Marketing Strategy at Ikea Essay

SynopsisThe cause study is to converse ab extinct the antithetical strategy utilize by IKEA to approach their customers. It is to a fault talk intimately the localization idea from a global tactics along ground on the cultural demand from distinguishable countries world full(a). IKEA is besides famous for their little expensive piece of piece of furniture, has some other(a)wise strategies to reach the customers based on their havefully. 4 Ps conception plays a actu on the wholey(prenominal) important role on IKEAs success besides the charge of stool which is differ from all other their competitor. gild Background1920sAt the age of five Ingvar Kamprad starts change matches to his fol griming door neighbors and by the quantify he is s plane, he starts selling to moreover neighborhood, utilise his bicycle. He buy matches in colossal numbers sordid and re-sell them individually at a very small worth but lock trace a advanced pro turn back. From s elling matches he flip whizs wigs to selling f upseter seeds, greeting cards, Christmas tree decorations, and afterward pencils and ball-point pens.1940s-1950sThe roots of a furniture dealer, Ingvar Kamprad is entrepreneurial in developing IKEA into a furniture retailer. This period sees the exploration of furniture design, self assembly, advertising, the employment of a catalogue and a showroom to reach the rough great deal.1960s-1970sThe IKEA concept starts to take locate. New IKEA interposes opened and attack aircraft products ar developed such(prenominal) as PONG, KLIPPAN and BILLY bookcase. It is a eon where concept takes shape and is documented in Ingvar Kamprads The volition of a article of furniture Dealer.1980sIKEA expands dramatically into impertinently marketplaces such as USA, Italy, France and the UK. to a greater extent IKEA classics arrive such as LACK and MOMENT. IKEA begins to takethe constellation of todays modern IKEA.mid-ninetiesIKEA grows mor e than by introducing Childrens IKEA and the decoct is on family unit furnishing solutions to meet the involve of families with children. The IKEA Group is formed and responsibility for great deal and the environment is seen as a prerequi point for doing right-hand(a) line of descent.2000sIKEA expands into new markets such as Japan and Russia. Everything for the bedroom and kitchen is explored and presented in interconnected furnishing solutions. This period to a fault sees the successes of several partnerships regarding companionable and environmental projects.IKEAs Vision and pipeline IdeaIKEAs imagination is to fix a cave in bothday manners for the umteen people. Their barter idea supports this trance by swirling a wide range of well-designed, easy home furnishing products at equipment casualtys so wiped out(p) that as many people as manageable leave be able to al kickoff them.IKEAs mission People have very thin wallet. We should take c be of their inter ests.IKEAs Product RangeIngvar KampradThe IKEA product range centeres on exhaustively design and function at a paltry price. It offers home furnishing solutions for every room in the home. It has something for the romantic at heart, the minimalist and everyone in in the midst of. It is coordinated so that no matter which style you select our designers and product developers survive hard to hold that our products meet your day-to-day needs and eliminates the unnecessary.IKEAs Low PricesLow prices argon the tush of the IKEA vision and our business idea. The basic thought behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone. We be constantly trying to do everything a little better, a little simpler, more efficiently and always cost-effectively.A better everyday lifeWe have taken the straightforward approach to the furniture business, by starting with developing furniture with the price tag in mind. This is the IKEA way, to maximize the social function of raw materials in lay to live up to peoples needs and likeences by pass quality products at an low-cost price.Social & environmental ResponsibilityIn 2004, IKEA published their commencement exercise Social and environmental Responsibility report. IKEA thinks good society is good for IKEA with the passionate to get to successful business in a responsible manner. Thats the reason haltability is very important for IKEAs strategical direction. Prioritizing sustainability drives further innovation and development. Managing resources with new ways to do things and developing dexterity set and expertise ar very important in driving IKEAs business.As a go with with low price product must be a low cost company which allow in earths special(a) resources usage in a good manner. IKEA has made tremendous and valuable voice across the world. Forests of Siberia, cotton fields of India, homes in New York, Lisbon and Shanghai are good examples of sustainability.IKEA blue bags are loose, tough and sustainable. Out with plastic bags In with reusable bagsSWOT analysisIKEAs objectives are advantageously achieved via their SWOT analysis and it is astrategic planning similarlyl too. It assistants the business to focus on key issues. SWOT is the first step of planning based on the Strengths, Weaknesses, Opportunities and Threats involved in a business.Strengths and weaknesses are internal aspects and it is within the control of the business. They may refer to aspects of merchandise, finance, manufacturing or organization. Opportunities and threats are external factors and they are right(prenominal) the control of the business. These may include the environment, the economic situation, social changes or technological advances, such as the internet.StrengthsStrengths could include a companys specializer marketing expertise or its location. IKEAs strengths includea.Low cost mental synthesisAt any economic situation, IK EA able to confirm the profit margin due to their low-cost products. IKEA buy the products in bulk from suppliers with a degrade price and get their customers to pile up the product by themselves, which gives customer a lower price product. Their long shape partnership with their suppliers to a fault ensures they have adit to broad(prenominal) quality material at reasonable prices. Their furniture is stylish, modern and functional. The companys low cost structure is able to meet the customers need at any point of economic condition.b.SustainabilityIKEAs cost effective and Social & Environmental Responsibility concept is a alone(predicate) strength of IKEA analyse to their other competitors. IKEA mapping renewable, reusable and recycled materials as much as possible. Example, IKEAs catalogues are headinged in chlorine-free theme and contain at least 10% to 15% post consumer waste. All of their products come in cardboard, compact packaging for faint use and recyclability . These make IKEAoutstanding from their competitors.OpportunitiesA business uses its strengths to take advantage of the opportunities that arise. IKEA believes that its environmentally foc utilise business conduct willing result in good returns even in a price in the raw market.Some of the opportunities that IKEA takes advantage of by means of its sustainability order of business are a.IKEA great deal further consecrate on the go green causal agency and IKEAs customers desire to have less(prenominal) of an impact on the environment. This concept is in addition de noning the demand for cheaper and greener products.b.Sustainability good deal be further maintained by offer tips and ideas online for customers to create a more sustainable home in any part of the world. It can also help to reduce coulomb footprint by packaging in less material. .Weaknesses and threatsWeaknessesIKEA has to acknowledge its weaknesses in order to improve and manage them. This can play a key role in helping it to set objectives and develop new strategies. IKEAs weaknesses may includea.The sizingIKEA is a warehouse style shopping core group. Because of their vast size, there are non enough people in a smaller region to maintain a interpose at that size. as well, IKEA find it thorny to penetrate a small market because they offer just now home furnishing. tall(a) company uniform Target offer home furnishing besides c stilthing, groceries and also technology.b.The need for low cost products.This needs to be balanced against producing good quality products too. They are also need to differentiate itself and its products from other competitors. IKEA believes there is no compromise between being able to offer good quality products and low prices.c.CommunicationCommunication or updates on their environmental activities with its consumers and stakeholders must be consistent and up to date. IKEA produces publications in print and online (for example People and the Environment) a nd carries out major TV and radio campaigns to modify the business to communicate with different target audiences.ThreatsIf a company is aware of possible external threats, it can plan to overturn them. By generating new ideas, IKEA can use a particular strength to argue against threats in the market. Threats to IKEA may stem froma.CompetitionMore competitors are now entering the low price household and furnishings markets. Example firm transshipment center is the 2nd largest retailer in the world and also a vast threat for IKEA. Home Depot also provides hardware, lumber, kitchen appliances, furniture and many other products. IKEA needs to re selective informationrce its unique qualities to compete with this soma of giants.Question 1 What are some of the things IKEA is doing right to reach consumers in different markets? What else could it be doing?IKEA Group operating 301 stores in 41 countries worldwide (IKEA statistics 2012) including franchisees. IKEAs marketing strategy starts with their business concept as stated in IKEAs vision statement The IKEA vision is to create a better everyday life for the many people. We make this possible byoffering a wide range of well-designed, functional home furnishing product at prices so low that as many people as possible can afford them. (IKEA Corporate Website)IKEA has a principle to work in the same way in every solid ground. This standardized approach provides usable advantages besides some disadvantages due to the different markets. Based on the marketing mixing which starts with product strategy, product covers more than the material goods that a company wants to sell. It is the goods & service junto that a company offers to the target market.Thus, IKEA offers a whole range of product with the determine which supposed to be the same (95%) with very small adaptations for all countries and in all stores worldwide. The pricing of products are comparatively low to what the consumers can find in a competin g store. The basic aim of IKEA is to deliver high value at a low price. IKEA has been cutting price in intimately of the countries.IKEA is also source its products from various companies all over the world alternatively than a small number of suppliers kindred many of the retailers do. IKEA has 1,300 suppliers from 53 countries, who can add products as per local taste based on their needs.Most of the IKEA stores are lay out of city centre, out of townspeople location due to a lower land cost and traffic access. colossal for UK stores (Coventry 2007 & Southampton 2009) located in city centre as a response to UK judicature restrictions blocking retail establishment outside city centers. It is a seven floors store with a different flow compare to other IKEA stores. Normally the stores will be 2 floors with a car park approachability and also comes with restaurants. The restaurants sell foods check to the local taste and also it opens effortless onward the rest of the stor es. Example in Canada, breakfast includes eggs, sausage, and hash browns and various add-ons like bacon and pancakes at additional costs. In the join States, the local variation serves scrambled eggs, bacon, country potatoes and choice of Swedish pancakes or French toast sticks.The selling environment and service of IKEA stores are also adjusted to fit with local taste. Example like DIY concept is fully accepted by Sweden and UK where the consumers believe thats the price they pay for the low prices products. Whereby in China, DIY concept is new to them because of the cheap labor and the prices are also not perceived as generally low.Q1.1What else could it be doing?1.Developing competitive advantage because IKEA has a low cost structure, they should be able to expand online market easily without incurring too much additional costs. IKEA also should take care at an expansion to the West Coast, oddly California. Also, expansion into regions with enough people to sustain a store of their size. 2.Developing a strategic focus handout online is not only reaching potential customers in less populated area, it is also will help customers to catch up with competitors. Besides that, jr. people (Gen Y) willing to buy online more compare to the older people.Question 2 IKEA has essentially changed the way people shop for furniture. Discuss the pros and cons of this strategy.Factors that encourage customers choice of visit to IKEA Prosi.Social motives for the customer the shoppers go in group since the outlet is huge and it will take judgment of conviction to shop. Also the location is far from city. Its a kind of short trip kinda of shop-visit which consume a lot of time and they prefer to go in a group (friends or family).ii.Availability of other serve and amenities Restaurants (food and beverages) and baby-sitting services within the stores which gives a greater convenient to all customer. put is also not an issue since most of the stores located far from t he city.iii. datarmation availability online info is more useful. Customers cansurf online catalogues in various languages for inspiration and planning mean before go to the store. This will also help them to catch up with their competitors. jr. generation will be also attracted with this online concept because they are the IT savvy generation compare to the older generation who is still a little doubt about purchase online. iv.Access Operating hours are good. great hours on weekend very facilitative for those customers work odd hours and also alert on weekdays.v.Speed of delivery no time lag time as they go and pickaxe up their products.Factors that discourage customers choice of visit to IKEA Consi.Design the color and bulbs used make the environment dull. Less store assistants and the routes are very long also make customers not really prefer to shop in IKEA. Customers feel world-weary when they are required to follow one special route instead go direct to the produc t that they want to purchase.ii.Product availability difficult to find, stored somewhere else, arrange in an illogical order. Also, ONLY furniture available in IKEA unlikely Home Depot provides all kind of products / items beside furniture.iii.Amount of shopping time it is time consuming. The route makes them to go through all products and to get the product seen before must go a big turn again. Also, customers ended up buying more than planned as going thru all the display products.iv.Assemble yourself most of the IKEA products are need to be assembled by customers themselves. If youre a handyman, or someone see with tools, it is fine. But for the normal men or even women, assembling some pieces tycoon be slightly difficult. Also it can be ended up doing something wrong. purposeIn conclusion, IKEA is a good place to shop furniture with a lot of different designs. Less expensive furniture made IKEA grow consistently around the world. IKEA has their own way of sustaining their business for decades. The boilersuit identity of IKEA is based in Smland, historical and thrift are grueling characteristics of the region and its people. All IKEA policies live up to this standard from the products that they sell.Exhibit 1 Facts & Figures FY2011References1.The Testament of a Furniture Dealer A Little IKEA Dictionary by Ingvar Kamprad (founder). published by Inter IKEA Systems B.V. 20072.Standardized Marketing Strategies in Retailing? IKEAs marketing Strategies in Sweden, the UK and China by Steve Burt, University of Stirling, 2008.3.IKEA Facts and Figures -2011 http//www.ikea.com/ms/en_AU/pdf/yearly_summary/Welcome_inside_2011.pdf4.Student Info IKEA http//www.ikea.com/ms/en_GB/about_ikea/press_room/student_info.html5.The IKEA Experience A case study on how different factors in retail environment affect customer experience by Rebecka Isaksson & Mirela Suljanovic.6.History IKEA http//www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/ record/index.html7.Introductio n SWOT analysis and sustainable business planning IKEA case studies and information The generation 100 http//businesscasestudies.co.uk/ikea/swot-analysis-and-sustainable-business-planning/introduction.html8.IKEA International A.S. History & Company Profilehttp//www.fundinguniverse.com/company-histories/ikea-international-a-s-history/9.Kerry Capell, IKEA How the Sweedish Retailer Became a planetary Cult Brand, BusinessWeek, November 14, 200510.IKEA group corporate site n.d., About the IKEA Group. Cited from (08.05.2009) http//193.108.42.168/?ID=25