A Case Study on A Case Study on IKEAIKEA

Presented by: Presented by:

Moon Jerome B. KwongMoon Jerome B. Kwong

Point of ViewPoint of View

Understanding the scope and the Understanding the scope and the structure of the entire market is structure of the entire market is necessary to develop strategy and necessary to develop strategy and anticipate market changes and anticipate market changes and competitive threats.competitive threats.

Statement of the ProblemStatement of the Problem

How could IKEA sustain and build How could IKEA sustain and build competitive advantage to improve is competitive advantage to improve is profit margin and to expand its marketing profit margin and to expand its marketing coverage.coverage.

ObjectivesObjectives

Identify the proactive market-driven Identify the proactive market-driven strategy of IKEA to deliver the superior strategy of IKEA to deliver the superior value to existing and new customer.value to existing and new customer.

Analyze the trend of the market to solicit Analyze the trend of the market to solicit fact’s and vital information that could be fact’s and vital information that could be use in designing and developing use in designing and developing marketing dtrategies.marketing dtrategies.

Areas of ConsiderationAreas of ConsiderationMarketing MixMarketing Mix Product – Living Room (Sofa-Karlstad, Kivik, Product – Living Room (Sofa-Karlstad, Kivik,

Arlid)Arlid) - Dining Room (Agne, Bernard)- Dining Room (Agne, Bernard) - Etc.- Etc.

Price – the retailer aims to lower prices across Price – the retailer aims to lower prices across its entire offering by an average of 2% and 3% its entire offering by an average of 2% and 3% each year.each year.

McCarlin a manager from N.Y. said “we McCarlin a manager from N.Y. said “we look for competitions take their price, and then look for competitions take their price, and then slash it in half”.slash it in half”.

Place – a wide structural form of store Place – a wide structural form of store which size a 5 football field. With which size a 5 football field. With attractive colors.attractive colors.

it is designed also in circle it is designed also in circle thus, customer can see everything while thus, customer can see everything while walking in one direction.walking in one direction.

Restaurant is available inside Restaurant is available inside the store.the store.

Promotion Promotion Gift certificates to the first in line during Gift certificates to the first in line during

opening of the store.opening of the store. Ambassador of Kul (which means fun). Ambassador of Kul (which means fun).

The five winners wrote an essay on why The five winners wrote an essay on why they deserved $ 2,000.00 in vouchers.they deserved $ 2,000.00 in vouchers.

HistoryHistory IKEAIKEA

  ((IIngvar ngvar KKamprad amprad EElmtaryd lmtaryd AAgunnaryd) gunnaryd) The company started 1943, at age 17 he The company started 1943, at age 17 he

sells pens, Christmas cards and seeds.sells pens, Christmas cards and seeds. “ “ A better life for many”A better life for many” ““divide your life in to 10 mins. units of divide your life in to 10 mins. units of

sacrifice as few as possible in sacrifice as few as possible in meaningless activity”meaningless activity”

““wasting resources is a mortal sin”wasting resources is a mortal sin”

CultureCulture

Egalitarianism Egalitarianism Anti-bureaucracy Anti-bureaucracy

Research and DevelopmentResearch and Development

No-design-no matter how inspired-finds its way No-design-no matter how inspired-finds its way into the showroom if it cannot be made into the showroom if it cannot be made affordable.affordable.

12 full time designers at Sweden, 80 12 full time designers at Sweden, 80 freelancersfreelancers

A trial-and-error process that can take as long A trial-and-error process that can take as long as three years.as three years.

It challenged 28 designers to find innovative It challenged 28 designers to find innovative uses for discarded and unusual materials.uses for discarded and unusual materials.

OutsourcingOutsourcing

With network of 1,300 suppliers in 53 With network of 1,300 suppliers in 53 countries. IKEA works overtime to find countries. IKEA works overtime to find the right manufacturer for the right the right manufacturer for the right product.product.

Market SegmentationMarket Segmentation

Customization of their products from Customization of their products from different countries to sell better in local different countries to sell better in local markets. Like in U.S. they preferred to markets. Like in U.S. they preferred to fold their clothes than to hang thus, IKEA fold their clothes than to hang thus, IKEA made deeper drawers.made deeper drawers.

Hispanics needs sofas that could fit two Hispanics needs sofas that could fit two or more persons.or more persons.

Cult BrandCult Brand

Alternative Course of Alternative Course of ActionsActions

Developing the Research and Developing the Research and Development ProgramsDevelopment Programs

Pros-Investment in research will Pros-Investment in research will give IKEA better ideas and guidelines for give IKEA better ideas and guidelines for the current trends, behavior and needs of the current trends, behavior and needs of the entire market thus, it will provide the entire market thus, it will provide superior customer valuesuperior customer value

Cons - R & D programs are too Cons - R & D programs are too expensive that could affect the price rate expensive that could affect the price rate of its products.of its products.

2. Promotion activities must consistently 2. Promotion activities must consistently implemented and regulatedimplemented and regulated

Pros – Promotion of IKEA are Pros – Promotion of IKEA are attention grabber creating store traffic, attention grabber creating store traffic, more sales and customer loyaltymore sales and customer loyalty

Cons – deregulated promotion activities Cons – deregulated promotion activities is dangerous for IKEA since expectations of is dangerous for IKEA since expectations of their loyal customers might end up for their loyal customers might end up for customer disloyalty.customer disloyalty.

3. Merging with other respectable local 3. Merging with other respectable local companies to strengthen its financial capacity companies to strengthen its financial capacity and can easily penetrate the market.and can easily penetrate the market.

Pros – experience and knowledge of Pros – experience and knowledge of respectable local companies will back-up the respectable local companies will back-up the marketing operation of IKEA and will likely to marketing operation of IKEA and will likely to have a slice of the market.have a slice of the market.

Cons – collision of different Cons – collision of different company’s cultures and principles.company’s cultures and principles.

RecommendationRecommendation

1.1. Evaluation of market-driven strategies Evaluation of market-driven strategies in different countries and form a in different countries and form a committee that will monitor the status committee that will monitor the status each region. A monthly report of its each region. A monthly report of its sales movement must submitted to sales movement must submitted to committee for proper studying and may committee for proper studying and may be use for future strategies. be use for future strategies.

2. As part of the CSR, may they continually 2. As part of the CSR, may they continually promote awareness in the conservation promote awareness in the conservation of the environment. They may have a of the environment. They may have a formal memorandum in R & D that only formal memorandum in R & D that only materials that are not toxic or contribute materials that are not toxic or contribute to the degradation of natural should be to the degradation of natural should be use in the production of their products. use in the production of their products.

3. Made initiatives in creation of 3. Made initiatives in creation of cooperatives to help other poor nations in cooperatives to help other poor nations in small communities to earn a living.small communities to earn a living.