A Deep Dive into Airbnb's Marketing and Management Case Study

This case study analyzes Airbnb's marketing and management strategies, focusing on a demand system map used to predict demand and listing prices, highlighting the importance of time fluctuations, listing characteristics, and competitor factors. The study then presents a case of a customer's negative experience, illustrating issues related to customer safety and communication failures, including the ineffectiveness of the hotline and lack of transparency. The problems stem from external and internal communication issues, along with a failure to adhere to traditional legalities. The paper suggests solutions, including executive actions, implementing an automaticity program, increasing transparency, prioritizing ethics, and implementing a vetting process to improve customer safety and build long-term stability. The company must also listen to customer concerns to provide relevant support.

Marketing & Management
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Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................4
Question 3........................................................................................................................................5
Question 4........................................................................................................................................6
References........................................................................................................................................7

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Question 1
Figure: Demand system map of Airbnb
Source: Self-constructed
The demand system map presented above predicts the demand and listing price of Airbnb
separately as these two aspects are correlated with one another. For instance, if the listing price
increases, there are more chances that the demand will decrease. As a result, this demand system
map helps consumers to make appropriate decisions and move forward to choose Airbnb for
booking rooms with lower prices and similar features (Kornberger et al., 2018). Thus, the
company decided first to model the demand system and then integrate it within the price
function. Hence, Airbnb constructed the demand system to capture time fluctuations, listing
characteristics and competitors factors.
The demand system ensures that the clusters were taken from assets, thus the changes in
characteristics are determined to be the factors that affect the rentals and that in turn puts an
impact on the demand variable. In order to provide the booking related benefits to the customers,
the company integrates both the baseline price and the demand system to generate the best and
suitable price. Moreover, it can be seen that usually, the demand for Airbnb is higher during the
weekend as compared to weekdays. The company designs such a demand system map to
measure the fluctuations in demand followed by neighbourhood and individual listing.
San Francisco
Cluster 1:
1. 3+ BR Apartments
2. Upscale Amenities
Cluster 2:
1. 1-2 BR Apartments
2. Modern Amenities
Cluster3:
1. Shared room
2. Basic Amenities
Neighbourhood

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Moreover, the new pricing system will help in adjusting the room prices related to the changes in
demand in actual time.

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Question 2
On 4th July 2015, Jacob Lopez reached to Madrid, Spain to meet his Airbnb host, was a
transgender from whom he learned. After his arrival, he followed his host to the apartments
where he was enforced to perform a sexual act. As Jacob denied she locked him into the room
and threatened him by fumbling with kitchen knives, cutting off the internet lines. He got afraid
and immediately texted her mother in the United States to call Airbnb for help. Airbnb instructed
his mother to call Madrid police who will help Jacob to get out of this critical situation.
However, his mother could not connect to the police, and later, Jacob was sexually assaulted
before escaping.
The increasing sharing economy featured by peer-to-peer contacts generates an investigative
environment for the traditional requirements of the legalities surrounding (Zervas, Proserpio and
Byers, 2017). Thus, this case study outlines the company’s tries to examine the possible harmful
effects and stay competitive amidst ambiguity of Airbnb sensitive approach.

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Question 3
The problem occurred due to external and internal communication issues such as the failure to
use the hotline properly as a process of having emergency communication. Airbnb integrated the
hotline for safety purpose, still, it proved to be untrustworthy (Abramova et al., 2016). Another
factor that leads to this problem is the delivery system for each apology. The apologies of Airbnb
never confronted the issues directly. Thus, the company has framed its apologies indirectly by
stating that the organisation was not truly sorry for the incident. The range of transparency
implemented by Airbnb is unclear. Hence, there occurs a parallel among the hazardous situations
occurred, and Airbnb changed the terms of services. The problem within the case states
numerous issues related to entering into the sharing economy. The company does not adhere to
the similar legalities that are followed by traditional hotel properties. As a result, the company is
enforced to construct its safety context.

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Question 4
In order to fix the problem firstly, the company’s executives must provide verbal responses with
actions that they failed to execute in the past. The company must acknowledge the failure and
show commitment through actions for customer’s safety (O’Regan and Choe, 2017). Thus, the
executives must be thoroughly prepared to facilitate a detailed action plan.
Secondly, the company must implement an automaticity program, as Airbnb offers dual loyalty
to its host and guests. Investing safely in both parties will prove to be beneficial for the company.
Thirdly, Airbnb must involve transparency within their Terms of Service. The implementation of
such transparency will enhance the confidence level of the consumers (Hamari, Sjöklint and
Ukkonen, 2016).
Moreover, the company must give utmost priority to ethics, which is significant for executing
business practices. The company may face failure if compromises with safety for rapid growth.
Thus, the company must remain proactive by integrating a certain amount of ethical practices in
their business activities (Kathan, Matzler and Veider, 2016).
On the other hand, the company must also implement a vetting process that would be a property
for the organisation. Implementation of this process may result in long-lasting stability.
Furthermore, to mitigate the problems, the company must listen carefully to the concerns and
issues faced by the customers. It will help the company to understand the problems and provide
relevant support to the customers.

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References
Abramova, O., Krasnova, H., Shavanova, T., Fuhrer, A. and Buxmann, P., 2016. Impression
Management in the Sharing Economy: Understanding the Effect of Response Strategy to
Negative Reviews. Die Unternehmung, 70(1), pp.58-73.
Hamari, J., Sjöklint, M. and Ukkonen, A., 2016. The sharing economy: Why people participate
in collaborative consumption. Journal of the association for information science and
technology, 67(9), pp.2047-2059.
Kathan, W., Matzler, K. and Veider, V., 2016. The sharing economy: Your business model's
friend or foe?. Business Horizons, 59(6), pp.663-672.
Kornberger, M., Leixnering, S., Meyer, R.E. and Höllerer, M.A., 2018. Rethinking the sharing
economy: The nature and organization of sharing in the 2015 refugee crisis. Academy of
Management Discoveries, 4(3), pp.314-335.
O’Regan, M. and Choe, J., 2017. Airbnb and cultural capitalism: Enclosure and control within
the sharing economy. Anatolia, 28(2), pp.163-172.
Zervas, G., Proserpio, D. and Byers, J.W., 2017. The rise of the sharing economy: Estimating the
impact of Airbnb on the hotel industry. Journal of marketing research, 54(5), pp.687-705.