How AirBnb can adopt in Country such as India
AirBnb was formed by a pair of entrepreneur’s in a loft in San Francisco in the year 2008 and it entered Indian market in 2012. Following rapid adoption strategies by visionaries, it has successfully grown into the mainstream market with a current estimated value of over $25–30bn USD.
AirBnb is the largest online marketplace to list and rent holiday homes and rooms around the world. It is one of the pioneers in bringing attention to the whole world with the concepts of collaborative consumption and sharing economy.
What makes some societies or individuals more willing to adopt disruptive technologies than others, and how did this understanding help AirBnb’s rapid growth?
Before Starting lets have some background…
The process involved in society’s adoption of disruptive technologies was formalized from an academic standpoint by Everett Rogers in 1962. He studied the willingness of farmers in Lowa in adopting new seed technologies for their crops. He classified the farmers (and thus society) into 5 categories:
· Innovators (2.5% of the population)
· Early adopters (13.5%)
· Early Majority (34%)
· Late Majority (34%)
· Laggards (16%)
The innovators were more prosperous, better educated and more willing to take risks. These attributes decline steadily until you reach their antithesis with the laggards.
The transition from early to mainstream market can be difficult. Mainstream consumers respond to different triggers and motivations than early adopters and thus marketing efforts need to be adjusted accordingly. For this reason, the gap between early and mainstream market and their technological adoption preferences has been colloquially termed as ‘The Chasm’.
Many start-ups fail after highly promising starts due to their inability to complete these steps of the chasm. As highlighted by the yellow ‘S’ curve below, crossing the chasm is fundamental to any start up’s growth in the long term.
Who were the Bleeding edge Users for AirBnb in India?
There are two aspects of adoption for AirBnb,
1. The people who are actually listing their properties on their platform.
2. The people who use the platform to live in those properties.
There initial focus of AirBnb was on surge in accommodation demand because of various conferences or events in the city and through this they were able to get their first few hundred early adopters. On the supply side the early adopters are the people who have some extra real estate like an extra room or even a house which they are not using but are in need for money. On the demand side are the people who couldn’t get a hotel room because of unavailability or high prices. It was more of an impulsive purchase because of the need of the moment.
How AirBnb adopted itself in Indian market as compared to western market?
AirBnb has about 2.3 million worldwide listings at present on its home-sharing platform compared to just 3,000 in 2009. That shows a compound annual growth rate of 153 percent. U.S. bookings grew 45 percent in the first quarter of 2016 compared to 2015, and the use of the company’s mobile app doubled between 2014 and 2016.
A study from Pew Research Center shows that only 11% of adults have used home sharing services like AirBnb.
India operations were launched in 2012. Currently they have 18,000 properties in about 100 different cities. In the beginning they had around 1400 properties in 6 cities. It shows a CAGR of around 90%. There has been more than 180 per cent (year-on-year) growth in inbound and outbound travel using the platform.
Why AirBnB is still facing challenges in Indian Market?
I feel that the major challenges faced by AirBnb in Indian market are multi fold:
1. In India while living in a stranger’s house people usually lack the element of trust and security also many families feel uncomfortable in sharing their personal space with guests.
2. India is a diverse country having various cultures, religions and languages, with these diversities it becomes more difficult for a sharing economy based company such as AirBnb to succeed.
3. Hotels have a very low occupancy rate in many cities and startups such as Oyo, Stayuncle, And satyzilla are also snatching away potential customers who are looking for cheap rental accommodation.
In a country such as India which still faces a major population issue, so many families live in single bedroom house, due to this limitation having an extra room or extra house to list on AirBnb is of course limited.
Factors which affected rate of AirBnb adoption
AirBnb faced various challenges related to their adoption (“crossing the chasm”). They tackled the problem by focusing on local issues and solutions and then using the local hub to expand. They offered a value proposition of providing a homely stay and an authentic experience to its leisurely travelers.
They introduced following features to tackle adoption issues:
1. Removing the risk from hosting a stranger by offering insurance of up to $1m in compensation to any damaged property as a result of AirBnb guests. There is also a 24hr call center to deal with such issues.
2. They created a strong referrals and word of mouth program through face to face marketing thereby creating a social standing for the brand in the community. Sharing economy runs on trust and both the host and the guest should be able to trust each other in order to stay together. AirBnb as a platform has been able to build that trust.
3. To provide a complete package to its customers, AirBnb has started using professional photographers to click photos of the listed properties. Through this they create a professionally organized marketing package to show the real value and the authentic experience to their customers.
Using sociological and Demographic understanding to ‘cross the chasm’…
Indians often stay with family or friends, so people are more open to the idea of sharing than may be assumed.
Their biggest challenge is to get people to understand what AirBnb is about. However, the best part is that once they get started, there is great word-of-mouth — you take a trip and tell friends.
And there’s been no issue with getting the word out about the company.
“More Indians use AirBnb to book accommodation than any other nationality in World wide when they go out for trip in other country — As per AirBnb . And they, along with other Asians, are increasingly using the website to book a room in places around the globe.” — Mohit Shrivastava, Managing Director at AirBnb
Another target group of users are those who mostly visit tourist locations near cities such as Mumbai, Bangalore and Delhi. They prefer group travel and home stays in these situations which constitutes a big percentage of travel plans in India. Providing them with better facilities like fully equipped homes with kitchens, refrigerators on rent will surely increase the user base of AirBnb in India.
Apart from all these a large chunk of population travels with in the country for their official purpose, most of them stay for a small period and they want to visit some good places nearby to have a pleasant stay.
The typical mainstream consumer is:
· Risk averse ( those who visit outside India)
· Reputation biased (Local Communities to share their AirBnb stay within the communities and do the WOM)
· Price sensitive ( those who visit city to city for their official work or youth who want to discover new place)
· Heavily influence by word of mouth recommendations and social connections
· After a ‘whole product’ solution
· Not patient enough to accept unfinished products
Therefore, AirBnb should approach entering the mainstream market with a different strategy, one that appeals to the mainstream consumer.
It appeals to these consumers by:
Reducing the risk: Following a few isolated incidents, AirBnb providers became increasingly concerned about the risk of damage to their properties. This had the potential to stunt growth and turn away mainstream property providers. In May 2012, AirBnb emphatically solved this issue by offering up to $1m in compensation to any damaged property as a result of AirBnb guests. It offered this in conjunction with a new 24hr call center to deal with such issues.
Building the word of mouth model: By hosting events and information seminars AirBnb can grow its social standing in the community. It will also increase the brand’s reputation by creating local communities and allowing the strong word of mouth growth that has made the company so successful.
Providing the ‘whole product: Initially AirBnb’s growth in India was very slow. The founders of the company flew to the city in june 2016 and tried to tie-up with some reputed companies such as times group and thomas cook to solve the problem. This is the type of ‘whole product’ thinking that mainstream consumers are after. AirBnb providers can now offer rooms that are 30–80% cheaper than the competition with a professionally organized marketing package.
As demonstrated by these examples AirBnb had a very good understanding of what makes their mainstream consumers think. The company systematically went about gaining the trust and credibility of Indian consumers. These happy consumers then became advocates for the company helping it to become a household name all over the world.
In order to achieve long term growth and success, companies need to understand how to appeal to their mainstream consumers in India. AirBnb’s success was driven by an in-depth knowledge of their target mainstream audience. They understood the concerns of their consumer, how to counteract these apprehensions, while building brand awareness and ultimately trust.