Marketing Strategy at Ikea Essay

SynopsisThe case study is to discuss or so the varied strategy utilise by IKEA to approach their clients. It is also talking about(predicate) the localization ideal from a global political party based on the cultural demand from various countries worldwide. IKEA is also famous for their less dearly-won article of furniture, has some former(a) strategies to reach the customers based on their require. 4 Ps concept plays a rattling important role on IKEAs success withal the way of obtain which is differ from each(prenominal) separate their competitor.Company Background1920sAt the age of five Ingvar Kamprad starts interchange matches to his next door neighbors and by the clock time he is seven, he starts merchandising to further neighborhood, using his bicycle. He buy matches in longsighted metrical composition cheap and re-sell them individu each(prenominal)y at a very showtime bell but still make a reasoned profit. From selling matches he expands to selling f spu rn seeds, greeting cards, Christmas tree decorations, and later pencils and b tout ensemble-point pens.1940s-1950sThe roots of a furniture dealer, Ingvar Kamprad is entrepreneurial in exploitation IKEA into a furniture retailer. This plosive speech sound sees the exploration of furniture design, self assembly, advertising, the use of a catalogue and a showroom to reach the many people.1960s-1970sThe IKEA concept starts to chance on place. New IKEA stores overt and hero products atomic number 18 developed overmuch(prenominal) as PONG, KLIPPAN and truncheon bookcase. It is a time where concept carry offs shape and is documented in Ingvar Kamprads The Testament of a Furniture Dealer.1980sIKEA expands dramatically into new markets such as USA, Italy, France and the UK. More IKEA classics arrive such as LACK and MOMENT. IKEA begins to takethe form of todays new-fashioned IKEA.1990sIKEA grows to a greater extent by introducing Childrens IKEA and the focus is on root word furnish ing solutions to assemble the unavoid satisfactorynesss of families with children. The IKEA meeting is formed and responsibility for people and the environment is seen as a necessary for doing honorable cable.2000sIKEA expands into new markets such as Japan and Russia. Everything for the bedroom and kitchen is explored and presented in coordinated furnishing solutions. This period also sees the successes of several partnerships regarding social and environmental projects.IKEAs Vision and Business IdeaIKEAs pile is to create a better effortless life for the many people. Their business idea supports this vision by suffering a wide lam of well-designed, federal agencyal home furnishing products at outlays so low that as many people as possible leave alone be able to afford them.IKEAs heraldic bearing People suck very thin wallet. We should take c atomic number 18 of their interests.IKEAs Product RangeIngvar KampradThe IKEA product range focuses on good design and functio n at a low legal injury. It suffers home furnishing solutions for every room in the home. It has something for the romantic at heart, the minimalist and everyone in between. It is coordinated so that no matter which style you prefer our designers and product developers work hard to take c ar that our products meet your day-to-day needs and eliminates the unnecessary.IKEAs Low PricesLow bells are the cornerstone of the IKEA vision and our business idea. The basic thinking behind all IKEA products is that low charges make well-designed, functional home furnishings available to everyone. We are unendingly trying to do everything a little better, a little simpler, more efficiently and always equal-effectively.A better everyday lifeWe have taken the straightforward approach to the furniture business, by starting with maturation furniture with the price tag in mind. This is the IKEA way, to maximize the use of rough materials in order to fulfill peoples needs and preferences by o ffering quality products at an affordable price.Social & Environmental stateIn 2004, IKEA published their first Social and Environmental Responsibility report. IKEA believes good society is good for IKEA with the passionate to create successful business in a responsible manner. Thats the reason sustainability is very important for IKEAs strategical direction. Prioritizing sustainability drives further innovation and development. Managing resources with new ways to do things and developing skill set and expertise are very important in driving IKEAs business.As a company with low price product must be a low cost company which include earths limited resources usage in a good manner. IKEA has make tremendous and valuable contribution across the world. Forests of Siberia, cotton wool fields of India, homes in New York, Lisbon and Shanghai are good examples of sustainability.IKEA blue bags are bigger, sturdy and sustainable. Out with plastic bags In with reclaimable bagsSWOT analysisIK EAs objectives are easily achieved via their SWOT analysis and it is astrategic planning tool too. It helps the business to focus on differentiate issues. SWOT is the first step of planning based on the Strengths, Weaknesses, Opportunities and Threats have-to doe with in a business.Strengths and weaknesses are internal aspects and it is within the direct of the business. They whitethorn refer to aspects of market, finance, manufacturing or organization. Opportunities and threats are external factors and they are outside 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 especial(a)ist selling expertise or its location. IKEAs carriages includea.Low cost structureAt any economic situation, IKEA able to maintain the profit margin delinquent to their affordable products. IKEA buy the products in bulk from suppliers with a lower price and get their customers to assemble the product by themselves, which gives customer a lower price product. Their long term partnership with their suppliers also ensures they have main course to high 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 unique(p) strength of IKEA equal to their opposite competitors. IKEA use renewable, reusable and recycled materials as much as possible. sample, IKEAs catalogues are printed in chlorine-free paper and contain at least 10% to 15% post consumer waste. All of their products come in cardboard, compact packaging for easy 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 enviro nmentally focused business get willing result in good returns even in a price sensitive market.Some of the opportunities that IKEA takes advantage of through its sustainability agenda are a.IKEA stick out further invest on the go green causa and IKEAs customers desire to have less of an impact on the environment. This concept is also denoting the demand for cheaper and greener products.b.Sustainability can 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 atomic number 6 footprint by packaging in less material. .Weaknesses and threatsWeaknessesIKEA has to ack outrightledge its weaknesses in order to improve and manage them. This can play a line role in helping it to set objectives and develop new strategies. IKEAs weaknesses may includea.The sizeIKEA is a warehouse style copping bosom. Because of their huge size, there are not enough people in a littleer region to maintai n a store at that size. Also, IKEA find it difficult to penetrate a small market because they offer only home furnishing. Un analogously company homogeneous Target offer home furnishing besides clothing, 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 cosmos 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) and carries out major TV and radio campaigns to enable the business to communicate with different target audiences.ThreatsIf a company is aware of possible external threats, it can plan to demoralise them. By generating new ideas, IKEA can use a particular strength to defend against threats in the market. Threats to IKEA may stem froma.CompetitionMore competitors are now entering the low price household and furnishings markets. Example Home stock is the 2nd largest retailer in the world and also a huge threat for IKEA. Home Depot also provides hardware, lumber, kitchen appliances, furniture and many other products. IKEA needs to reinforce its unique qualities to compete with this cast 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 m any people as possible can afford them. (IKEA Corporate Website)IKEA has a principle to work in the uniform way in every country. This standardized approach provides operational advantages besides some disadvantages due to the different markets. Based on the marketing desegregate which starts with product strategy, product covers more than the physical goods that a company wants to sell. It is the goods & assistance combination that a company offers to the target market.Thus, IKEA offers a whole range of product with the pricing 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 competing store. The basic aim of IKEA is to kip down high value at a low price. IKEA has been cutting price in most of the countries.IKEA is also source its products from various companies all over the world rather than a small number of suppliers like many of the retailers do. IKEA has 1,300 suppliers from 53 countries, who can supply products as per local bask based on their needs.Most of the IKEA stores are placed out of city centre, out of town location due to a lower territory cost and traffic access. Exceptional for UK stores (Coventry 2007 & Southampton 2009) set in city centre as a response to UK government restrictions blocking retail brass instrument outside city centers. It is a seven floors store with a different flow par to other IKEA stores. Normally the stores will be 2 floors with a car parking approachability and also comes with restaurants. The restaurants sell foods consort to the local taste and also it opens daily before the rest of the stores. Example in Canada, breakfast includes eggs, sausage, and hash browns and various add-ons like bacon and pancakes at surplus costs. In the United States, the local variation serves scrambled eggs, bacon, country potatoes and quality of Swedish pancakes or French toast s ticks.The selling environment and serving 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 dig out 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 surplus costs. IKEA also should look at an working out to the West Coast, particularly California. Also, expansion into regions with enough people to sustain a store of their size. 2.Developing a strategic focus going online is not only reaching potential customers in less populated area, it is also will help customers to catch up with competitors. Besides that, younger 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 radical since the outlet is huge and it will take time to shop. Also the location is far from city. Its a benevolent of short trip instead of shop-visit which consume a lot of time and they prefer to go in a group (friends or family).ii.Availability of other services and amenities Restaurants (food and beverages) and baby-sitting services within the stores which gives a greater genial to all customer. Parking is also not an issue since most of the stores located far from the city.iii.Information availability online info is more useful. Customers cansurf online catalogues in various languages for inspiration and planning purpose before go to the store. This will also help them to catch up with their competitors. Younger generation will be als o attracted with this online concept because they are the IT savvy generation compare to the older generation who is still a little doubt about buying online. iv.Access Operating hours are good. Long hours on weekend very helpful for those customers work odd hours and also busy on weekdays.v.Speed of rescue no waiting time as they go and pick 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 bored when they are required to follow one special route instead go direct to the product 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 r oute 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 sufferd with tools, it is fine. entirely for the normal men or even women, assembling some pieces tycoon be slightly difficult. Also it can be ended up doing something wrong.ConclusionIn 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 overall identity of IKEA is based in Smland, historical and thrift are strong characteristics of the region and its people. All IKEA policies live up to this standard from the products that they sell. present 1 Facts & Figures FY2011References1.The Testament of a Furniture Dealer A scant(p) 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. account statement IKEA http//www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/history/index.html7.Introduction SWOT analysis and sustainable business planning IKEA case studies and information The Times 100 http//businesscasestudies.co.uk/ikea/swot-analysis-and-sustainable-business-planning/introduction.html8.IKEA International A.S. History & Company Profilehttp//www.fundingunivers e.com/company-histories/ikea-international-a-s-history/9.Kerry Capell, IKEA How the Sweedish Retailer Became a Global 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