The 7 P’s marketing mix of home-sharing services: Insights from over 1 million Airbnb reviews
Tuesday, July 28, 2020
The 7 P’s marketing mix framework is a widely used managerial tool that helps businesses identify the principal components of a service product. The 7 P elements include Product, Promotion, Price, Place, Participant, Physical Evidence, and Process.
The 7 P’s framework can assist marketers in making decisions regarding segmentation, positioning, and differentiation. Even for the same type of products with different brands, marketers can still drive higher sales through the improvement of a product’s marketing mix.
The empirical study about 7 P’s of home-sharing services
Building upon the 7 P’s marketing mix framework, I led a research team in a big-data, supervised machine learning analysis of over 1.14 million English-language reviews of 37,092 Airbnb listings in San Francisco (SFO) and New York City (NYC). We aimed to discover meaningful new business intelligence through the analysis of an immense quantity of online review information created by consumers in the cyber marketplace.
The three research questions of the study
1. What does the marketing mix revealed from consumers’ online review data on Airbnb inform us about travelers’ experience of home-sharing products?
2. Do travelers comment on the similar element(s) of the marketing mix for their home-sharing stays with multi-unit and single-unit hosts? In other words, do travelers share similar experiences for their home-sharing stays with multi-unit vs. single-unit hosts through a comparison of the two product types’ marketing mix?
3. Do travelers comment on the similar element(s) of the marketing mix for their home-sharing stays with superhosts and ordinary hosts? In other words, do travelers share similar experiences for their home-sharing stays with superhosts vs. ordinary hosts through a comparison of the two product types’ marketing mix?
The data and the analysis
We downloaded the data from InsideAirbnb.com, an independent, nonprofit website that provides publicly accessible data collected from Airbnb.com. We picked SFO for its being a gateway city in the West Coast and Airbnb’s birthplace and NYC for its being a gateway city in the East Coast and a top tourist destination. We downloaded 233,070 reviews of 4,381 Airbnb listings in SFO and 1,047,337 reviews of 32,985 Airbnb listings in NYC in September/October 2018.
We then cleaned the dataset by removing all non-English reviews, retrieving 94.3% (219,833) and 88.6% (928,229) of the reviews that were written in English from the SFO and NYC markets, respectively. We used a sentence as a unit for data annotation under the assumption that people usually express one idea in one sentence.
Through a series of preliminary analyses, we concluded that most sentences expressed one of the elements in our coding schema, with about 3% of the sentences mentioned two or more of the elements. In the cases when a sentence can be labeled with more than one element, the most probable element was used in our analysis.
7 P’s marketing mix as the coding schema
We trained the model to annotate the sentences using the following coding schema before we applied the validated algorithms to analyze the whole dataset.
- Service Product (PT): words that describe the overall impression of the intangible experiential product, e.g., “A great experience.”
- Price (PR): words that indicate the price or value of the experiential product, e.g., “Rather than renting two hotel rooms, we split this 2-bed Airbnb and probably saved $300 per night.”
- Place (PL): words referring to the location of a listing, e.g., “Short walk to the Bart station.”
- Promotion (PO): words comparing what the traveler(s) observed against a listing’s photos or descriptions on the website, e.g., “The place was exactly as advertised!”
- Participant (PP): words mentioning the host(s) or people/pets in the listing, e.g., “The hosts were also extremely friendly and accommodating.”
- Physical Evidence (PE): words that describe the tangible aspect of the experiential product, such as the physical attributes and the facility of a listing, e.g., “Details like flowers, wine openers, Brita water pitcher, shampoo, added to our relaxation.”
- Service Process (PS): words that emphasize the process where the traveler(s) received a service, with or without the interactions with the host, e.g., “[host name] left detailed instructions for us upon our arrival.”
- Traveler (TR): words that are irrelevant to the experiential product (Airbnb) itself, e.g., “We had ice cream for dessert two nights in a row (The Best!) and walked home with our cones feeling very happy indeed.”
Travelers in both markets mentioned PT (about 26%) and PE (about 25%) most often, followed by PL (at about 19%) and PP (at about 15%). PS (less than 10%) was usually about the check-in process and how the hosts handled customer service issues. Travelers seldom talked about PO (about 2%) and PR (about 1%).
Research question two is to compare travelers’ experiences between multi-unit and single-unit hosts. We found almost no observable differences except that travelers would mention the host names more often for single-unit hosts. Such a finding suggests that multi-unit hosts are as competitive as single-unit hosts. Hoteliers should pay close attention to multi-unit hosts in the market because they are the micro-entrepreneurs and professional operators of home-sharing services.
Research question three is about the differences between superhosts and ordinary hosts. On average, listings managed by superhosts recorded more reviewers than the ones managed by ordinary hosts, a good indicator that travelers favor listings managed by superhosts. Travelers staying in the listings managed by superhosts commented more on their wonderful experience (PT) and the hosts (PP).
In contrast, those staying in the listings managed by ordinary hosts commented more on the physical evidence (PE) and the location (PL). Possibly, when travelers do not have as much to talk about PT and PP for ordinary hosts as they would for superhosts, they comment more on PE and PL instead.
COVID-19’s possible impacts on the research findings
COVID-19 is expected to change how people travel, and it will take a long time before we see a real recovery. Now more than ever, hygiene and cleanliness have become the top priority among consumers, hotels, and tourism companies. Travelers’ emphasis on the 7 P elements could have shifted in the post-COVID-19 era, such as about the upkeep and cleanliness of a place (PE) and avoiding direct human contact (PP & PS).
Besides this study’s theoretical and methodological contributions, the results provide valuable insights for the hosts who want to compete with superhosts. Meanwhile, hoteliers may refer to our findings as they seek improvement of their existing products or want to differentiate their products from home-sharing services. Lastly, we recommend the policymakers to consider restricting the professional operators or multi-unit hosts in the short-term residential rental market.
What do you think about the research findings? To what extent does the 7 P’s marketing mix reflect travelers’ experiences of home-sharing services?
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