Airbnb, Inc. is an online marketplace that allows offering or arranging homestays, lodging, or tourism experiences. The company works like a broker receiving commission for each successful deal executed on its website (Airbnb, 2019). It does not operate or own any of the properties. The company was found in 2008 as a startup and has headquarters in San Francisco, California. It was found by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. The company received great success and expanded to include various subsidiaries under it over the years. In 2017, the company generated revenue of $2.6 billion with 12,736 employees (Lee, 2018). The company started its working through various funding rounds that helped it earn millions that allowed it to expand and enter new markets successfully.
Following are the four dimensions of the Ansoff Matrix for Airbnb:
Market Penetration
Market penetration refers to the act of entering existing markets through existing products. Since inception, the company has aggressively marketed its existence and products. The company also advertises its app and teaches users how to use it to create ease for them. The entire operations of the company are online. The company motivates people to list their properties on the app and also motivates seekers to seek out properties through the app. Airbnb faces little competition as it was the pioneer in the online rental marketplace. The company also improves its products by allowing users to have a virtual tour of the property, see pictures, read reviews, and other functions to make the marketplace more attractive. The company also enters strategic alliances with various other online marketplaces to promote its products. This allows the company to gain further business. Offering discounts through voucher codes is another market penetration the company uses. The excellent customer service the company offers allows it to lead the market and gain the trust of customers.
Market Development
Airbnb develops its markets by launching its existing products in new markets. The main source of market development for Airbnb is geographic expansion into new markets by launching its app in that market and developing its real estate listing. The company then markets its existence through social, print, and electronic media. It hosts events to greet other startups to join hands. It joins hands with local real estate companies to list their products on its app. It also sponsors events to highlight its presence. The company has to vary its commission rates when entering new markets to gain trust and motivate users to list their properties (Dudovskiy, 2019). The different pricing structures allow it to enter the market successfully and become profitable in the minimum of time.
Product Development
Product development refers to the launch of new products in existing markets. Since inception, the company has continued to add new products to its portfolio and expand its online marketplace. It started as a short-term accommodation provider and now includes adventures, restaurant experiences, tourism, home rentals, and various other hospitality functions. The company continues to expand its portfolio by offering various new services from time to time. The services it offers also vary from market to market. The research and development section of Airbnb works to create these new products. The products are designed, tested, and then launched. Once they are launched, they are also marketed to generate market awareness. Product development is an excellent strategy for Airbnb to create new vibes in the market and earn revenue.
Diversification
Diversification is launching new products in new markets. The company has diversified by offering villas, mansions, and other premium locations to its premium members in various new markets. This has helped create an entirely new market segment. Similarly, Airbnb can also horizontally diversify and establish alliances with hotels to list hotel rooms on its web. The company can also vertically diversify by purchasing its own properties and listing them on its app. This will increase costs but also increase the earnings of Airbnb (Wong, 2019). It can also create its own hotel and tourist resorts similarly to list them. All of these vertical diversification possibilities will increase the revenue of the company. Conglomerate diversification is also possible for Airbnb by entering into the apparel industry, consumer electronics, automobile, and various other industries. The successful startup tag on Airbnb can help it grow rapidly in other industries.
References
Airbnb, 2019. What is the Airbnb service fee? [Online] Available at: https://www.airbnb.com/help/article/1857/what-is-the-airbnb-service-fee [Accessed 01 Jan. 2020].
Dudovskiy, J., 2019. Airbnb Ansoff Matrix: a brief overview. [Online] Available at: https://research-methodology.net/airbnb-ansoff-matrix-a-brief-overview/ [Accessed 01 Jan. 2020].
Lee, D., 2018. AirBnB aims to woo wealthier travellers. [Online] Available at: https://www.bbc.com/news/technology-43163448 [Accessed 01 Jan. 2020].
Wong, A., 2019. AirBnB’s product diversification. [Online] Available at: https://www.dreacademy.co/single-post/2018/02/27/AirBnBs-product-diversification [Accessed 01 Jan. 2020].