Cassies 2009 Cases

Brand/Case: PAX Wardrobes

Winner: Off to a Good Start—Silver

Client Credits: IKEA

Hilary Lloyd, Advertising Manager Cass Hall, Marketing Manager

Agency Credits: zig Shelley Brown, Partner, Managing Director

Martin Beauvais, Executive Creative Director Lesley Rivard, Team Leader

Mark Aronson, Strategic Planner Natalie Sammut, Project Manager

Geoff Morgan, Copywriter Mark Puchala, Art Director

JJ Sullivan, Digital Strategic Planner Anthony Del Rizzo, Art Director

Scott Macgregor, Copywriter Patti-Ann Cochren, Print Specialist

Mindshare

Brian Fitzpatrick, Managing Partner Paul Havery, Group Media Director

Laura Holding, Media Manager

Crossover Notes: All winning cases contain lessons that cross over from one case to another. David Rutherford has been identifying these as Crossover Notes since Cassies1997. The full set for Cassies 2009 can be downloaded from the Case Library section at www.cassies.ca Crossover Note 2. Brand Truths. Crossover Note 3. Core Equity versus Price & Promotion. Crossover Note 11. The Eureka Insight. To see creative, go to the Case Library Index and click on the additional links beside the case.

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EXECUTIVE SUMMARY

Business Results Period (Consecutive Months): Sept 2008 – Feb 2009 Start of Advertising/Communication Effort: Sept 2008 Base Period for Comparison: Sept 2007 – Feb 2008 a) Synopsis of the Case The PAX wardrobe has always been a significant part of IKEA’s range. Last year, it accounted for almost 12% of IKEA’s bedroom business—a strong performer, but one with much more potential. This is the story of how a fresh take breathed new life into the bedroom business. b) Summary of Business Results Given that IKEA indexes sales and store-traffic daily against the previous year, we know instantly whether our efforts are working or not. Thus far the campaign has exceeded all expectations despite a serious decline in Stats Canada’s retail furniture and home furnishings sectors.

• PAX sales index over the results period: 110 • Sales Index during advertising period #1: 311 • Sales Index during advertising period #2: 112

Sales Goal Index Sales Actual Index Retail Sector Growth* 105 (+5%) 110 (+10%) -6.9%

*Statistics Canada “Retail Sales – furniture/home furnishings” SITUATION ANALYSIS

a) Overall Assessment The PAX wardrobe had long been a part of the IKEA bedroom range. It was originally designed to be a free-standing storage solution for Europeans living in small flats built without the walk-in closets that we’ve come to expect in North American homes. A brilliant solution yes, but one with appeal to a very limited part of our target audience in Canada. To bolster the Bedroom business we needed to find a way to broaden its appeal. While PAX was designed as a free-standing armoire, its flexible size and configuration could make it the perfect organizational solution for custom closets. With the potential to configure it thousands of different ways, PAX was begging to become the custom closet of our target’s dreams (at a tiny fraction of the cost). Crossover Note 2. As with many retailers, IKEA’s year is divided into events. During a particular event all of IKEA’s communication, right down to store signage, supports the message, occasionally with a discount on product. Like last year, we were scheduled to have two PAX events during the results period. We would support the offer in the same way as before, but reasoned that a PAX “brand” campaign could enhance sales over the rest of the results period.

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IKEA keeps its margins razor-thin. Everything they do, from choosing store locations to self-assembly, is designed to pass savings on to the customer. As such, there is very little room for additional discounting. Nevertheless, we were able to add an additional two weeks to the PAX discount for this year (Sept 8-20) but could not offer a larger discount than last year to really boost sales. To really improve the performance of PAX, we’d have to make it more relevant to our target. b) Resulting Business Objectives

Understanding the crippling effect that the recession was having on the furniture and home furnishings sector, IKEA set a goal of a 5% increase in sales VYA. c) Budget Range/Share of Voice

IKEA was facing a strong push from Canadian Tire, who had debuted a TV campaign touting closet storage solutions. Home Depot, RONA, and even Walmart were also offering low-cost options for bedroom storage. With a number of other priorities during the year, we could allocate just over $2 million in support. Nielsen estimates IKEA’s share of voice for the results period to be ~12%. STRATEGY & INSIGHT a) Analysis and Insight One of the key parts of our analysis was an in-depth ethnographic study. We went into women’s homes to see their bedrooms, closets and storage needs first hand. The results were startling. The closet was the most neglected part of the home. Visions of beautifully organized closets were no match for real life. As a contained space with a door that could hide everything, the closet had become a dumping ground. The fact that it was not on display, and in a room that is typically private, made it the absolute last place in the home to get any attention – a perfect opportunity for PAX. If only we could convince women to pay attention to this space. b) Communication Strategy In a category that relies heavily on flyers, and tactical radio and television commercials touting deep-discounts, credit and deferred payments, a strong brand-building campaign was the only way for us to re-frame PAX in a meaningful way for women. Crossover Note 3.

Suzanne’s closet, Richmond Hill, ON

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CREATIVE EXECUTION We found the perfect parallel – the garage. Crossover Note 11. This catch-all for automotive parts, snow shovels, gardening equipment and anything too dirty for the basement has been successfully reclaimed by men over the years to the bewilderment of women. While awareness was key, it was crucial that our work gave women a more in-depth look at the features available for PAX. We wanted everyone to understand its versatility and customizability. We would use rich media to extend the TV experience, and magazine to cover many “consideration phase” details like warrantee, style and price. TV: Two women fresh from a tennis game enter one’s walk-in closet in its full PAX glory. They revert to stereotypical roles of men in a garage with one proudly showing off all the customizations she’d added. The viewer gets a guided tour of some of the more popular PAX features.

Rich Media Banner: Featuring one of the main characters of the TV, this banner allows the viewer to look more closely at the PAX features that didn’t make it to TV.

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Magazine

MEDIA EXECUTION To date IKEA has used mass media advertising to support two PAX events. We clustered the TV, online, radio and FSI drop to coincide with in-store support.

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BUSINESS RESULTS Overall, PAX sales during the results period grew by 10% Particularly impressive are the results from the two event periods when the advertising was in-market.

• Sales Index during advertising period #1: 311. • Sales Index during advertising period #2: 112.

Even more encouragingly, we’ve been able to sustain a healthy increase in sales during the months between events:

CAUSE & EFFECT BETWEEN ADVERTISING AND RESULTS Tracking studies immediately following the Results Period show a strong correlation between the advertising and results:

• Top-of-Mind awareness of IKEA as a retailer of bedroom furniture increased 3 points over the previous period, and 4 points VYA to 27% - the highest ever recorded.

• Unaided brand awareness increased 2 points over both the previous period and VYA to 38%.

Before we can attribute the business success to the communication, we have to explore and eliminate other possible explanations.

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Market Performance: PAX sales drastically outpaced growth in the Furniture/Home Furnishings sector over the results period. When graphed against the StatsCan retail data, it is clear that our increase in PAX sales bucks a major market decline.

PAX Events: The first PAX event was a new addition to IKEA’s calendar. IKEA did not offer a discount on PAX at the same time last year we can assume that this contributed in part to the significant sales index VYA (311). The Second PAX event anniversaried the same discount as the previous year and still indexed at 112. It would be easy to assume that a 311 index would be enough to skew the entire results period. It’s critical to note that it’s inflated because there was no advertising support or offer at that time the previous year. In real dollars IKEA actually earned more from the 12% increase on the second, anniversaried PAX event in January. IKEA Retail: PAX sales measured in dollars could be influenced by an increase in average price of PAX or consumers buying much more wardrobes. With prices for PAX stable, customers weren’t just buying larger wardrobes or more interior fittings. There was a significant increase in the absolute number of PAX wardrobes sold. IKEA offered no additional or greater discounting on PAX than it did in the base period. Another explanation for growing PAX sales could be an increase in IKEA’s overall sales. While PAX experienced 10% growth, IKEA’s total growth averaged around 2%. Clearly PAX contributed its share to the growth of IKEA’s business as a whole.