IKEA’s marketing problems

By Goi & Sai

• IKEA is a privately held international home furnishings retailer.

• It is a Dutch-registered company, with offices in Netherlands, Sweden and Belgium.

• As of August 2010, there are IKEA stores in more than 38 countries, with 280 stores in 26 countries belonging to the IKEA Group. All IKEA stores are operated under franchise from Inter IKEA Systems B.V

IKEA was founded in 1943 by Ingvar Kamprad in Sweden

IKEA’s Vision and Business Idea

IKEA’s vision is "To create a better everyday life for the many people.”

IKEA’s idea is "To offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”

The IKEA Marketing Mix

IKEA has a long tradition in marketing communication focusing primarily on printed media which has proven its values and success to the company over the years. Other media now being used to an increasing degree include TV, radio, and internet based communication.

The IKEA Catalogue

the IKEA catalogue is the main marketing tool.

It is produced in 38 different editions, in 17 languages for 28 countries. 110 million catalogues were circulated last year -

the,

"We sincerely apologise to any customers who have experienced technical difficulties when shopping online using an iPad, iPhone or iTouch device”

"We always make every effort to ensure that our customers have an easy online shopping experience and as soon we became aware of this issue, we have been and will continue to work towards a resolution."

Ikea on the Japanese Market

During Ikea’s expansion on the international market Japan was the first country in Asia that Ikea considered to enter in 1970’s.

The differences between culture, lifestyle, and behavior made Ikea face the failure.

In 1974, when IKEA entered Japan, it was not just selling products, but also philosophy: this is how things are done in Sweden.

Pulled out in 1986

IKEA re-entered Japanese Market in 2001

How did IKEA avoid the mistake?

ProductFirst round Second round

Offer all the available product lines as other markets

IKEA adapted Japanese living condition – big family live together in a small house

How did IKEA avoid the mistake?

PlaceFirst round Second round

IKEA thought the JapaneseConsumers used to shop at small stores, so they have their store built small to adapt to the local life style

Japanese people are more attracted to mega stores,IKEA introduced a mega store with 10,000 product lines supported by 2,200 car parking spaces, a child-care area and one of the Tokyo’s largest restaurants.

How did IKEA avoid the mistake?

Packaging

First round Second round

Introducing the flat-packs and DIY concept but Japanese customers were not ready and wiling to do so

Adapt to customers' tastes and habits by providing home delivery and assembly for an extra charge.

How did IKEA avoid the mistake?

PromotionFirst round Second round

Standardization of showrooms’ format and display regardless of Japanese real life housing conditions.

Finding out that Japanese homes are mostly small, IKEA comprised 70 mini-showrooms on the second floor of the store with the same size of typical Japanese room.

Future Challenges for the IKEA Group

• The complexity of the logistics system will increase.

• It will be more difficult to respond to national needs and cultural sensitivity issues.

• Franchisees may demand more control over operations.

• With all these challenges emerging, it will be very difficult to maintain a global organizational structure. The best approach to meet these challenges is to find the proper balance between country level autonomy and centralized intervention.

Reference

Chapman, M. (2012). Ikea apologies for service failure on Apple devices. Retrieved May 20, 2012, from http://www.prweek.com/uk/news/1119933/Ikea-apologises-service-failure-Apple-devices/?DCMP=ILC-SEARCH

Inter IKEA Systems B. V. (2012). IKEA. Retrieved May, 20, 2012, from http://www.ikea.com/gb/en/

Chopra, R. (2009). IKEA Case Study. Retrieved May, 20, 2012, from http://www.slideshare.net/riddhimachopra/ikea-case-study

Capell, K. (2006). Ikea’s New Plan for Japan. Retrieved May, 20, 2012, from http://www.businessweek.com/globalbiz/content/apr2006/gb20060426_821825.htm