Sharing Economy Marketing: Temporarily Accessed Versus Owned

Introduction

With the advent of the Sharing economy, the traditional values and definition of marketing have changed drastically over the past six years. Marketing has traditionally been defined as “The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” This definition of marketing is six years old, and since it was devised the “Sharing Economy” has risen, challenging the three fundamental foundations of marketing. The sharing economy is a way that goods are distributed between private individuals, for a small fee or for free, through the Internet. The sharing economy has important implications for marketing because people in the United States are reducing the number of items and services they are using, and are instead taking advantage of the sharing economy, which has entered many niches.

The emergence of the Sharing Economy

The sharing economy emerged with a new way to use data to provide services to people the moment they need them. Uber and Airbnb are some of the prime examples of the sharing economy and how it has reshaped marketing. Uber allows independent drivers to work through the company to provide others with rides in their personal vehicles. This has changed the taxi industry and the way taxis market, as they now have a major competitor whereas before they only had other taxi services to compete with. Airbnb is a site where individuals can book private residences across the globe instead of paying the high hotel rates when they travel. It enables these homeowners to make some extra cash while simultaneously allowing someone else to get the experience of the country they live in.

One of the differences between marketing and the sharing economy is that with the sharing economy the offerings are temporarily accessed versus owned. This is one of the major differences that has altered the concept of marketing. With marketing, companies are attempting to show customers the value their product will provide them so they will purchase it. However, with the sharing economy, individuals do not own anything, they are renting it out essentially with services like Uber and Airbnb. Value is transferred from one entity to another with the sharing economy since one side is getting paid for the services and the other side receives services. A platform, such as the Internet, is often used with the sharing economy because it facilitates the exchange between providers and creates appropriate matches via this platform. Marketing can use the Internet to advertise services and products but differs because this exchange is not happening like with the sharing economy.

The sharing economy has experienced rapidly accelerated growth in the past few years that has disrupted the regular marketing that companies will utilize to convince buyers to purchase their products. One of the biggest appeals of the sharing economy versus purchasing traditional products from companies that market is the positive user experience that many people have. Also, utility and trust are other major facets of consumers' decision to go with the sharing economy versus purchasing a product outright for themselves. Consumers have learned to trust brands like Uber, Lyft, and Airbnb that consistently provide great quality service and meet customer expectations. These brands and others in the sharing economy have developed the trust of consumers, so they continue to use their services.

Each separate practice of the sharing economy is a hybrid of exchange and sharing between individuals that is unlike other aspects of marketing and management that have been seen before. Non-ownership forms of consumption activities have begun to rapidly increase in the market causing a rapid shift in marketing and the way that managers are beginning to think about how to spread the word about their products. Economy practices such as Airbnb have altered the hotel industry, caused hotels to lower their prices to compete, and changed the way that hotels let customers know about their business. Sites such as Expedia enable consumers to bundle hotel and flight deals and save tremendous amounts of money by doing so. This is one way that hotels have attempted to combat the sharing economy by partnering with sites like Expedia as well as local airlines.

When managers are making marketing decisions for their business now, they must always consider the sharing economy. For example, managers who are in the travel industry with hotels would need to consistently check the prices of the Airbnbs around them, as well as the traffic that the Airbnbs get to adjust the prices if need be. If many individuals are staying at an Airbnb and not with a hotel, this could signify that the hotel’s prices are too steep, and they need to lower them. Once they start getting a lot of business again, then they know that their prices are reasonable enough for customers to want to stay at the hotel versus the exchange option. Managers need to consistently be thinking about ways that they can beat the sharing economy and make the best decision for their business.

People own less and are sharing much more now with one another than in prior years, which is the danger of the sharing economy to traditional companies that are selling products. many people don’t want to have a lot of items as they are part of the new minimalist movement that has taken the country by storm. Additionally, even people who don’t make a lot of money can own a lot of items, especially since manufacturing these items has gotten significantly cheaper. The advent of digital and sharing economies has created a system where people don’t need to own a lot of items to get by as they did before. With Uber, Lyft, and other similar companies people don’t even necessarily need to purchase a car, theoretically they could Uber everywhere of take a Lyft to the places they need to go. In fact, many families find it more favorable to just have one car or zero cars because they are reducing the emissions they use.

Not only are people looking to downsize their cars and items in general, but they are no longer getting traditional jobs either. One example of this is WeWork which is a large company that provides co-working spaces in major cities. Entrepreneurs and freelancers can rent a cheap desk space or an entire office without having to pay to rent an entire building or suite. meeting space, internet, and even coffee are often included as perks of renting with WeWork. These entrepreneurs and freelancers no longer need to work for a specific company to get their work done, instead, they can work for themselves and rent office space. This changes the human resources department process of hiring applicants, as they are likely losing out on a lot of qualified applicants who want the benefit of setting their own schedule and pace at work.

Peer-to-peer lending is another prime example of how the sharing economy has taken over the banking industry in a way and allowed people to get much smaller loans. Sites such as Lending club allow people to lend each other money with lower interest rates than if they took out a loan from a bank or with a credit card company. Investors get returns from the loans and those borrowing get more competitive interest rates than if they borrowed from another source. Managers at banks when marketing for loans might want to alter their strategies and provide lower interest rates, particularly when they are comparing the rates of their loans to ones that Lending Club and similar services provide. The bank just wants to ensure that they get paid in a timely manner from the person who is borrowing the money, but if they did smaller loans as Lending Club does, then they could make significantly more money.

All of these services such as peer-to-peer lending and ride-sharing with apps like Uber and Lyft are not possible without big data and algorithms that drive these platforms through the internet. The companies like Uber and Airbnb are not the actual providers, instead, they are the facilitators of exchange between individual service providers and customers. This is one of the largest differences between traditional companies that market and sharing economy. Hence, because of this significant difference, it has changed the way that marketing is done. Many people work as individual contractors under Uber, Lyft, and Airbnb. Not only is it changing marketing and management, but the fabric of human resources and the way people are making money.

Sharing economies are a disruptive form of a business model that has been successful in dozen of niches and industries. These industries that are booming with sharing economies are reliant on the factors of trust and reputation. In this regard, many traditional companies that market is more stable than sharing economy companies because they could be considered more trustworthy. For example, Uber had issues with some of their individual contractor's kidnapping, raping, and murdering some of the people that used the Uber services. This tarnished their reputation and made traditional taxi companies look more appealing to many individuals for a couple of months, at least until the press from the incident had died down. Uber had to release multiple statements clarifying how they vet their drivers and that individuals need not be worried because this is a very rare occurrence.

It is clear through reviewing the available literature that marketing is drastically altered because of the sharing economy. Companies are now having to compete with services where consumers don’t have to purchase a product, instead, they can rent it for a cheap price and not have to own it or keep up with it. This is desirable to many consumers because of the minimalist movement that is ongoing where consumers pride themselves on owning minimal products. An example of this is consumers no longer taking pride in owning 3-4 cars but instead priding themselves on owning just one or even no cars and using services such as Uber or Lyft everywhere. It has made it difficult for regular companies to compete and get consumers to purchase their products. Marketing has changed to show consumers the benefit of purchasing these products outright versus just renting them or hiring a service to do it for them.

Conclusion

Overall, it is evident that through sharing economy services such as Airbnb, Uber, and Lending Tree regular businesses are having to figure out new ways to market their services and convince consumers of their value. Hotel companies in particular have been striving to show consumers the value they will get through staying with them versus renting a house from someone else for a cheaper price. One of the big entities that they often offer, and the market is a nice clean hotel room, complimentary breakfast included with guests' stay, and excellent customer service when they check-in. Many Airbnbs do not offer free breakfast or even have excellent customer service. However, consumers can see this before they even purchase an Airbnb, so they often expect a certain level of customer service from the owners. Peer-to-peer lending is another sharing economy service that has disrupted an entire niche of lenders, including banks. Banks have had to reduce a lot of interest rates to keep up with these peer-to-peer lending services and have had a lot of competition. other industries have had immense competition as well and had to change their marketing strategies as a result.