipressi: Marketing Manager

  • Stephanie Cipressi: Product Manager

  • Henry Panizza: Marketing Researcher

  • Paul Mangelakis: Promotions Manager

  • Zac Gallagher: Distribution Channel Manager

  • Airbnb is a multinational

  • online marketplace and hospi-

  • tality service for people to

  • rent short-term lodging, or to

  • participate or facilitate experi-

  • ences related to tourism.

  • Type:

Privately held company

  • Industry: Lodging

  • Founded: August 2008 in San Francisco California

  • Website: www.airbnb.com.au

  • Think about the customer’s perception

  • of value. What creates it and how can

  • an online company deliver it?

  • Value is the difference in the benefits the

  • customer gains from owning and using

  • the product, and the costs of obtaining the

  • product. When deciding on value, cus-

  • tomers only consider the features that are

  • important to them and buy from the firm

  • they believe can provide them with the

  • highest customer delivered value,

  • (Seamons, 2015).

  • Perceived Benefits of Airbnb

    • Monetary Saving is the main driver, as
  • customers believe the costs are lower in

  • comparison to hotels.

    • Novelty of the service is a benefit as
  • customers can stay in unique places rang-

  • ing from full homes to hotels, and have

  • authentic experiences.

    • Social Interaction of the service in-
  • volves becoming friendly with the hosts,

  • knowing people from the local neigh-

  • bourhood, and having meaningful rela-

  • tionships on the holiday, (Stollery, 2017).

  • -Usability of the App, is simple to use,

  • free to download, is exciting, and hosts

  • can be directly communicated to through

  • it.

  • Perceived Costs of Airbnb

    • Hosts are a main cost, as the chance of
  • having unhospitable hosts is one risk of

  • the service.

    • Safety Issues are a major risk, as users
  • may not feel safe in these homes, particu-

  • larly if the host is living with them

    • False Advertising of residences may
  • occur when the actual residence doesn’t

  • reflect what was shown on the app

Airbnb offers Homes, Experiences Res-

taurants, all part of their service.

A variety of experiences are on offer to

appeal to all different travellers.

Unique homes, and opportunities to ex-

plore are highlighted on the website, as

one of their main features.

Think about the concept of Competi-tive Advantage. Why are some on-linebusinesses successful while others fail?Competitive advantage is defined as sat-isfying a customer’s needs better thanyour competitor, (Seamons, 2015). Tocreate competitive advantage, the compa-ny must:

  1. Analyse the competitors, through themethod of Porters Five Forces2. Then develop competitive advantagemarketing strategies – such as Cost Lead-ership, differentiation, focus.Some online businesses are more suc-cessful than others, as they have effec-tively mapped out their competitors andcreated the relevant strategy to allowthem to have an advantage.

AIRBNB have adopted the marketingstrategy of differentiation. They havelooked at their competitors, which are thehotels and agents, and tried to differenti-ate themselves, through promising tooffer more than just a place to stay. Theyhave capitalized on the concept of offer-ing an ‘experience’ that is different fromthe traditional way of travel, and furtherdeveloped this idea through not only of-fering homes and places to stay, but alsooffering experiences and guides on whatto do in each place.

Porter’s Five Forces, was applied toAirbnb, on the following page.

how that is detrimental to thesuccess of a company. UsingPorter’s Five Forces to analyseAIRBNB, revealed that they havecurrently put themselves at a goodadvantage, over other competitorsin the market. However, more re-search into AIRBNB may haverevealed threats that I hadn’t yetthought of and changed my opinionon their competitive advantage.Whilst I had thorough informationabout the perceived value ofAIRBNB, I believe that I needed todo more research into the company,particularly their current competi-tors.

To help performance in the future, Iwill conduct more research prior totutorials, as this information will bevaluable in the future marketingplan.

Throughout the week, my team setup a google drive, Facebook groupand chat, to have our resourcesready for weekly activities and themarketing plan, and to brainstorm- What online companies do you use, and what makes them

  • special?

  • I currently use: Spotify, Apple Music, Netflix, Online Shopping

  • Netflix is cheap and has a relatively good range for the price.

  • Spotify is a really unique, usable, and social way to listen to

  • music. Whilst online shopping sites like The Iconic, are special

  • as they have great return policies and a better range than its

  • competitors.

  • What creates value for customers of an online store, and do

  • you think customers are becoming more demanding?

  • Value for me consists of an easily accessible website, that is

  • clear to understand, allows you to quickly communicate, re-

  • ceive adequate information about the product, and it to be well

  • priced, knowing that it is online and has low overhead costs.

  • Customers are becoming more demanding, as they have so

  • much access to information, they are aware of all their different

  • options and competing businesses, making it extremely difficult

  • for companies to have competitive advantage, (Tarrant 2018).

  • This week, I believe I thoroughly understood the concept of

  • value, and what value online sites can provide. Through per-

  • sonally using a range of online sites, it was easy to understand

  • what I value in the sites I use, and why I don’t use certain ones.

  • I also had a good understanding of competitive advantage, and

the discussion questions for Tutorial 2. Whilst the chat wassuccessful to communicate ideas in preparation for the tutorial,I am currently considering the use of a shared document ingoogle drive, where we can transfer our ideas and collate themto make presenting to the class easier and more effective, asshown in the figures below.

Amarketing Facebook group was developed and all team memberswere invited to join it, along with the google drive

Evidence of the Google Drive that was created and relevantdocuments that were created in it.

Image of the tutorial discussion document made, to easilycollate all group answers prior to the tutorial.- Evidence of discussion of tutorial questions via Facebook


  • Name of Marketing Company: One World Marketing

  • Briefly outline the product that you have been assigned, and the

  • products/services you will be offering:?

  • Airbnb is a multinational online accommodation broker established in

  • San Francisco in 2008, which connects homeowners wishing to pro-

  • vide accommodation to travellers, (Folger 2016). The company sup-

  • plies a simple and easy to understand platform for guests to find ac-

  • commodation with varying price ranges, location and capacity, which

  • aims to provide a possibly cheaper alternative or more personalised

  • and local experience than traditional accommodation options. Whilst

  • the hosts are able to easily set up a listing for their accommodation

  • that can be accessed by a large market and serve as a tool to make

  • money of their existing assets.

  1. Pragmatic Novelty Seekers

These travellers are drawn to the novel-

ty of Airbnb and the household benefits

the accommodations offer. They almost

always choose to rent entire homes and

are also not regular Airbnb users.

Airbnb attracts this market by showcas-

ing their novelty homes in locations

that visitors would have never imag-


  1. Interactive Novelty Seekers

These travellers are attracted by the

novelty of Airbnb and by the chance to

interact with their host or other locals.

They often stay in shared accommoda-

tions, and generally have limited expe-

rience using Airbnb.

  • The service also has the existing attributes:

  • Free registration for both hosts and guests.

  • Service fees include 6-12% for guests, and 3% transaction fee

  • from the host, (Folger 2016).

  • Hosts are able to adjust price of rooms to match demand.

  • The company owns none of its listings.

  • Specifically identify your target market and discuss your segmen-

  • tation strategy.

  • A market is defined as a set of all actual and potential buyers of a

  • product, who share a particular need or want that can be satisfied

  • through exchange, (Seamons, 2015). Whilst, segmentation is the divi-

  • sion of the market into specific groups that are sufficiently homoge-

  • nous but at the same time, different for other groups.

  • For Airbnb, the target market is both travellers and hosts, as the ser-

  • vice enables both parties to either buy or sell.

  • For hosts, the market seems to consist of people who wish to make

  • money out of an unoccupied space, or people who may simply wish to

  • meet varying groups of people through the service. The following link

  • reveals the marketing strategy employed by Airbnb to appeal to hosts,

  • which consists of hosts reflecting on their experience with the service,

  • emphasising how ‘safe it is to rent out your home,’ which aims to

  • alleviate the primary concern that hosts have with using the service.

  • Link: https://www.youtube.com/watch?v=lVIz0ZbJikw

  • Based on a survey conducted (Guttentag, D 2017), which asked cus-

  • tomers of Airbnb to reveal their motivation for the choosing the com-

  • pany, the market of guests can be divided into the following five seg-

  • ments:

    1. Money Savers
  • Consist of customers searching for a cheap room or just a bed to stay

  • the night.

    1. Home Seekers
  • The home seekers are a market that is attracted to Airbnb due to either

  • the household amenities available, large spaces and the homely feel

  • that Airbnb provides in comparison to competing hotel chains. These

  • people are usually going for longer trips or are travelling in big par-

  • ties. They tend to be older, well educated people.

  • The segmentation strategy employed on this market segment, is the

  • Airbnb service called Airbnb plus, which are homes that have been

  • verified for quality and comfort.

    1. Collaborative consumers
  • This market segment is attracted to the sharing economy, where they

  • simply enjoy the opportunity to interact with locals and have an au-

  • thentic experience. They seemed to be older and less affluent.

Briefly summarise the current marketing environment, includinga brief competitive analysis.

The current marketing environment consists of the following competi-tors:

A: Direct Competitors such as HomeAway which has many partner ,and Homestay

B: Indirect Competitors, such as a traditional hotel chains like HiltonBest Western, hotel reservation sites such as (Expedia, trivago, andTravel sites such as TripAdvisor) or booking.com, hotels combinedCompetitive Analysis is the process of identifying these competitors,their objectives, current employed strategies, and most importantlytheir strengths and weaknesses to identify ways to have a competitiveadvantage, (Seamons 2015)/


HomeStay has a strong focus on hosted housing, so the host is presentthroughout the stay. The concept is similar to Airbnb however morelike couchsurfing . This then entails lower prices, and more typicallyoffering shared room, a bed or a couch, (AirbnbReview, 2017).OneFineStay

OneFineStay uses the sharing concept of Airbnb but more upmarketwhere they remove the control that is placed on hosts to provide quali-ty. They rent out expensive homes, offering linen and skincare uponarrival. They have aligned their product to match the quality youwould expect in hotels, (Lagorio-Chafkin, 2014).

The company targets the older more affluent crowd of travellers thatwant an authentic experience but do not want to sacrifice the quality oftheir accommodation.

As OneFineStay has a lot more involvement in the preparation andrenting/quality process it removes the responsibilities that the hostwould have. This makes it ideal for people that have homes that areunattended when they are on holiday or at another one house and wantto make extra money. OneFineStay offers a turnkey solution to home-owners. See below.


Guaranteed quality homes

Target a wealthier market of people, can rent out homes atmuch higher prices to cover employee costs

Removes hosts responsibilities, making it more attractive tohosts that just don’t have enough time or capacity to upkeeptheir properties.

  • Provide the same local experience but with the addition of

  • benefits one would receive at a hotel

  • Weaknesses:

  • Only targets one segment of the market, quite niche in that

  • young travellers and families would not be attracted to that

  • sort of accommodation.

  • With a large involvement in the overall process in regards to

  • screening houses, cleaning and providing the “hotel experi-

  • ence”, OneFineStay will incur more costs associated with

  • employee expenses, cleaning and other costs associated with

  • monitoring the homes.

  • HomeAway

  • The company runs numerous brands, such as VRBO, all with a simi-

  • lar concept. The concept is similar to Airbnb however unlike Airbnb

  • the travellers will not be interacting with the owners/hosts of the

  • property. Each site has same booking policy, where the traveller has

  • to pay a 10% fee for all bookings.

  • The service is particularly good for finding rental accommodation for

  • families, or people with pets in non-urban destinations,

  • (AirbnbReview, 2017).

  • Booking.com

  • Can find a range of different accommodation options from rentals to

  • hotels. There are good cancellation policies allowing flexibility, and

  • no fee for booking. The rentals are all professionally managed, so

  • there is no host onsite, (AirbnbReview, 2017).

more than those produced by professionals

Hires professional photographers – to ensure accuracy oflistings, and make them enticing

Also insures the property of homeowner for up to 1 million ,(Airbnb, 2018).

Discuss how you will add value to the chosen market segmentand what will be your competitive advantage.

Airbnb’s current competitive strategy focuses on differentiation ofthe product. They achieve this through ensuring they continually addnew concepts and experiences to keep up with the trends of societyand the interests of the target market. Airbnb has a strong onlinepresence on Instagram, Facebook and their own magazine. This isimportant in that when they add new experiences, their major targetmarket will be aware as majority of them will have access to one ofthe online avenues.

Airbnb Ads and Instagram posts are vital in attracting customers tothe service. They use photos taken from actual customers staying inhomes and apartments throughout the world to entice new customers.This is very important in regard to attracting the novelty seekers thatrarely use Airbnb.

Specifically develop an action plan listing specific job functionsfor each team member, including a statement of, who will be do-ing each function, and when they will do it. Can be in form ofteam contract.

The team contract has been developed and will be included in themarketing plan. The clauses in the contract are based on, commit-ment to attend tutorials, equal assignment of assessment tasks, activeinvolvement in team meetings and discussions, respect and value foreach member’s opinions and striving for the best possible mark.Using Porter’s Five Forces, outline the factors that are likely toimpact the business.

  • Strength and Weakness of Airbnb

Expanding on the Porter’s Five Forces created in last weeks tutorial:- Strengths:

  1. Threat of New Entrants:
  • Not constrained by rising variable costs

  • Can offer an incredibly expansive list of rooms, in countries

  • around the world, for little more than the price of additional

  • servers and engineers

  • Can navigate listings intuitively thanks to several features on

  • site, easy filters

  • Can track preferences of users, collects data by tracking

  • browsing behaviour, it is able to gain a better picture of its

  • user through sites Facebook API, (NU Business Review,

  • 2014).

  • Weaknesses:

The capital requirements for opening a business service is quite large,where as Airbnb takes investors in – LOW THREAT LEVELThe company has no tangible assets, as the hosts owns the locationThere are companies entering the market with better online infra-structure and experience packages, from years of experience withonline services, for example FlipKey by TripAdvisor

Barriers to entry are low, as a similar platform could be replicated injust a few short weeks, however what a competitor lacks is the posi-tive feedback loop associated with the network effect that Airbnb hascaptured – MEDIUM THREAT LEVEL

Cost Advantages of competing entrants include being undercut by asite that charged lower premiums, however this would likely dimin-ish the quality of operation, unless the revenue source could be alter-natively found

  • Cannot fall back on reputation, like a hotel chain can.

  • The experiences that an Airbnb user has, is ultimately contin-

  • gent on factors beyond the company’s control

  • However, the business model is one increasingly trusted by

  • consumers, as long as the proper mechanism are put in place

  • to ensure quality and transparency

  1. Bargaining Power of Suppliers

The suppliers consist of hosts offering their homes to the service.They have limited power, because their homes would otherwise beunoccupied.

  • These include:
  1. Bargaining Power of Buyers
  • Features reviews by guest who have stayed in a specific

  • space with a specific host prominently on all search results

  • Reviews are both quantitative and qualitative

The bargaining power is limited by the lack of competition in thespace. However, customers could identify the space they wish torent, contact the seller directly, which bypasses Airbnb but also by-passes the insurance clause and method of collecting payment – ME-DIUM THREAT

  • The value of these, reduce both contracting and control costs,

  • has also been proved people trust info contained in reviews

    1. Rivalry Amongst existing competitors
  • This is usually the greatest force or threat a company faces. Based on

  • the existing competitors mentioned above, the following threats apply.

  • Customer Loyalty is flexible depending on the suitability of customers

  • to the company – MEDIUM THREAT LEVEL

  • Customer loyalty also exists in form of loyalty services, where cus-

  • tomers who repeatedly use a hotel chain, earn points or credit to return

  • at lower costs – HIGH THREAT LEVEL

  • Quality difference between a Airbnb and Travel agents sites, include

  • the fact that travel agent sites are not structured to offer types of list-

  • ings that Airbnb does, however they can offer a travel planning pack-

  • age, and reduce time spent on the whole process.

  • This week I had thoroughly prepared for my tutorial, and the numer-

  • ous questions that were being asked. My strong point of interest, was

  • Airbnb competitors, as I’m personally searching for accommodation

  • and decided to test out competing sites, and Airbnb for myself. From

  • personally using the websites, it was easy to understand the different

  • levels of usability, and the differentiation that Airbnb has tried to

  • achieve in order to get a competitive advantage. Personally, for my

  • intended use I found Airbnb’s site to be confusing, having less effec-

  • tive search options than competitors. Additionally, the ads that ap-

  • peared on my feeds after using the site were merely clickbait, and

  • never led to the property that was being displayed, unlike ads being

  • shown from other sites. I am happy that I had the opportunity to use

  • the sites for my own purposes, to understand the different market seg-

  • ments and their needs.

  • There was not much need for improvement for this week, however I

  • am eager to develop a brand name and logo for a marketing company,

  • using the strategic branding concepts discussed in class. There was

  • little time to discuss these in the tutorial, therefore as a team we will

  • need to use our own time to do this.

  • This week there is the opportunity to extend upon what was discussed

  • in the tutorial, in preparation for the marketing plan. Several methods

  • to quantify competitive analysis, were mentioned in the lecture, there-

  • fore, following this tutorial, I will use my thorough research on com-

  • petitors, to create a table that compares competitors, and identifies

  • gaps in the market.

  • I believe currently there lies the threat of repetitive information. So

  • far from the tutorials, many concepts have overlapped or been repeat-

  • ed. I believe it will be a matter of properly collating ideas, and format-

  • ting for the marketing plan, to ensure that it is not repetitive and makes

  • the most of the words available to use.

  • Networking was vital in this week’s tutorial tasks, as

  • tutorial preparation involved a lot of different ques-

  • tions that had to be discussed.

  • The main interactions surrounded, discussion of

  • tutorial questions via a google drive document that

  • allowed us to put our ideas under topic headings.

  • Whilst it turned out to be a large document, with

  • repetitive ideas, I believe it will be useful in the

  • marketing plan to ensure that everyone’s ideas are

  • being considered.

The Facebook chat was

used to discuss various

marketing brand logos and


  • For this week our main strength was that from all attempting the tutori-

  • al questions, we each had a particular interest in one or two that we

  • provided a bit more information on. This wasn’t intentional however

  • had turned out that way due to our varying interests, which made for

  • some really good research and collaborative thinking.

  • Our current weakness as a team would be efficiencies. As we all at-

  • tempted the tutorial questions last week, to save time we could have

  • assigned everyone two questions. This would have been more efficient

  • however has the downside of having limited knowledge on the whole

  • topic.

  • At this stage I think we are progressing well with tutorial activities,

  • therefore I believe we soon have the opportunity to begin our market-

  • ing plan, using the discussion questions. If we begin as soon as possi-

  • ble, this will allow us plenty of time to complete our plan to the highest

  • possible standard.

  • Threats to our team currently look slim, however as the semester con-

  • tinues we may find that people become busy or sick and may have to

  • miss team meetings. This will not be an issue if we still have team

  • discussions and inform the missing team member of what occurred in

  • tutorials.

  • a) What is your perception of these stores, (b) what basis is this perception made?

  • The image on the left creates a perception of selling a high quality product, at higher prices, and an atmosphere of wanting you

  • to spend a longer time in the store. This perception is based on the look of the store. The layout looks expensive and puts an

  • emphasis on the products being sold, whilst the couch in the corner creates the idea that they wish for you to be comfortable in

  • the store and spend a longer amount of time there.

  • The image on the right has the perception of selling low quality products at extremely cheap prices. This is due to the crowded

  • look of the store, where they clearly sell a large range of products. The crowded nature of the store, lack of couches, and self-

  • serve system proves that customers are there to quickly purchase their item, receive limited service, and only pay low prices as a

  • result.

  • c) What would your attitude to shopping in these either of these stores be?

  • To the store on the left, I’d expect a high-quality product that will last a long time. I’d also expect a nice atmosphere with great

  • service. Whereas the store on the left, I’d expect to purchase a seasonal item, I was not willing to spend a lot of money on, as I’d

  • know I wouldn’t get much use out of it. I would be willing to shop in either stores, obviously in search of different items to

  • satisfy different needs. For example, if I was looking for a shoe I needed for a one-off event like a job interview, I would go to

  • the store on the right to find a cheap shoe that I didn’t expect to get much wear out of. Whereas, if I was searching for a pair of

  • boots to last me throughout winter, I wouldn’t consider the store on the right, and would go straight to the other store to find a

  • pair that would last me in terms of quality and style.

  • (d)

  • How about for other people: older consumers, different cultures, wealthy or poor, lifestyle, self-image?

  • People who shop at the store on the left may care more about self-image and how they present themselves to the public. They

  • may be wealthier, being able to spend more money on quality items. They may also value quality and understand the investment

  • value of the product. Whereas, the store on the left will attract customers who are not as concerned with their self-image, have a

  • culture of quick consumption, and are not as wealthy.

  • Question 1: Who are

  • your customers?

Airbnb customers include all types of people searching for accommodation. The site particularlyappeals to younger travellers, who either are travelling solo and looking for a cheap place to stay ortravelling in large groups and want a larger place to stay which can accommodate for all. It also ap-peals to families who wish to stay in a home, which can accommodate all members at a much cheaperprice then getting separate hotel rooms.

  • Question 2: Will you

  • have a website (yes),

  • and why? What will

  • the website look like?

Airbnb will definitely have a website, as the service relies on the website to showcase their range ofaccommodation options. The website will be minimalistic, aesthetically pleasing, easy to navigateand search. The website should also display ratings and reviews of certain properties and have aneasy way to show the facilities of the place.

A website is vital for Airbnb, as it is a simple and easy way to show off the entire range of accommo-dation to users. Users should be able to define their search criteria so that they can find exactly whatthey are looking for. It also allows for easy advertising, being able to track properties people havelooked at, and show them similar ones.

A website is important these days as majority of people spend their time online and it can reach allpotential customers.

  • Question 3: How will

  • this look influence

  • customers to go

  • there?

  • Question 4: How can

  • you influence custom-

  • ers perception of

  • price and quality?

  • Question 5: What

  • other ways would the

  • customers form an

  • opinion of the prod-

  • ucts you are selling

The look of minimalism will convey a perception of high quality, which hopefully reflects the qualityof accommodation being presented on it. A simple and easy to use website will convey a sense ofsimplicity to the travel accommodation process and take the stress out of searching.

Marketers can influence a consumers perception of price and quality, through certain marketing strat-egies, which are designed for a certain type of buyer to react to.

Consumer purchases are strongly influenced by two groups of factors, internal characteristics, whichconsist of psychological and personal factors, and external characteristics, which consists of culturaland social factors, (Seamons, 2015).

Psychological factors include, motivation, that is, a behaviour that satisfies the consumers needs orgoals, perceptual process of marketing stimuli, learnt behaviours, and beliefs and attitudes, and self-concept. External Factors, include personal factors, cultural factors, and social factors. Through un-derstanding these characteristics, marketers can target their audience to respond to marketing stimuli.Customers can form opinions by other people’s experiences, so word of mouth, prior experience withthe product, information they have gathered through the research process and through evaluating andcomparing the alternatives.

  • Identify different ways of motivating customers to use your assigned product – by using Maslow’s hierarchy of needs.

  • Note: I was unable to find a self-actualisation need associated with Airbnb, however further thought will be had.

    1. Consider from the various competitor options to your product, which one would you choose?
  • Last week I tested out HomeAway and Airbnb. I personally enjoyed using HomeAway more and chose it as my primary search

  • engine over Airbnb.

    1. On what bases did you make your choice?
  • This choice was based on the usability of the site, as I was searching for accommodation with a particular set of characteristics.

  • HomeAway was better suited for this purpose, as it had better search filters in place, and easily displayed the features and specifi-

  • cations of the accommodation, in comparison to Airbnb.

    1. Is your choice different from others, why would this be?
  • Yes, because I knew what I wanted, it made the search harder, however people who wish to just browse and unsure of what they

  • want, Airbnb may be more suitable, as they try to match properties to what they think you want, and have a greater range of dif-

  • ferent options with different features.

    1. Consider how it meets your needs based on Maslow.
  • This site meets my basic physiological needs, as I can very easily find a place with all the basic amenities I require. It also meets

  • my needs of safety, as unlike Airbnb, the rentals are run by external companies and have no interaction with the host, therefore I

  • feel safer using this option in comparison to Airbnb where hosts may be onsite.

Search Results from Airbnb (Left) Vs. Search Results on HomeAway (Right)

Display of available features in a property on Airbnb (Left) Vs. HomeAway (Right)

  • This week’s strengths include my knowledge of motivation theories, particularly Maslow’s Hier-

  • archy of Needs. This is based on prior knowledge and study of it, making it easy and interesting

  • to apply it to marketing theories.

  • My weaknesses include that I am yet to use the textbook to get more information on lecture top-

  • ics, however having bought it, I will ensure I use it in the coming weeks and for the plan. The

  • textbook could help better explain concepts from the lecture, and provide more examples of rele-

  • vance.

  • Opportunities to improve include attending consults to ask certain questions prior to the tutorial,

  • to further consolidate my knowledge. After discussing the marketing plan with the tutor, she

  • notified me that there should be examples online, therefore I should begin to read these plans and

  • highlight key topics we also need to consider. The only threat I can feasibly perceive would be a

  • lack of time to complete the portfolio and prepare for tutorials. As the semester progresses, other assessment items may get in

  • the way of me properly com-

  • pleting this. However, I aim to

  • allocate a few hours a week on a

  • Sunday to be fully prepared for

  • my Monday tutorial.

  • Networking this week was used

  • to mainly discuss tutorial ques-

  • tions, and clarify with other

  • team members. As shown in

  • the image, I needed clarification

  • about one of the tutorial ques-

  • tions and one of my team mem-

  • bers quickly replied and provid-

  • ed his response and opinion.

  • Being able to ask questions to

  • the group and receive a quick

  • response is vital in effect team work, and a good sign that in future assignments people will be responsive and always willing to

  • help.

Group Conversations to discuss tutorial questions.

  • So far we have been a strong team, particularly in our commitment to weekly attempt tutorial questions. At each tutorial it is

  • evident that we have all attempted the questions to our best ability and done extra research when necessary.

  • Paul was absent at Monday’s tutorial, however we were able to update him on what he missed, so this was not considered to

  • have such a large threat as previous concerns.

  • With mid semester break approaching there is the opportunity to start planning and assigning tasks for the marketing plan, in

  • order to begin over the break and get a head start. If we assign relevant tasks now, we can ensure that in upcoming lectures we

  • pay the necessary attention to relevant topics, complete tutorials with more detail, and ask any questions whilst it is still early.

  • Similarly to my personal threat, as stress rises throughout the semester we need to ensure that everyone still puts in the necessary

  • effort and commitment. Additionally, being in a team with my sister could lead to conflict, that we need to assure does not rise.

  • Imagine a company that is considering changing its product line to become more environmentally friendly, which might

  • increase costs. Use the 6 major forces of the macro environment and list pros and cons that the company should take into

  • consideration before making its final decision.

  • Demographic:

Demographic Forces:

  • Better educated and an increasing white collar popula-

  • tion might indicate they have more money to spend on

  • environmentally friendly initiatives. Additionally,

  • increasing education of environment will support this

  • initiative.

Average household income would influence both how many customersuse Airbnb and how many utilise the service as hosts, as those withenough income are less likely to start the venture to make small profits.Disposable income is also a major factor, as tourists only travel whenenough of it has been accumulated.

  • Economic:

Economic Forces:

  • Only middle and upper classes can afford more expen-

  • sive products, and particularly if there is a cheaper but

  • non-environmentally friendly option, people are more

  • likely to choose the cheaper option rather than the

  • ethical one.

Economic forces include the current state of the housing Market, as highhousing prices would increase Airbnb costs and decrease the number ofhosts looking to rent out their homes. Additionally, financial crashes,could cause loss of homes and thus hosts, and a decrease in global tour-ism in general.

  • Natural:

Natural Forces:

  • The advantages are the obvious positive effects of

  • environmental initiatives associated with the change.

  • Disadvantages include the cost increases as they indi-

  • cated.

  • Technological:

  • The internet could be used to promote the product,

  • however with the fast pace of technology, the venture

  • could become outdated quickly, as technology ad-

  • vances, and users can use the internet to find similar

  • but cheaper alternatives.

  • Political:

Include climate change, and increases in severe weather events couldlead to damage to host homes and thus decrease the number ofhosts. Severe weather conditions could also deter tourists in certainparts of the year. And most major cities are coastal, flooding is a con-cern and home damage.

Technological Forces

Technology could both enable and disable Airbnb, Airbnb relies almostexclusively on the internet thus restricting it to countries that have relia-ble internet. However it also allows people worldwide to have accessthrough the internet. However with the fast pace of technology, com-peting companies are likely to enter the scene. Scam and fraud couldplausibly occur, as given that credit card details are stored on Airbnb, itmakes it a target for potential financial attack

Political Forces

  • Legislation could be brought in with a greater con-

  • cern for ethics, therefore the venture may not be as

  • unique as previous thought.

Political forces include corporate taxation, introduction of new locallaws that may limit the legality of the service. Additionally, visa re-quirements may limit the travel of foreigners.

  • Cultural:

Cultural Forces

  • Current culture suggests that people are more open

  • and willing to spend on environmentally friendly ven-

  • tures, as people place more emphasis on the value of

  • ethical products.

The increasing culture of the share economy will boost the service,where people are more open to share their resources in order to bothmake small incomes or save money.

  • What aspects of the company’s microenvironment need to be taken into consideration? Use the groups of other actors

  • discussed in the chapter: suppliers, marketing intermediaries, competitors and various publics.

  • The microenvironment are forces close to the organisa-

  • tion that affect its ability to serve its customers. It con-

  • sists of the marketing organisation, suppliers, marketing

  • intermediaries, customers, competitors and publics.

  • Suppliers need to provide resources to provide goods

  • and services. For Airbnb the suppliers include the hosts,

  • who offer their goods and services on the website for

  • Airbnb to sell. Suppliers would also include insurance

  • companies who provide necessary insurance. The level

  • of competition can range from pure competition to mo-

  • nopolies. Currently, Airbnb has competition and not the

  • only service in the market, as seen by Porters Five Forc-

  • es.


Suppliers may not be able to provide affordableproducts, and thus the price will be expensive.Marketing



It may be hard to ensure that suppliers also sup-port the ethics involved in the products, and actu-ally see the value in it.

There may already exist competitors with envi-ronmentally friendly products, who have existedfor longer and been able to reduce their pricesand find better efficiencies as a result.There are likely to be media, citizen, local pub-lics who believe in a similar cause, and also en-dorse similar principle, who will be happy tohelp market the product.

  • It is vital to consider the various publics, who are any group that has interest in

  • or impact on an organisation’s ability to achieve its objectives. The biggest

  • current negative public is government, and their interest in legal issues of

  • Airbnb. This arises over the different state and council laws regarding short

  • term and vacation rentals, and whether Airbnb hosts are breaching these local

  • laws, (Legal Vision, 2017).

  • Imagine that you are the communications director for an alternative medicines health company. What publics might be

  • affected by a news report that your organisation had not tested its products for potential side effects? How would you

  • respond to this report?

Financial Shareholders who have invested in the product will lose out.
Media Media will be able to carry the news, having a positive impact on them.
Government Governments may recognise the needs for regulations for situations like this to not occur.
Citizen-Action Groups called to action once it was made public.
General The general public would change their purchasing habits.
Internal If the case involved a whistle blower then they would have a large effect on them, by the company also.
  • Currently my major strength is my familiarity with the lecture theories. From attending each lecture and writing thorough notes,

  • and additionally reading the textbook and adding examples from it, I have developed a good understanding of all lecture theory

  • topics and its application in the marketing plan. I believe that this will be extremely useful in the group assignment, as my depth

  • of knowledge will make it easy to ensure that all lecture theory has been covered to ensure that we receive the highest possible

  • mark.

  • My major weakness, is my personal lack of understanding about the marketing plan. The task at hand is unclear, as I am yet to

  • find the Marketing Plan toolkit that is supposedly online, however after asking my tutor she should be able to direct me to the

  • correct place. Currently, this lack of clarity worries me, however I know that I need to spend a bit of time reading all the availa-

  • ble resources and asking tutors, to grasp a proper understanding which will restore my confidence.

  • If the task is still unclear after a proper attempt of understanding, I have the opportunity to attend a consultation session where I

  • can ask direct questions to the tutor. Additionally, the lecturer mentioned a FAQ email he would send out, to address all queries,

  • therefore I should also read that document.

  • The only major threat would be a lack of time which leads to rushing the stage of understanding the marketing plan. This would

  • mean that without proper understanding, the marketing plan could be delivered wrong which would have a greater effect than

  • spending a bit longer in the earlier stages of the task.

  • This week’s networking efforts involved collation of all tutorial notes via a Google Drive Document. This makes it incredibly

  • easy to review everyone’s ideas and show the team that they are putting in the necessary effort in each week. Whilst networking

  • is low at the moment, due to preoccupation with other subjects, it is sure to rapidly increase as soon as the plan is underway.

  • Evidence of Google Drive documents being used collaboratively

  • Our strengths still lie in our completion of tutorial questions up to good standards. We all still go to weekly lectures and com-

  • plete tutorial questions, despite this not being compulsory in tutorials, particularly because this week the answers were provided.

  • This gives me hope that we are all dedicated to this team and can all put in the required effort and do a good job on our marketing

  • plan.

  • However, our major weakness currently is our lack of understanding for the marketing plan assignment. We need to start assign-

  • ing tasks, however first and foremost, we need to have full understanding of the plan objective before we can begin, to avoid go-

  • ing down the wrong path.

  • To avoid this, as a team we decided that prior to the break we will spend the week understanding the marketing plan checklist,

  • looking at available resources, reading past marketing plans in order to grasp an idea about what it is about, and possibly choose

  • topics we are interested in completing. Then, before the break we will have a team meeting and delegate necessary tasks that

  • should be completed by the time university semester resumes.

  • The only perceivable threat, would be if the above plan does not occur, that is, tasks are not delegated prior to the break. If not,

  • this would mean the required work will not be done by the end of break, as people are often harder to contact over the break, and

  • without weekly tutorials, all discussions will need to be conducted online which is often harder to coordinate. To overcome this,

  • as marketing manager, I will immediately organise a meeting before Thursday.


The purpose for segmentation is that customers have different needs for the same product, so it isimportant to understand consumer differences and needs and serve a particular segment.Targeting:

Targeting involves selecting the target market, and adopting one of the 3 strategies, Undifferentiat-ed, Differentiated, Concentrated.


Positioning involves deciding on the position the organisation wants to occupy in these segments.For example, strategies include, product class, away from competitors, usage occasions.- Question 1: Market segmentation is built around identifying differences in needs between different groups of customers.

  • How would a Bank account for those different needs and segment its consumer market?


  • Demographic Seg-

  • mentation

  • Based on variables

  • such as age, educa-

  • tion.

Tailored packages

for tertiary stu-

dents targets a

certain age and

education demo-


  • Geographic Segmen-

  • tation

  • Based on different

  • geographic unities

  • such as nations, re-

  • gions, states, coun-

  • tries or cities.

  • Psychographic Seg-

  • mentation

  • Based on variables

  • such as socioeconom-

  • ic status, lifestyle or

  • personality character-

  • istics

Targets the young

single female

market, by plac-

ing advertise-

ments in maga-

zines they would


Targets people of

a certain lifestyle,

such as large

spenders, and

look for a certain

personality when

giving out loans,

such as reliability.

The Airbnb store in our marketing plan will be set, in Fortitude Valley, BrisbaneAustralia. In this area, over 50% of the population are aged from 25 to 44 years old.The most dominant occupations are professionals, administrative and clerical work-ers and managers. The median total personal income was higher than the Brisbaneaverage, (ABS 2016). Demographic research of Airbnb reveals that 54% of theguests are female, 46% being male, and the average traveller is 35,

(iPropertyManagement, n.d.). There is clear demographic divide between users andnon-users of the service, with it being that users tend to be wealthier, higher educatedand older than the average, (iPropetyManagement, n.d.)

Airbnb uses the fact that people of certain geographic unity, possess a certain person-ality trait. Airbnb has used geographic segmentation in the past to create highly tar-geted campaigns, by leveraging the data from their large user base. For example, amarketing video in East Asia, targets the users by answering all queries, they foundpeople from this area had.

The large range of accommodation choices, from single rooms to whole houses, tonovelty destinations, means there is accommodation to meet all lifestyles. The typesof properties Airbnb guests rent, the length of their stay, and the number of peoplethey travel with, reflects their lifestyle and travelling preferences. It was found that80% of reservations made were for groups of 2 to 4 people, and that 60% of the res-ervations were for entire homes or apartments. Reservations for single guests madeup 7%, and 11% were for one-night stays. This suggests that majority of peopletravel with 2 or more guests, for extended stays, whereas the market is divided fairlyevenly when it comes to renting out entire homes or shared rooms.

Further research into the types of properties rented, reveals that those who rentedshared rooms, were more likely to be male, of low income, with low concerns forcleanliness and openness to social interactions. Whereas those who rented entirehomes, were of high income, high education, travelling with a partner or spouse, un-comfortable with social interaction, and had higher expectations of cleanliness,More specific psychographic segmenting, is evident in their previous marketing cam-paigns targeted at the LGBT community, (Ice, B 2016).


  • Behavioural Segmen-

  • tation

  • Based on knowledge

  • of product, attitude

  • towards it, the way

  • they use it, and their

  • responses to it.

They might en-

dorse a certain

account for peo-

ple who under-

stand more about


Through competitive prices and aims to differentiate their lodging choice, they try totarget the people who do a lot of research prior to their trips and actively compareplaces as part of the decision process. Additionally, they have a range of choices tomatch people’s decisions based on value. A study found that there are five distinctbehavioural segments, (Guttentag, 216)/

Money Savers – seek best price, convenient locations, and household amenitiesHome Seekers—value amenities, space and the homely feel that Airbnb givesCollaborative Consumers—value the economic savings, local experiences and socialinteractions.

Pragmatic Novelty Seekers—value novelty of the service and home benefitsInteractive Novelty Seekers—attracted by novelty, but value local interaction.Airbnb is bought on usual occasions when people are looking for accommodation.They are typically used in situations where travellers want cheap accommodation, ortravellers want a whole house.

  • Occasion Segmenta-

  • tion

  • According to the oc-

  • casions when they get

  • the idea to buy, actu-

  • ally make the pur-

  • chase or use the pur-

  • chased item.

People go to

banks on different

occasions, such as

for first home

loans, saving ac-

counts etc, so

they can offer

each person a

different thing.

  • Question 2: What roles do product attributes and perceptions of attributes play in positioning a product? Can an attrib-

  • ute held by several competing brands be used in a successful positioning strategy? Give an example of this in the airline

  • industry.

  • Product position is the way the product is defined by consumers on important attributes, and the place the product occupies in

  • consumers minds relative to competing products.

  • In the airline industry, Tiger Air position themselves as a low cost, medium quality airline.

  • Airbnb’s current positioning strategy is based on marketing efforts that communicate the company provides unique experiences,

  • in great locations with social interaction. However it was found that not everyone values these factors, as seen in the money sav-

  • ers group above. Therefore a new positioning strategy may have to be adopted to appeal to different markets.

  • Question 3: How do companies effectively segment their markets?

  • Market Segments must be Measurable, Accessible, Sustainable, Substantial, Actionable.

  • For example, Airbnb may assess the effectiveness of marketing to the Pragmatic Novelty Seekers, over the Money Savers..

  • Accessibility – degree to which the segments can be reached and served.

  • Money savers may look for accommodation of many different search engine sites, which easily compare prices, and which

  • Airbnb are not part of. Pragmatic Novelty Seekers are more likely to browse the Airbnb site as they enjoy the novelty of the

  • service and appreciate the brand itself. Both users are relatively young, (Guttentag 2016), and therefore their high use of technol-

  • ogy makes them very accessible, in comparison to an older demographic. Additionally a physical store in an area with young

  • people will increase their accessibility.

  • Substantiality – degree to which the segments are large or profitable enough. A segment should be the largest possible homoge-

  • nous group worth going after with a tailored marketing program.

  • Measurability – degree to which size and purchasing power of the segments can be measured

  • For example, the Pragmatic novelty seekers, are less concerned with costs of Airbnb, and therefore are likely to spend more than

  • the usual user. This indicates that they have a large purchasing power, possibly due to higher income. Whilst money savers are

  • more concerned with costs, therefore are likely to spend less.

  • Actionability – degree to which effective programs can be designed for attracting and serving the segments.

  • Airbnb are yet to run marketing campaigns purely targeted at these two segments, which makes them very plausible. Additional-

  • ly with the recent acquisition of Luxury Escapes, Airbnb can use these properties to further target the Pragmatic Novelty Seeker

  • segment, who like to stay in luxury homes.

  • Differentiability – segments are distinguishable and respond differently to marketing programs.

  • The segments are very distinguishable, due to their different values, and demographics. For example the Money Savers seek low

  • costs, convenient locations and household amenities. They are not influenced by the other benefits such as local authenticity,

  • novelty ad social interaction. This segment represents a younger demographic. Whilst Pragmatic Novelty Seekers value the

  • novelty of the service, like the home benefits, and lower costs, they are however not attracted to interaction with the host, are

  • likely to rent out entire homes and have limited past use. They are also younger users and hold the perception that Airbnb is

  • Cool.

  • Whilst the two segments do overlap, ultimately the primary value driver differ between the segments, and correspond to different

  • demographic variables.

  • Question 4: Factors that make segments attractive are often different for large and small firms. Large companies are at-

  • tracted to large growth markets while small ones are drawn to specialised niche markets. Describe this for the swimwear

  • industry or wine industry.

  • a) Segment structural attractiveness

  • A segment might have desirable size and growth and still not be attractive from a profitability point of view. The company must

  • examine several major structural factors that affect long-run segment attractiveness. Current and potential competitors, substitute

  • products, relative power of buyers and power of suppliers all play a role in the evaluation of a segment’s structural attractiveness.

  • b) Company objectives and resources

  • Even if a segment has a positive size and growth and is structurally attractive, the company must consider its own objectives and

  • resources in relation to that segment. Some attractive segments could be quickly dismissed because they do not mesh with the

  • company’s long-run objectives and while tempting, would divert the company’s attention from its main goals. The company

  • should only enter segments where it can offer superior value and gain advantages over competitors.

  • Question 5: How has Coca-Cola moved from mass marketing to product-variety marketing to target marketing.

  • a) Mass marketing: Coca-Cola was originally available only as Coke that was mass marketed. Here the seller mass-

  • produces, mass distributes and mass promotes the product to one market to satisfy all buyers. The rationale is that it should lead

  • to the lowest cost and prices and create the largest potential market.

  • b) Product-variety marketing: Coca-Cola then produced several soft drinks packed in different sizes and containers. This

  • is an example of product variety marketing which aims to offer variety to buyers rather than appeal to different market segments.

  • c) Target marketing: Coca-Cola now produces products in the sugared cola segment (Coca- Cola), the diet segment (Diet

  • Coke) and the no-caffeine segment (Caffeine Free diet coke) and the non-cola segment (Sprite and Lift etc).

  • Airbnb’s marketing strategy should be differentiated marketing, which is a form of product variety marketing. As Airbnb grows,

  • and a large range of properties are established to cater to many segments, it is wise to use a differentiation marketing strategy,

  • which describes that there must be a separate marketing strategy for each segment, (Seamons, 2015). This strategy however

  • requires considerable research to understand each segment’s needs and results in higher costs for differentiated products and ad-

  • vertising campaigns, however it would help achieve the objective of increasing market share by targeting and hopefully capturing

  • groups of users who are yet to be marketed to.

  • Current strengths lie in my progress with the marketing plan. I assigned myself the task of internal analysis, and found that it

  • was relatively easy to complete due to the work put in by each team member in tutorials. I was able to understand everything

  • that needed to be addressed by reading the marketing toolkit in the textbook, and how to apply it to Airbnb. Since this section is

  • completed, the SWOT analysis can be begun, so we have made a good start to the plan.

  • Weakness lies in my understanding of this weeks topic, as it has been a while since I attended the lecture. However it should be

  • easy to catch up, and properly apply it to Airbnb in the plan.

  • Opportunities include, being able to study for the midsemester online quiz, as my duties so far, in the marketing plan have been

  • completed to a standard I am happy with, and won’t need much extra help. Threats include false confidence in the online quiz,

  • as I have never completed a mid sem online and am not sure how much study time to allocate to the task.

  • Networking has been vital over the past few weeks as over the mid semester break it was the only form of communication the

  • team had. I used social media, to allocate tasks, explain the strategy we needed to take, set deadlines, update the team on my

  • personal progress, and upload my completed section in order for the next stages of the assignment to begin.

  • Parts were allocated over Facebook and Google Drive was used to upload completed sections.

  • Facebook message was the primary form of communica-

  • tion over the break, to organise completion of the marketing plan.

  • As a team, we are still co-operating extremely well. Since a few members had to miss the Monday tutorial, we are all very

  • understanding of everyone’s personal commitments and are very flexible around it. This was also evident when prior to allo-

  • cating tasks for the marketing plan, I enquired on everyone’s current study load, to ensure that people who were busiest now

  • were allocated later tasks, whilst people who were busy later and free now could begin their section. My situation was of the

  • latter, so I offered to complete the first section, as soon as possible, as I had a lot of spare time, and wanted to allow the oth-

  • ers to also begin quickly. Our only current weakness, would be that if tutorials are missed, group discussions will instead

  • need to be held online, which is inferior to physical contact, however if a meeting is urgently needed I will ensure that every-

  • one attends the tutorial.

  • Opportunities include using our knowledge on theory from completing sections of the marketing plan to assist others in stud-

  • ying for the mid semester test. As we all had our certain topics to focus on, it would be useful to share this knowledge with

  • other team members. A possible threat is someone not completing their task by the specified due date, as we’d like to be as

  • flexible as possible, however due dates should be enforced, or it is necessary to regularly check on progress.

  • Consumer products are products bought by final consumers for personal consumption.

  • Convenience

  • Products

Goods and services that are bought frequently, immediately and

with a minimum of comparison and buying effort.

Examples are milk and bread.

Goods and services that the consumer, spends more time in the

process of selection and purchase, by comparing on bases such as

suitability, quality, price and style. Consumers usually spend a

considerable amount of time and effort gathering information and

  • Shopping

  • Products

making comparisons.

Examples are fashion items, furniture.

  • Specialty

  • Products

  • Unsought

  • Products

Specialty products are goods and services with unique characteris-

tics or brand identification for which a significant group of buyers

are willing to make special purchase efforts. No comparisons are

usually undertaken.

Examples are Louis Vuitton bags, leather bags, Waterman pen


Goods and services the consumer either does not know about, or

knows about but does not normally think of buying.

Examples are life insurance, funeral cover, smoke detectors.

Airbnb goods are shopping products, asconsumers spend more time in the selec-tion and purchasing process, by comparingthe product with other products in the mar-ket. Particularly with the ease of onlineshopping, research is easy to conduct andconsumers will often spend a considerableamount of time in this stage, gatheringinformation and comparing. Additionally,hotel comparison sites such as Expediaalso allow easier comparisons to be done,further intensifying competition.- To differentiate services from goods there are 5 factors to account for:

  • Some services will be more physical than others, however the following factors should be presented.

  • Intangible

  • Variable

  • Perishable

  • Synchronous

  • Delivery and

  • Consumption

Services are intangible, of no physical form. Therefore buyers look for signals of service quality, whichcan be drawn from people, place, physical environment.

Quality control and standardisation is difficult, as human based services are prone to variations of humannature.

Services cannot be stored over time, providers cannot use inventory to manage fluctuations in supply anddemand.

Services are produced and consumed at the same time, customers participate in service production.- Is Australia Post selling goods, services or experiences? Justify your answer.

  • Australia Post is selling goods and services. Its goods include stationery and related items, impulse items, items of Australiana,

  • cards and stamps. It has expanded its services to include EPOS, billing services for business, retail banking facilities, direct mail

  • (EDIPost) and a Post Logistics service. Students may be encouraged to access the Australia Post web site to learn more about its

  • products.

  • Is the Airbnb product a service or a good?

  • Airbnb is a service as it owns no inventory and simply connects guests with homeowners. Whilst the place for rent, itself might

  • be tangible, the service itself isn’t. However, the line between product and service is blurred, and many cross over into the two.

  • To further develop the brand identity of Airbnb,

  • and particularly ensure it appeals to all consumer

  • segments the following must be emphasised:

  • Unique offerings, ranging from homes to

  • novelty destinations

  • All offerings are of the utmost quality

  • Each stay is individual and personalised, however of the best standard

  • Encourages social travelling, and authentic experiences

  • Airbnb takes pride in its community of hosts and guests

  • Personally I believe I am in a strong position for this semester. The mid Semester online exam has just opened and I have been

  • spending the past week revising topics. The topics were easy to grasp as through the marketing plan I have learnt and applied

  • majority of the topics that are being assessed. This will hopefully make it easier to complete. Weaknesses include ensuring that I

  • do not take up too many tasks for the plan, and adequately delegate. As I have no mid-semester exams to prepare for, I decided

  • to take up another section in the marketing plan, offering to complete it soon, in return for not having as much input in the later

  • parts. I am happy with this decision as the topics will also help in the mid semester. Therefore a threat is that I work on the later

  • topics too and spend overall too much time on the course, however I will try and ensure that

  • this does not happen.

  • Networking this week was limited, as we are all completing our separate sections. Howev-

  • er some social interaction was conducted, particularly with other team members to ensure

  • that they were writing relevant information.

Conversations are based

around the marketing plan.

  • We are still performing very well as a team. Our strength lies in our communication skills,

  • and openness with each other. We all know how we are progressing and ensure that every-

  • one is working on the plan. There are two members who have had no part in the plan yet,

  • however this was done on purpose to allow them to have a later part in the plan to complete

  • at a less busy time.

  • It must be ensured that these members stay on track with the lectures in the upcoming weeks to ensure they know the relevant

  • theory to complete these parts of the assignment.

Steps of the Process:


identifying the target audience

  • 2.

  • Determining the response sought

Integrated marketing communication (IMC) involves coordinating the organisation’s promotionalactivities utilising major communication strategies such as advertising, public relations, personal sell-ing, sales promotion, and direct and online marketing.

Integrated marketing communication ‘is the concept under which a company carefully integrates andcoordinates its many communications channels to deliver a clear, consistent and compelling message aboutthe organisation and its products’.

  • 3.

  • 4.

  • 5.

  • 6.

  • Selecting a message

  • Selecting a media

  • Selecting a message source

  • Collecting feedback

  • Direct marketing ‘is marketing targeted at and often customised for, a specific person’ (p. 609).

  • Classifying IMC media, tools and technologies

  • Refers to the promotion mix element:

  • Mass communication ‘is the use of mass media such as free-to-air television, radio, newspaper and magazines, as well as other

  • media, such as cinema and outdoors’.

  • Advertising ‘is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor’.

  • Targeted communication ‘is the method of how marketing organisations tailor their messages to suit various market seg-

  • ments’ (examples include pay TV (satellite, cable, microwave), home shopping, public relations, door-to-door, catalogues)

  • In-store communication ‘is the use of media, tools and technology at store level’ (examples include retail counter selling; mer-

  • chandising, location TV, radio, aisle displays)

  • One-to-one communication ‘is the use of integrated database marketing to track an individual customer’s buying pat-

  • tern’ (includes all examples of database marketing such as direct mail, telemarketing and tele sales).

  • Sales promotion ‘is the short-term incentives to encourage purchase of a product or service’.

  • Steps in developing integrated marketing communication There are nine elements in the process of communica-

  • tion:

  • Sender – party sending the message to another party.

  • Encoding – the process of putting through into symbolic form,

  • Message – the set of symbols that the sender transmits,

  • Media – the communication channels through which the message moves from sender to receiver

  • Decoding – the process by which the receiver assigns meaning to the symbols encoded by the sender,

  • Receiver – the party receiving the message sent by another party,

  • Response – the reactions of the receiver after being exposed to the message,

  • Feedback – the part of the receiver’s response communicated back to the sender,

  • Noise – the unplanned static or distortion during the communication process that results in the receiver getting a different message

  • from the one the sender sent.

  • Step 1: Identifying the target audience

  • A marketing communicator starts with an identifiable target audience.

  • Audience types include: potential or current buyers, individuals, groups, special publics or general publics.

  • For Example, Tesla may target an audience they haven’t before, such as primary school children, to convey a particular message,

  • so they can be future users of the product.

  • What do you think is Australia Post’s core product? Actual product? Augmented product? How have these changed over

  • the years?

Additional Example:

An additional example is the KIA car. The coreproduct can be seen to be the freedom of move-ment, whereas the actual product is the KIA careitself, and augmented products, include servicewarranty and roadside assist. KIA originally cap-tured market share through differentiating them-selves based on the augmented services, with their5 year warranty which was unusual at the time.Apply to Airbnb.

Airbnb’s core product is a place to stay, thereforeproviding shelter. The actual product is any of thehomes they have for rent, from their wide range,and the online website, and physical store. Whilstaugmented products include customer service fea-tures, insurance policies, online transaction service,Airbnb community blog posts,

Customers frequently complain when they wantto buy stamps or send a package, that they needto wait behind people paying bills. How canAustralia Post respond to this complaint?Australia Post is losing money on the private mailbusiness and its other operations help subsidise thisexpense. Also a number of private operators suchas newsagents handle some of Australia Post’ssmaller scale operations. Perhaps the companycould design its services cape so that there is a ded– icated line for customers looking to make a quick transaction. For example a lane for passport photos, a lane for packages and a

  • lane for other services such as paying bills.

  • Would you classify email, instant messaging, SMS as non-durable goods or as services? Why?

  • Products used over an extended period of time are durable products. Those consumed in a single use or after a few uses are non-

  • durable products.

  • It can be argued that SMS/MMS or instant messaging received is a non-durable product as it is consumed in a single use. How-

  • ever, they should recognise that the product that enables them to receive the communication is durable, as they are available over

  • an extended period of time.

  • Take the situation where two premium brands, two competing house brands and two competing generic labelled brands

  • of tinned tomatoes are produced in batches to the same formula on the same production line by the one manufacturer.

  • Would many people be willing to pay more for the branded products than for the unbranded products? What does this

  • tell you about the value of branding? Is this situation unethical? Is the situation legal?

  • The chapter discussion shows that branding benefits buyers, sellers, and society. Consumers pay more for branded products be-

  • cause branding gives evidence of quality, but there may be more fundamental psychological reasons. Taste tests indicate that

  • people’s taste perceptions are more influenced by a brand name than by the actual product, as the Coca-Cola Company’s experi-

  • ence with its Coke reformulation shows. In blind taste tests, over half the participants preferred the new version; in the store, 14

  • times as many people reached for Coca-Cola Classic as chose Coke.

  • Branding is a promise to consistently deliver a specific set of features, benefits and services to buyers. As long as the

  • claims made for the product are true and delivered by the product, charging more for branded products is not illegal.

  • Airbnb Branding

  • Airbnb current icon called, “The Belo”, after the concept of belonging. The icon is an abstraction of four principles, People,

  • Places, Love and Airbnb, blended into the single “A” shape, (Design Studio, 2014). This icon is still very effective, as it is sim-

  • ple, easy to reproduce, recognize and propagate. This current icon is well known across consumers and uniquely identifies con-

  • sumers, therefore even with this new positioning strategy, the logo should remain.

  • For Airbnb:

  • Appropriate target audiences for Airbnb could include, current users of the product, whether it is frequent or infrequent, non-users

  • of the product who have strong opinions on the service and have yet to use it. Past users, who have used it previously but have

  • had a bad experience and will no longer use it, and potential buyers, are those who have looked into using the product, but are yet

  • to. The audience could also include people who influence decisions to use the product, such as social media influencers, or those

  • who help make the buying decisions, such as travel agents who assist in people booking ac-

  • commodation on their holidays.

  • Airbnb have used celebrities in the past to endorse Airbnb, such as Mariah Carey, shown in

  • the photo below, (Belissimo-Magrin, 2017.

  • Step 2: Determining the response sought

  • Once the target audience has been defined, the marketing communicator must decide what

  • response is sought.

  • While purchase is the utmost outcome of the program, the target audience may be in any one

  • of the buyer readiness state:

  • Awareness – the communicator tries to build awareness – name recognition,

  • Knowledge – raise knowledge of the product or organisation,

  • Liking – enticing a favourable outlook for the product or organisation,

  • Preference – establishing consumer preference,

  • Conviction – build conviction that taking the next step (purchase) is the right thing to do

  • Purchase – lead consumer to commit to purchase the product.

  • NOTE: Buyer readiness states ‘is the stages consumers normally pass through on their way to purchase, including awareness,

  • knowledge, liking, preference, conviction or purchase’. The target audience may be in one of the six buyer readiness states.

  • For Example: A café may want conviction amongst the target audience, as often customers have many different places to choose

  • to eat, and often look around. They may achieve this through a coupon offer, such as a ‘Buy One Get One Free’, which helps

  • build conviction within the customer, by convincing them that purchasing the product is the correct thing to do, as you ultimately

  • will get a cost saving, through a free product.

  • For Airbnb:

  • Potential users are most likely to already be aware of the Airbnb product, due to its online nature and easy accessibility. They are

  • more than likely to have seen the advertising campaigns, further raising the knowledge of the product and organisation, particular-

  • ly in previous campaigns which clearly highlight the values of Airbnb. Also as potential users, they are already likely to like the

  • product, therefore the response of Conviction is most likely response sought, as this is the next step for them. For Past users, the

  • response would be liking, as it is clear there is a reason they didn’t enjoy the product and no longer using it. For current users,

  • who are possibly infrequent, a preference for the product should also be obtained, to ensure that as users they are choosing Airbnb

  • each time they are looking for accommodation. Social Media influencers, and travel agents, would be more interested in aware-

  • ness and knowledge, so these influential figures can help convey the message. They could also build a liking by providing a fa-

  • vourable outlook for the brand.

  • Step 3: Selecting a Message

  • Message and media decisions

  • Today, media fragmentation, ever-rising costs and more focused target marketing strategies have promoted the importance of the

  • media planning function.

  • Creating the message

  • Effective communication is especially important in today’s costly and cluttered advertising environment. All this advertising clut-

  • ter bothers many consumers, and it also causes big problems for advertisers. Typically, advertisers pay $10 000 – $20 000 for 30

  • seconds of advertising. In such cases, their ads are sandwiched in with a clutter of other commercials.

  • However, with the growth in Pay TV, VCRs, DVDs and the web, viewers have more options. They can mute ads or watch com-

  • mercial-free Videos or DVDs. Thus to gain and hold attention, today’s communications must be better planned, more imaginative,

  • more entertaining and more rewarding to consumers.

  • Designing the message (AIDA Model)

  • The communicator turns to developing an effective message. Ideally the message should get Atten-

  • tion, hold interest, arouse Desire and obtain Action

  • Message content

  • The communicator has to work out an appeal or theme that will produce the desired response.

  • There are three types of appeals

  • 1.Rational appeals ‘are message appeals that relate to the audience’s self-interest and show that the

  • product will produce the desired benefits; examples include appeals of product quality, econo-

  • my, value or performance’.

  • For Example, a rational appeal for a Hot Water service, would be the following sticker, which

  • provides an action guide on how to receive hot water. It is logical and rational, and shoes the

  • steps to receive the desired benefits.

    1. Emotional appeals ‘are those that attempt to stir appeals that attempt to stir negative or posi-
  • tive emotions that can motivate purchase, examples include fear, guilt, shame, love, humour and

  • joy appeals’ .

  • For Example, an emotional appeal would be the ads that condone drink driving, such as the one

  • below, which evokes emotion of sadness thinking of people who have died.

    1. Moral appeals ‘are messages appeals that are directed to the audience’s sense of what is right and
  • proper’.

  • For Example, moral appeals would include a World Vision Ad, where they offer you the opportunity to do

  • something morally good.

  • For Airbnb:

  • The current Airbnb appeal is one of emotion. Marketers focus on gaining the response of knowledge and awareness of non-users

  • of the Airbnb product, through their ‘Live There,’ campaigns. Created out of TBWA/Chiat/Day L.A., the campaign features an

  • anthem spot that urges would-be travellers to think differently about their next trip:

  • “Don’t go to Paris, don’t tour Paris and please, don’t do Paris,” a voiceover urges atop scenes of the city’s most famous landmarks

  • like the Eiffel Tower and the Arc D’Triomphe. “Live in Paris,” it then asserts before cutting to warm, familial scenes of people

  • letting loose and hanging out as if they’re locals in neighbourhoods like Malibu, California, Shinagawa in Tokyo and the East

  • Village in NYC, (Diaz , 2016). Therefore, Airbnb attempts to stir negative emotions around the traditional tourist way of travel-

  • ling, through scenes of people visiting tourist spot and being in crowds, stuck in long lines etc. The sharp transition to scenes of

  • family in local neighbourhoods, contrastingly creating feelings of love and community.

  • The Live There campaign vide is found here: https://vimeo.com/198909649

  • Step 4: Selecting Media

  • There are two broad types:

  • Personal communication channels ‘are those which two or more people communicate directly with each other, including face-

  • to-face, person-to-audience, over the telephone or through the mail’.

  • Some personal communication is controlled directly by the company. Others might be not directly controlled by the company.

  • For example, word of mouth influence is ‘personal communication about a product between target buyers and neighbours,

  • friends, family members and associates’. Companies can take steps to put personal communication channels to work for them.

  • This is known as ‘buzz marketing’ and involves cultivating opinion leaders and getting them to spread information about a prod-

  • uct or service to others in their communities.

  • For Airbnb, personal communication tools could be used in conjunction with social media influencers, who speak to a very

  • large audience, and personally get their message across. This may or may not be controlled by the company, depending on their

  • agreements with the influencers, and whether they are allowed to voice their personal opinion.

  • Non-personal communication channels ‘uses media that carry messages without personal contact or feedback, including me-

  • dia, atmosphere and events’. The marketer must determine the media’s reach and frequency necessary to achieve objectives.

  • Reach ‘is the percentage of people in the target market exposed to an ad campaign during a given period’.

  • Frequency ‘is the number of times the average person in the target market is exposed to an advertising message during a given

  • period’.

  • Media impact ‘is the qualitative value of a message exposure through a given medium’.

  • For example, ads on social media are effective in assessing the reach, frequency and impact of the product. Through social me-

  • dia, the advertiser can track how many people have seen the ad (reach), how many times they have been exposed (frequency),

  • and whether they use the ad to look further into the product, (media impact).

  • What do you think are the advantages and disadvantages of web-based selling? When might it be least useful?

  • It helps reduce costs and a salesperson’s time, provide low cost training and updates on information, and lowers costs of sales

  • presentations. It would be least useful when customers are uncomfortable using the web, during larger purchases, when they are

  • unsure with the purchase and would like some advice or their questions answered. In these circumstances, physical contact is

  • preferred.

  • For Airbnb, the following concerns of the online store may be had:

  • security issues with the payment of the service

  • Hosts and guests personality and trust

  • Queries regarding the property

  • Less familiar with online services.

  • Limited knowledge of the product/Airbnb service

  • Wanting advice about their holiday.

  • Therefore the physical store will help alleviate some of these concerns, and provide a point of contact for some people.

  • For some junk mail has become a nuisance. What do you believe is the appropriate sales promotion strategies for those

  • consumers who do not want this material? Suggest alternates.

  • There may be limited strategies for those consumers who find junk mail a nuisance. A strategy that circumvents this is for com-

  • panies to send authorised mail to consumers. This however incurs more cost. Other strategies are to include samples or redeema-

  • ble coupons with the promotional material, which makes it more appealing to the consumer.

  • Airbnb already employ a similar thing, with their Airbnb magazine they send to customers who request it. The Airbnbmag, is a

  • promotional tool, which highlights the experiences and places available to visit, with Airbnb listings and interesting articles,

  • (Kokalitcheva, n.d).

  • Currently, I am travelling well throughout the semester. I am nearly completed my second

  • part of the Marketing Plan Assignment, Segmentation and Positioning, and am very happy

  • with my conclusions. This means that my individual tasks for the assignment are complet-

  • ed. This poses a threat for my portfolio, as I may lose track of content learnt, as I don’t

  • personally need to apply it in the plan. However it is vital I still complete tutorial questions

  • to a high standard and have the knowledge to effectively edit documents as required. How-

  • ever, not having to complete any more of the plan also gives me the opportunity to ensure

  • that my portfolio is up to standard, and still contribute to other aspects of the plan through

  • tutorials.

  • Networking effects are still going ahead, however take the form of weekly catch-ups at

  • tutorials, over using social media. For example, the Monday morning tutorial was used as a

  • chance to conduct a meeting about the current status of the marketing plan. The topics and

  • conclusions are revealed in following copy of meeting minutes. As team leader, I also en-

  • sure that I keep track of every team member’s progress, such as through personal Facebook

  • messages.

Evidence of personalFacebook messages.

  • Meeting Minutes from Monday

  • morning.

  • We are still working great as a team. Now that mid semester quizzes are over, we all understand that we need to focus on the

  • marketing plan, and are very eager to complete it. Our only current weakness would be our current position in the plan, as I be-

  • lieve we are slightly behind, with Henry yet to complete his SWOT and objectives, and me yet to complete my segmentation and

  • positioning. However, after chatting with Henry it was decided that he would aim to get his section completed by Friday, so that

  • I could aim to get my section completed by Sunday, in order to allocate new tasks on Monday. If these tasks are completed by

  • the deadline, there are no foreseeable threats.


Setting the total IMC budget

These include the following:

Affordable method: setting the IMC budget at

what the company can afford

One of the most difficult decisions for a company is how to spend on IMC. There are a number of differentmethods by which companies can use in setting the total IMC.

  • Percentage-of-sales method: most companies use this method, budget

  • set at percentage of forecasted or current sales

  • Competitive-parity method: IMC budget set at what competitor’s

  • budget

  • Objective-and-task method: most logical IMC method, marketers

  • develop budget on basis of defining objectives, determining tasks and

  • estimating cost of performing tasks.

  • Objective-and-task method ‘is the development the promotion budget by:

  • 1.

  • 2.

  • 3.

  • defining specific objectives

  • determining the tasks that must be performed to achieve these objectives; and

  • estimating the costs of performing these tasks.

  • The sum of these costs is the proposed promotion budget.

  • Other product-specific factors

  • The communication budget for each product also depends on other product-specific factors which are:

  • A.

  • Stage in the product life cycle

  • B. Market Share

  • Competition and clutter

  • Advertising frequency

  • Product differentiation

  • C.

  • D.

  • E.

  • Setting the IMC mix

  • The marketing organisation must divide the budget into its core categories:

  • Media advertising: can be expensive, however useful in developing a presence in the market,

  • Public relations: adds believable component through news stories, features or events, tends to be an afterthought,

  • Sales promotion: includes coupons, contests, cents-off deals, premiums which attracts consumer attention and provide

  • information that may lead them to purchase product,

  • Direct and online marketing: includes various forms call centres, desktop publishing, electronic databases, CD-ROMs,

  • Internet,

  • Personal selling: sales force is an effective tool that builds rapport and relationship with consumers.

  • Personal selling ‘is an oral presentation in a conversation with one or more prospective purchasers for the purpose of

  • making sales’.

  • NOTE: Depending on the nature of the company, the IMC mix will be different.

  • Factors influencing the development of an IMC program:

  • Type of product and market (e.g. difference between the needs in a consumer and business-to-business market)

  • Push versus pull strategy

  • Buyer readiness state (see tutorial 8)

  • Product life-cycle stage

  • Integrating the promotion mix

  • Having set the promotions budget and mix, the company must now take steps to see that all the elements are smoothly integrat-

  • ed.

  • Here is a checklist for integrating the firm’s marketing communications;

  • Analyse trends internal and external that can affect the company’s ability to do business

  • Audit communications spending throughout the organisation

  • Identify all contact points for the company and its brands

  • Team up in communications planning

  • Create compatible themes, tones and quality across all communications media

  • Create performance measures that are shared by all communications elements

  • Appoint a director responsible for the company’s persuasive communications efforts

  • Sales Promotion

  • Sales promotion has different meanings in different contexts. However, all sales promotion are tools used to prompt immediate

  • sales, whether in-store or through direct channels.

  • Sales promotion is the ‘short-term incentives to encourage purchase of a product or service’.

  • The main tools of sales promotion include:

Application to Airbnb / Past Promotions / Possible Future Promotions

And the Purpose / goal of these promotions

  • Samples

Free samples may be difficult to supply for a company like Airbnb, however Airbnb promotions in the pastinclude 3D virtual reality ads, that aim to give the viewer a feel of what the Airbnb experience will be like.This could attract new users, who have limited knowledge on the service.

  • Redeemable Cou-

  • pons

Redeemable coupons could help increase the frequency of Airbnb purchases, meeting the objective of turninglight users into heavy users. These coupons could have discounts in general, or discounts could follow themeslike certain destinations, or times of bookings.

  • Cash-back offer

Cash back offers are a form of price saving, that doesn’t decrease the brand image. For Airbnb, cashback of-fers could apply in the form of Airbnb credit money, which can be used for future purchases. This would re-gain past customers.

  • Price Packs

Price packs are probably less applicable in this case, but could apply for extended stays. For example, stay 10nights and get 20% off could be a plausible discount. This encourages larger purchases.

  • Premium Offers

Premium Offers for Airbnb could include, free transfers, food vouchers, and other offers offered free of chargewith an accommodation purchase, and relate to the region they intend on staying in.

  • Advertising Spe-

  • cialties

Advertising specialties could include Airbnb keyrings, and household products, or tourist products.- Patronage Re-

  • wards

These are vital for rewarding loyal customers, and should apply to Airbnb in the form of loyalty points thatcan be exchanged for money off next purchases, or used in exchange for experiences.

  • Contests and game

  • of chance/skill

A promotional event, could be a competition, where the winner receives a fully paid for Airbnb holiday, orexchange for money.

  • For Example, a car manufacturer may do a Cash Back offer on a car. If the car was discounted itself, it may cheapen the brand,

  • therefore providing a cashback offer retains the usual premium price, whilst giving a cash reward.

  • Purpose of sales promotion

  • Sales promotion tools have varied objectives. These include:

  • Reward loyal users and retain them,

  • Convert light user to heavy user,

  • Attract new triers from three groups: Non users – never tried before, Loyal users of another brand – convert from another

  • brand, Brand switchers – can be enticed to switch and by another brand during sales promotion, not fully satisfied with

  • single brand.

  • For Example, free sample of packet Oats, will try and attract non-users, by allowing them to taste a product they otherwise would

  • not have tried, and have prior expectations of, such as oats being bland.

  • Sales promotion, unlike advertising, tries to break down brand loyalty. The benefits of sales promotion provide manufactur-

  • ers and consumers some immediate opportunities. They provide manufacturers with an opportunity to adjust short-term changes

  • to supply and demand in different market segments, and provide consumers also benefit with the opportunity to try new products

  • instead of staying with old ones.

  • Any Sales promotion decision must consider:

  • Impact on the brand

  • Secondary objectives, such as customer database and awareness

  • Message consistency

  • Promoting it

  • Linking to PR opportunities

  • Adding Urgency.

  • 1.

  • 2.

  • 3.

  • 4.

  • 5.

  • 6.

For Airbnb, a competition would be very effective,as it stimulate awareness around the brand, andwould easily grow the Airbnb database throughcontestants entering their details. A competitioncould be used in conjunction with the Airbnb ideaof 3D virtual reality campaigns, where a gamecould be incorporated with the winner receiving anAirbnb prize. This would further link to PR oppor-tunities, and urgencies to visit the Airbnb storewhere this competition will be primarily held.- I just completed my second section of the marketing plan, therefore my duties for that task have been completed. This will allow

  • me for more time on other subjects which I may have neglected in place for Marketing. This puts me in a good position to study

  • for my final exams. Current weakness is lack of completion of tutorial activities, Whilst is it simple to answer the questions I’m

  • finding difficulty in researching and applying to Airbnb, particularly with limited co-ordination with team members on weeks

  • where tutorials aren’t held. However, the next part of the assignment is to be completed, based on the last few weeks topics,

  • therefore further discussion is definitely to be had. I am currently worried about the completion of the marketing plan. Whilst I

  • originally thought we were travelling well, I believe now we are behind in our tasks. Having just started the products section, we

  • need to get a move on and complete other sections. Particularly, as editing and ensuring that it is a coherent document is ex-

  • pected to take a long period of time. As team member, I will ensure from now on, tasks are completed ASAP, and communicate

  • effectively to avoid confusion and time spent on editing.

  • Networking this week involved me clarifying my sections with other team members to ensure the document was coherent. I re-

  • viewed Henry’s objectives and ensured that they were in line with my ideas, and discussed my segmentation strategy, particular-

  • ly the demographic aspect, with Zac to ensure we weren’t repeating the same information. This communication has proved to be

  • useful, as we can get advice and opinions from others very quickly. I also had to communicate to Stephanie, her task that she

  • was assigned, and did this through messenger.

  • Facebook message was the primary form of communication.

  • As a team, one of the key aspects that help our success is our ability to assist others and provide feedback and opinions. This

  • was evident when I went to Zac to get his opinion on my section in relation to his work, and when Henry asked for my opinion

  • on his work, to ensure that other team members agreed. This constant communication helps in achieving a good end product.

  • Our weaknesses would be reaching set due dates, as we wish to be accommodating for all, and understanding of other commit-

  • ments that arise. But in the upcoming weeks it would be a good opportunity to ensure that deadlines are further enforced, and

  • emphasise to team members the benefits of getting the task completed early and without rush.

  • According to Seamons, 2015, the following are steps to effective pric-

  • ing:

  • 1.

  • 2.

  • 3.

  • 4.

  • 5.

  • Start by determining what value the target market places on the

  • product or service

  • Assess the differences in value placed on the offer by different mar-

  • ket segments

  • Determine price sensitivity in different market segments

  • Identify the best pricing structure

  • Take account of likely competitors’ reaction

    1. Measure and monitor the net prices obtained in the market
  • Assess customer’s emotional responses to prices

  • Determine whether the market segment or key customer prices sufficient returns in relation to costs to serve

  • 7.

  • 8.

  • Factors to Consider when setting prices:

  • A company’s pricing decisions are affected by many internal company factors and external environmental factors.

  • Internal Factors:

  • Include the company’s marketing objectives, marketing mix strategy, costs and the organisation.

  • Before setting price, the company must decide on its strategy for the product. If the company has selected its

  • target market and positioning carefully then its marketing mix strategy, including price will be fairly straight-

  • forward. The clearer a firm is about its objectives, the easier it is to set price.

  • Examples of common objectives are survival, current profit maximisation, market-share maximisation and

  • product-quality leadership.

  • For Airbnb, pricing will differ between each product, as there is a large range of different products, at different

  • levels of quality.

  • Survival – Companies set survival as their major objective if they are troubled by too much capacity, heavy

  • competition or changing consumer wants. A company will set a low price to increase demand.

  • Current profit leadership – They estimate what demand and costs will be at different prices and choose the

  • price that will produce the maximum current profit.

  • Market-share maximisation – When companies believe that the company with the largest market share will

  • enjoy the lowest costs and highest long-run profit. To become the leader, they set prices as low as possible.

  • Product-quality leadership – A company might decide it wants to have the highest quality product on the

  • market. This normally entails charging a high price to cover the high costs of production and R & D.

  • Other objectives – A company might use price to attain other more specific objectives. It can set prices low to

  • prevent competition from entering the market, or set prices at competitors’ levels to stabilise the market. Prices

  • can also be set to keep loyalty and support or avoid government intervention, even to create excitement for a

  • product.

  • For Airbnb, the lister chooses the price, however Airbnb can inform the decision to what price to set, by search-

  • ing for comparable listings in your city or neighbourhoods to get an idea of market prices, (Airbnb, 2018). The

  • automated Airbnb Pricing Tool, helps hosts earn up to 40% more revenue, taking into consideration a range of

  • factors including special events, day of week, hotel prices, seasonality, competitor prices, advance bookings,

  • (LearnAirbnb, 2015). Other price determinants include, host attributes, amenities and services, rental rules, and

  • online review ratings. The effects of distance to nearest landmark, impact of facility and nearest landmark pop-

  • ularity were also factors, (Zhang, 2017).

  • With these smart pricing tools in mind, it is likely to that Airbnb follows a current profit leadership pricing

  • strategy, as the main goal for sellers is to maximise their personal revenue, which in turn leads to greater reve-

  • nue from Airbnb.

  • M

  • a

  • r

  • k

  • e

  • t

  • i

  • n

  • g

  • O

  • b

  • j

  • e

  • c

  • t

  • i

  • v

  • e

  • s

  • C

  • o

  • s

  • t

  • s

  • T

  • h

  • e

  • M

  • a

  • r

  • k

  • e

  • t

  • a

  • n

  • d

  • D

  • e

  • m

  • a

  • n

  • d

  • Costs set the floor for the price that the company can charge for its product. The company wants to charge a price that

  • covers all its costs for producing, distributing and selling the product, and also delivers a fair rate of return for its effort

  • and risk.

  • Fixed costs: ‘Costs that do not vary with production or sales level’.

  • For the Airbnb host, fixed costs involve usual rates associated with households, such as rent, electricity etc.

  • Variable costs: ‘Costs that vary directly with the level of production’.

  • For the Airbnb host, variable costs would include costs associated with rental of their homes These include a service fee

  • of 3%, which covers the cost of processing payments, (Marte, 2015),. It also covers any supplies bought, as Airbnb rec-

  • ommends that hosts provide clean linens, towels and other amenities to guests. Additionally any cleaning services, or

  • personal insurance required will be a part of variable costs.

  • Total costs: ‘The sum of the fixed and variable costs for any given level of production’.

  • Costs at different levels of production – To price wisely, management needs to know how its costs vary with different

  • levels of production.

  • Costs as a function of production experience – As a company gains experience in producing, it learns how to do it better

  • so average costs tend to fall with accumulated experience.

  • Experience curve (learning curve): ‘The drop in the average per-unit production costs that comes with accumulated pro-

  • duction experience’.

  • Points to Consider: The economics of information based products – Information goods, which are those that can be dis-

  • tributed in digital form like software, books, movies and music, have a different cost structure from tangible products.

  • The majority of costs of a movie or book are committed upfront. It costs relatively little to print another book, or DVD.

  • The economics of information-based products is skewed towards fixed costs with very large economies of scale. The

  • more that is produced, the lower the average unit cost of production.

  • Costs set the lower limits of prices, whereas the market and demand set the upper limit. Economists recognise four types

  • of markets, each presenting a different pricing challenge.

  • Pure competition: ‘A market in which many buyers and sellers trade in a uniform commodity – no single buyer or seller

  • has much effect on the going market price’

  • An example, are agricultural products such as corn, wheat, soybeans. The suppliers have no influence over the market

  • price, and thus are price takers.

  • Monopolistic competition: ‘A market in which many buyers and sellers trade over a range of prices rather than a single

  • market price’.

  • Most consumer goods, such as health and beauty aids, fall into this category. Suppliers attempt to differentiate their

  • product as being better so they can justify higher prices.

  • Airbnb falls into the market of Monopolistic Competition. There are many buyers and sellers in the rental market, in-

  • cluding direct competitors like other home-sharing websites, or indirect competitors such as hotels. Rental properties

  • widely range in price and quality levels, therefore there is no single market price, and instead many different prices.

  • Oligopolistic competition: ‘A market in which there are few sellers who are highly sensitive to each other’s pricing and

  • marketing strategies’.

  • An example would be supermarket chains, Woolworth and Coles, as there are few sellers. They are highly sensitive to

  • each other’s pricing, and marketing strategies, and they have to quickly respond to a competitors strategy.

  • Pure monopoly: ‘A market in which there is a single seller – it may be a government monopoly, a private, regulated

  • monopoly or a private non-regulated monopoly’

  • For example, a pure monopoly would be Australia Post, as they are the only mail service in Australia. It is a government

  • owned organisation, and therefore the government regulates what companies can function in the market.

  • In the end the consumers decide whether the price is right. Effective pricing involves understanding how much value

  • consumers place on the benefits they receive from the product, both actual and perceived benefits.

  • Each price the company might charge will lead to a different level of demand. Most demand curves slope downward, but

  • for some luxury goods, the demand curve sometimes slopes upward.

  • Demand curve: A curve that shows the number of units the market will buy in a given time period, at different prices

  • that might be charged.

  • Price elasticity of demand: A measure of the sensitivity of demand to changes in price. If demand hardly changes with a

  • small change in price, we say the demand is inelastic. If demand changes greatly, we say the demand is elastic.

  • Buyers are less price-sensitive when the product they are buying is unique or when it is high in quality or prestige. They

  • are also less price-sensitive when substitute products are hard to find. If demand is elastic, sellers will consider lowering

  • External Factors:

  • Competitors’ prices and offers

  • Another external factor affecting the company’s pricing decisions is competitor’s prices and their possible

  • reactions to the company’s own pricing moves?

  • A low-price, low-margin strategy however, may stop competitors or drive them out of the market whereas

  • high-price, high-margin strategy may attract competitors to the market. The company needs to learn the price

  • and quality of each competitor’s offer. Once a company is aware of competitors’ prices and offers, it can use

  • them as a starting point for its own pricing.

  • Past studies have investigated numerous factors affecting hotel price, such as brand name, star rating, location,

  • hotel age, number of rooms, and amenities. The main difference between Airbnb and hotel competitors is price

  • savings. Airbnb bookings data and traditional accommodation bookings data from the ABS showed that rooms

  • in Airbnb listings are, on average, $88 cheaper per night, compared to traditional accommodation in central

  • Sydney, while this difference if $50 per night outside central Sydney, (Deloitte, 2017). These prices exclude

  • shared and private rooms.

  • Platforms like Airbnb are adding accommodation supply and in doing so, are generating competition in the

  • market. There may be costs and impacts for existing operators in the accommodation market due to this com-

  • petition, particularly given Airbnb’s rapid growth. However, Airbnb is also growing the overall size of the mar-

  • ket – with consumers induced by Airbnb’s lower average prices or its innovative features. Despite the potential

  • impacts on existing operators, consumers stand to gain from competition in the long term through improved

  • quality and reduced prices.

  • Airbnb’s impact on the traditional hotel market, includes limiting the hotel’s ability to raise rates, and may lead

  • to hotels lowering rates to stay competitive, however it is having minimal impact outside the top markets.

  • Since traditional hotel chains, were already existent in the market, Airbnb used a low-price, low-margin strate-

  • gy to actively compete. As a result, some hotel chains have had to lower their prices, to compete.

  • When setting the prices, the company must also consider other factors in its external environment. Economic

  • factors such as inflation, poor or recession and interest rates affect pricing decisions because they affect both

  • the cost of producing a product and consumer perceptions of the product’s price and value. The company must

  • consider what impact its prices will have on other parties in its environment.

  • The government is another important external influence on pricing decisions. Marketers need to know the laws

  • affecting pricing and make sure their policies are legal. The Australian Competition and Consumer Commission

  • (ACCC) plays a major role in investigating possible breaches.

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  • Describe which strategy, market skimming or market penetration, the following companies use in pricing their

  • new products and services: (a) Jetstar, (b) Sony, and (c) Cadbury Schweppes. Are these the right strategies for

  • these companies?

  • Market-skimming pricing: ‘Setting a high price for a new product to skim maximum revenue from the segments will-

  • ing to pay the high price; the company makes fewer but more profitable sales’. Many companies that invent new

  • products set high prices initially to ‘skim’ revenues layer by layer from the market. However, this can only be effec-

  • tive under certain conditions. The quality end image must be consistent with a high price, there must be enough buy-

  • ers, and are different price-market segments.

  • Sony generally uses a market-skimming strategy initially and then reduces their price once competitors’ products ap-

  • pear in the market place. This was the case with the PS2 which is currently less than one third of its original price

  • when launched.

  • Market-penetration pricing: ‘Setting a low price for a new product in order to attract a large number of buyers and a

  • large market share’. Here companies set a low initial price in order to penetrate the market quickly and deeply – to

  • attract a large number of buyers quickly.

  • Warehouse stores and discount retailers also use penetration pricing. Several conditions favour this; the market must

  • be sensitive to different price levels so that a low price produces more rapid market trial and growth. Production and

  • distribution costs must fall as sales volume increases.

  • Jetstar uses a market-penetration price strategy. It prices to gain market share or deny business to Virgin airlines,

  • Qantas’s cut price competitor. The economy market, or travel market is price sensitive and therefore this strategy

  • makes sense.

  • Cadbury Schweppes aim to penetrate the market quickly to ensure large share of the market. As such they predomi-

  • nately use market-penetration.

  • When Airbnb first entered the market they used a market-penetration strategy, characterised by very low prices. This

  • was possible to achieve as majority of listings at this time, were for shared and private rooms rather than entire

  • homes or novelty destinations, which allowed much cheaper prices. In this way, Airbnb was able to attract market

  • share, and penetrate the market quickly and deeply.

  • I have a good understanding of this weeks pricing topic, due to prior understanding of micro-economics. Therefore it

  • was easy to apply my past knowledge to the Airbnb example, and interesting to conduct further research into the cur-

  • rent pricing strategy. However, it may be difficult to then apply and justify these in the marketing plan, or come up

  • with alternative pricing strategies, due to the complex nature of Airbnb and variety of listings. Whilst it may be a

  • challenge, the content is interesting to complete.

  • Majority of this weeks networking involved talking about completion of the portfolio rather than the marketing plan.

  • Conversations were had regarding the content of the portfolios, any group ideas, and clarification of concepts.

Facebook message was the primary form of communication this week.

  • We are still performing really well. However, we need to get a move on in our marketing plan, as Steph is yet to

  • begin her section, leaving us with less than half currently completed, as this section is a major component of the plan.

  • However, as her sister, I will keep track of her progress, and ensure it is done in due time.

  • Tutorial 11: Channels

  • Tutorial 12: Market Research

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  • Available at: http://www.qgso.qld.gov.au/subjects/demography/population-projections/tables/proj-pop-medium-series-sa2-sa3-

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  • Design Studio, 2014. New Logo and Identity for airbnb. [Online]

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  • Diaz, A.-C. (2016, April 19). Airbnb asks why vacation somewhere, when you can live there? Retrieved from AdAge: http://

  • creativity-online.com/work/airbnb-dont-go-there-live-there/46533

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  • Guttentag, D., 2016. Airbnb: Why Tourists Choose It and How They Use It. [Online]

  • Available at: https://www.dg-research.com/Papers/Summary%20doc%20-%20Airbnb.pdf

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  • Guttentag, D., 2017. Why Tourists Choose Airbnb: A Motivation-based Segmentation Study. Journal of Travel Research, 27

  • April, 57(3), pp. 342-359.

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  • Available at: https://ipropertymanagement.com/airbnb-statistics/

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  • Kokalitcheva. (n.d.). Airbnb’s Magazine promotes home-sharing lifestyle. Retrieved from Axios: https://www.axios.com/airbnbs

  • -magazine-promotes-home-sharing-lifestyle-1513304568-7f832cbe-165a-469f-b1b3-d8655b7888df.html

  • Lagorio-Chafkin, C., 2014. It’s Like Airbnb, Minus the Regulatory Troubles. [Online]

  • Available at: https://www.inc.com/christine-lagorio/home-rental-unhotel-onefinestay.html

  • [Accessed 9 April 2018].

  • LearnAirbnb. (2015). Your Airbnb Pricing Strategy Sucks. Retrieved from LearnAirbnb: https://learnairbnb.com/airbnb-pricing-

  • strategy-sucks/

  • LegalVision, 2017. Is Airbnb Legal in Australia. [Online]

  • Available at: https://legalvision.com.au/is-airbnb-legal-in-australia/

  • [Accessed 24 April 2018].

  • Lutz, C., 2018. Consumer Segmentation within the sharing economy: The case of Airbnb. Journal of Business Research, Volume

  • 88, pp. 187-196.

  • Marte, J. (2015). Thinking of renting our your home on Airbnb? Consider these costs first. Retrieved from Washington Post:

  • https://www.washingtonpost.com/news/get-there/wp/2015/07/24/the-many-unseen-costs-of-renting-out-your-home-through-sites

  • -like-airbnb/?noredirect=on&utm_term=.2e4101da4530

  • NU Business Review, 2014. The Northwestern Business Review. [Online]

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  • framework-583dc8a50515

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  • Seamons, O., 2015. Foundations of Marketing. 3 ed. Sydney(NSW): Pearson Education.

  • Stollery, A., 2017. The antecedents of perceived value in the Airbnb context. Asia Pacific Journal of Innovation and Entrepre-

  • neurship, 11(3), pp. 391-404.

  • Tarrant, N., 2018. IBISWorld Industry Report Online Travel Bookings in Australi. [Online]

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  • Zhang, Z. (2017). Key Factors Affecting the Price of Airbnb Listings. MDPI.


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