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BlueOcean Strategy

The document discusses how Airbnb disrupted the hotel industry using a blue ocean strategy by targeting a new market and redefining the consumer group. It provided lower prices and a personalized experience compared to hotels, capturing market share and becoming a billion dollar company.

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1K views4 pages

BlueOcean Strategy

The document discusses how Airbnb disrupted the hotel industry using a blue ocean strategy by targeting a new market and redefining the consumer group. It provided lower prices and a personalized experience compared to hotels, capturing market share and becoming a billion dollar company.

Uploaded by

waliya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Entrepreneurship

Assignment 2
Blue Ocean Strategy

29/04/2019 Waliya Khan, BSMT17030


Blue Ocean Strategy

The hotel and hospitality industry was flourishing before the inception of Airbnb in 2008. The perception
that Airbnb was serving a different market with a different business model led the industry to not perceive
it as a potential thread that ended up taking their market share and revenues. Initially Airbnb started with
roommates that didn’t have money for rent so they came up with the idea of providing accomodation on
air mattresses with breakfast to travelers. After overcoming numerous hurdles in their journey they
successfully became a billion dollar company with increasing growth.The hotel and tourism industry
provided travelers with high priced rooms and adequate locations that were usually fully booked during
holidays and festivals. Airbnb used an innovative business model that not only created and served a new
market but also attracted the markets the hotels were serving. With the central locations, flexibility of
bookings,cheap prices, ease and availability of the services it created a model that benefited both the local
businesses and consumers.

The Hotel industry capitalized on the famous brand names of the hotels, high prices being a sign of
premium quality with various amenities being provided to compete in the bloody red ocean with other
competitors. The safety level was much higher with moderate types of rooms being offered. Since their
business model was much conventional hence social network influence was not of as importance. Airbnb
used a much innovative business model that comprised of blue ocean strategy, where it looked across
hotels and rental buildings to combine the concepts and come up with a value providing service. They
also redefined the consumer group as the hotel industry was majorly serving luxury and business
travelers. Whereas, Airbnb “ offers vacation rentals and homey environs to low-budget consumers.”
Resulting in indulgent holidays with economical costs. With the redefined consumer group it provides
them an experience and solution the consumer seek with the strategic locations, different types of rooms
and comfort provided with them to add to a personal experience. Whilst the hotels competed on their
brand name and luxuries creating an emotional appeal for its customers. Airbnb developed a functional
appeal distinguishing themself from the industry and adding value for its customers. The four action
framework highlights their strategy below;
Airbnb eliminated the fame earned by the big names of the hotels’. They raised the visual designs, social
network influence thereby increasing the reviews from the guests, providing variety of rooms and
apartments types that the hotels overlook as they operate on a traditional business model. However, due to
Airbnb's business model their cost were already reduced compared to the expenses of the hotels hence
they were able to provide lower prices, with limited quantity of service and reduced safety. The new
market they created was of homestay accommodation for lower budgets, interaction and valuable
relationships between hosts and guests. Connecting consumers with local culture and bringing a sense of
belonging to them compared to the environment provided by the hotels

Airbnb has provided differentiation with lower costs to provide value to their customers hence this
simultaneous pursuit has led them to capture the needs of newer markets whilst also improving serving
the markets of hospitality industry. This strategy has led them to reshape the market conditions and
traditional ways they operated on.With the application of value innovation they have provided to the
customer needs and enhanced their service to capture the most value from the target markets.
References
1. https://getpaidforyourpad.com/blog/the-airbnb-founder-story/
2. https://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2#it-started-wit
h-an-email-joe-gebbia-sent-his-roommate-brian-chesky-an-idea-what-if-they-made-a-designers-b
ed-and-breakfast-complete-with-a-sleeping-mat-and-breakfast-it-was-a-way-to-make-a-few-buck
s-almost-nine-years-later-that-idea-is-worth-25-billion-1
3. https://www.clickz.com/to-airbnb-and-beyond-digital-transformation-in-hotels-hospitality/11387
2/
4. https://www.slideshare.net/ssuserb9c14b/case-study-of-airbnb-87298758
5. http://analysiscasestudy.blogspot.com/2014/09/blue-ocean-strategy-airbnb-social.html
6. https://www.bu.edu/bhr/2018/10/31/airbnb-and-the-hotel-industry-the-past-present-and-future-of-
sales-marketing-branding-and-revenue-management/
7. https://www.investopedia.com/articles/investing/112414/airbnb-brings-sharing-economy-hotels.a
sp
8. https://medium.com/the-suite-life/how-the-new-airbnb-offerings-impact-the-hotel-industry-2add7
1d8555d
9. https://www.slideshare.net/YairCarmel1/airbnb-and-the-hotel-industry
10. https://www.bu.edu/bhr/2018/10/31/airbnb-and-the-hotel-industry-the-past-present-and-future-of-
sales-marketing-branding-and-revenue-management/
11. https://www.investopedia.com/articles/investing/112414/airbnb-brings-sharing-economy-hotels.a
sp

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