2018

Marketing Strategy & Planning

IKEA
12/13/2018
The British university in Egypt
Faculty: Business administration
Module Name: Marketing Strategy & Planning

Module Code: 18BMKT09H

Module Leader: Dr. Rasha El Gendi

Group Number: 10

Company Name: IKEA

Name ID Major

Nada Emad Ragab 140993 Marketing

Saif Ali Abdallah 151094 Marketing

Sarah Yasser Ahmed 146126 Marketing

Yasmine Gharib Fawi 141777 Marketing

Academic Year: 2018/2019

Date of Submission: 13/12/2018

Page 1 of 42
Table of Contents
1. Abstract:......................................................................................................................4

2. Introduction.................................................................................................................5

3. Company Profile/ Vision/Mission Statement/Objectives.............................................6

4. Current and future status:...........................................................................................7

5. Situation analysis:.......................................................................................................9

5.1 Market overview:..................................................................................................9

5.2 PESTEL Analysis...............................................................................................10

5.3 Customer Analysis.............................................................................................14

5.4 Competitor analysis............................................................................................15

5.5 Organization Competitive Advantage.................................................................16

6. Marketing strategy.....................................................................................................17

6.1 Marketing Objectives:.........................................................................................17

6.2 Segmentation, positioning and targeting:...........................................................19

6.3 Product Plans:....................................................................................................21

6.4 Pricing Plans:......................................................................................................24

6.5 Distribution plan:.................................................................................................26

6.6 Promotion:..........................................................................................................28

7. Conclusion and recommendation:............................................................................30

Bibliography.....................................................................................................................32

Page 2 of 42
Appendix:.........................................................................................................................36

6.7 People:...................................................................................................................36

6.8 Physical Evidence:.................................................................................................38

6.9 Process:.................................................................................................................39

Page 3 of 42
1. Abstract:

The purpose of writing this research paper is to investigate a strategic marketing

plan for the chosen company, IKEA. This is done through analyzing what IKEA has

done and what if offers. IKEA is a Swedish company that was established in 1943 that

came out to the market by offering high quality products and services with a low cost.

The Swedish based company operates in each continent with multiple stores in each

country. Analysis for the company’s is market and competitor are done. Moreover,

analysis for the company’s political, economic, social and technological surroundings is

done. Furtherly, investigation on IKEA Egypt STP plan is done for observing the market

and what Egyptian customers prefer. A detailed description for company’s 7Ps is done

which are product, price, place, promotion, people, process and physical evidence.

Recommendations were given for the company for further improvement in the future.

Page 4 of 42
2. Introduction

The main tool of the company success is strategic

marketing plan, in which it highlights the company path to

accomplish a specific business objectives and goals

[ CITATION Dav17 \l 1033 ]. Furthermore, it is like a “road

map” to achieve greater results; by taking right decisions,

ensure that the selling activities support each other, and

make sure of every department aware of what is going on organization [ CITATION

Dav17 \l 1033 ]. IKEA one of the companies that have a

well- developed marketing plan. This paper presents

IKEA’s strategic marketing plan at furniture department in

Egypt. The paper will start by IKEA’s profile, and then

followed by current and future status, situational analysis,

marketing strategy and finally conclusion and recommendations.

Page 5 of 42
3. Company Profile/ Vision/Mission Statement/Objectives

In 1943, IKEA was founded by Ingvar Kamprad in Sweden as a multinational retail

Business [CITATION Ike181 \l 1033 ]. IKEA offers more than 9,500 products, including

a complete range of home and office furnishings, equipment, lighting and accessories;

in addition to having food and beverage [CITATION

Ike18 \l 1033 ]. It has a recognizable brand name

and strong positioning in the global market, in which

it exist in forty-eight countries and having over

172,000 employees around the world [CITATION

Ike18 \l 1033 ]. Further, due to the use of Southern

Sweden woods; IKEA had the ability to build a high brand image with the target of

having high quality at low prices to make it affordable for all segments [CITATION

Ike181 \l 1033 ]. IKEA mission statement is “We shall 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” [CITATION Ike18 \l 1033 ]. While when it comes to

IKEA vision, it is “To create a better everyday life for the many people”. According to

the interview, the main objective of IKEA business is selling high quality products with

low prices to be suitable for all segments (Existing market penetration & differantion)

(Mohamed M., personal communication, November 2018). Additionally; to offer all the

products that customer need in one store (Existing market penetration) [CITATION

Ike18 \l 1033 ].

Page 6 of 42
4. Current and future status:

IKEA as one of the well-known stores around the world as it has 403 stores in 49

countries[ CITATION Ike17 \l 1033 ] (E. market development). In 2017 the number of

visitors to IKEA’s stories reached a total of 936 million visit. IKEA is one of the leading

companies in the furnishing industry as according to its sales that reached 38.3 billion

dollars in 2017[ CITATION Ike17 \l 1033 ]. New stores open every year as in 2017, (E.

market development). 14 new stores opened around the world and one of them was

introduced in a new market; Serbia[ CITATION Ike17 \l 1033 ]. In order to measure any

place’s success, we have to compare last year’s highlights by what is there today. In

2018, 19 new stores opened and for the first time in India and Latvia[ CITATION Ike17 \l

1033 ]. Sales also increased to reach 38.8 billion dollars[ CITATION Ike17 \l 1033 ].

According to all the above-mentioned statistics, IKEA positioned itself as a market

leader in every country it operates in. IKEA when choosing Egypt in 2013 to operate in,

it was a challenging thing for them as it was after the revolution and the market was

unstable as mentioned by Mr. Mohamed (2018). Thus, IKEA now is leading the market

of furniture in Egypt by compering its sales by other competitors (Existing introduction).

Moreover, IKEA’s point of strength made it easier for them to lead the market, as some

of their strengths is that the company focuses the most on high quality, superior

customer service and creating a unique product line as to satisfy customers ( Existing

differention )(Mohamed M., personal communication, November 2018).

Moreover, as for IKEA’s future plan, it is to expand worldwide and to enter each

market[ CITATION Ike17 \l 1033 ]. IKEA serves several types of products that fits for all

Page 7 of 42
tastes. That did not make IKEA stop from thinking in a broader way as to satisfy larger

segment of customers. As for Egypt, IKEA’s future plan is to open a new branch in El-

Sheikh Zayed exactly at Mall of Egypt in 2020[ CITATION Ent17 \l 1033 ]. That’s

because to make it easier for people living far from New Cairo that IKEA’s branch is

located. Moreover, they are discussing a plan of having a new branch in another

government, which is Alexandria, in order to reach a larger segment of the Egyptians

(Proposed Market development)[ CITATION Ent17 \l 1033 ].

Page 8 of 42
5. Situation analysis:

5.1 Market overview:

IKEA is involved in the furniture retailing industry and is one of the major players in

the market both in Egypt and on a global scale, the industry giant has had to adapt to

different developments and shifts that have affected the market. The furniture retailing

sector in Egypt has been around for a long time, with the Egyptian market being able to

provide access to a large population as consumers and has also been greatly aided by

the relatively low costs of production, these have led to production in the furniture sector

to represent 2.1% of all the manufacturing in the country in 2013 [CITATION Int16 \l

1033 ] While this might seem relatively meagre when compared to the general

manufacturing sector, it does have a significant share of workers, with it employing

270,222 across 104,250 establishments according to CAPMAS, which shows the level

of competition in that is ongoing in the Egyptian furniture market. Recently, the market

has been growing quickly due to increase of exports to other countries, most of which

are within the region, however with the increase in exports there has also been an

upsurge in the amount of imports, with some coming all the way from the Asian

continent mostly from China and others from European countries. The industry is

concentrated within 3 centres, which are Cairo, Sharkya and Damietta, these account

for most of the production of the country’s furniture products, with most of the smaller

companies involved in labour intensive and manual skills, while the larger companies

use modern machines and technology for production, giving them a significant

advantage in the market[ CITATION Int16 \l 1033 ].

Page 9 of 42
5.2 PESTEL Analysis

Companies use PESTEL analysis as a tool to build awareness of the external

factors. Once these factors are identified and analysed; the company will be at good

position to meet its objectives and minimize any errors that might be causing a

performance expectation gap [ CITATION Dav17 \l 1033 ].

Political forces:

The flotation of Egyptian pound makes the government put

some trade obstacles to support the Egyptian industry in terms

of bureaucratic administrative delays

as well as tariffs [ CITATION Int17 \l 1033 ] Government

delays affected timeline of the business delivery

which lead to stock deficit, and then the VAT increased

from 13% to 40%. Consequently, it represents a threat on

the company; as it leads to increase the product price on the customers (Mohamed M.,

personal communication, November 2018).

Economic Forces:

Floating of Egyptian currency considered a threat for the company specially, IKEA

import most of its products. Accordingly, it reflects negatively

on its products by raising their prices, which contradict with

IKEA’s vision; high quality with low price (Mohamed M.,

personal communication, November 2018).

Page 10 of 42
 According to the interview; unexpectedly, economic conditions had inconsiderable

effect on the company, in which HR manger declared that; on the weekly basis IKEA

stores kept on receiving an average of seven thousand customers. Furthermore, he

stated that, the customers that visited the store at the weekend are twice there number.

Finally, the customers reached about 23 thousand on the Black Friday (Mohamed M.,

personal communication, November 2018).

On the other hand, nowadays Egypt is facing; economic instability, inflation rate,

fluctuation in the oil pricing, and gradual increase in taxes, all of these represent current

and future threat on the company. As it was said that IKEA is a retailer which imported

most of its products from abroad; hence, IKEA will be directly affected. That’s because

Egyptian customers are somehow price sensitive and care about the superior product

with low price (Mohamed M., personal communication, November 2018).

Social:

Egypt’s culture considered as a great opportunity for IKEA Company; that’s

because Egyptian has a concept and promotes the idea of high birth rate. Therefore,

IKEA take advantages of this opportunity by designing a variety of products and

promote it by saying “children are the most important people in the world” (Mohamed

M., personal communication, November 2018).

Additionally, IKEA affected positively by the size of

Egyptian population, number of marriage and the early

marriage occurring at some areas in Egypt. Moreover, in

most of marriages, Egyptian has a habit of buying huge household products as a kind of

Page 11 of 42
prestigious (Mohamed M., personal communication, November 2018). One more

opportunity is the difficulty of Egyptian emigration outside the

country (Mohamed M., personal communication, November

2018). On the other hand, the company will face a forecasted

threat by increasing the elder population from 6.3% to 20.8%

by 2050, in which the marriage rate will be affected

[ CITATION Ike17 \l 1033 ].

Furthermore, Egyptian consumers affected by

globalization; in which they become more open than

before, and most of them tent to imitate and buy

something rather than the traditional one.

Henceforth, IKEA make use of this opportunity and fill

this gap by offering stylish and modern

furniture (Mohamed M., personal communication, November 2018).

By shifting to the education level; it was found that IKEA recruit only

the bachelor’s degree; also, it does not accept summer internship

(Mohamed M., personal communication, November 2018).

Furthermore, Egyptians culture is considered collectivism

culture, In which IKEA take this as an opportunity by always

mentioned word “Family” on social media, also by , placing a

“join our family” bottom evoking the team spirit [ CITATION

Abo18 \l 1033 ]. Additionally, IKEA contributes in a charity association which makes it

favourable than other competitors. In which the company organized an event for Qafalet

Page 12 of 42
Al Kheir where orphans were invited for a list of entertainment activities (Mohamed M.,

personal communication, November 2018).

Technology:

IKEA partnered with Wood Welding through which they could establish cost

reducing strategies referred to as the “democratic design”; in which manufacturing is

done in a trivial time frame using inexpensive materials [CITATION Woo13 \l 1033 ]. In

addition to, IKEA takes technology as an opportunity; in which it is developing an online

catalogue, accessibility to the stocks online, where the customer can check the

availability of a product before visiting the store (Mohamed M., personal communication,

November 2018). Furthermore, availability of purchasing through a barcode and finally,

online purchasing in a number of countries, and will soon be launched in Egypt

[ CITATION Ike182 \l 1033 ].

Environmental forces:

Nowadays IKEA focus on how to be a green, sustainable

and environmental in order to align with SDGs (sustainable

development goals); by achieving 100% renewable energy and

become environmental friendly [ CITATION Ike182 \l 1033 ]. Consequently, it works on

recycling strategy by using the material more than one time repeatedly [ CITATION

Ike182 \l 1033 ]. For instance, IKEA make its bio- plastic bag “ISTAD” by using sugar

cane; so, by using these bio-organic products, it will contribute positively in a healthy

and more safety environment [ CITATION Ike182 \l 1033 ]. More than that, IKEA tries to

reduce using of water, carbon footprints usage and cutting the energy use (Mohamed

Page 13 of 42
M., personal communication, November 2018). Hence, IKEA environmental activities

reflect a great opportunity to the company; as people day after day become more

sustainable, in addition to government support sustainable activities.

5.3 Customer Analysis

An essential part of business plans is customer analysis, this is the process of

analysing the potential customers of a business to determine who the target market is,

discover their needs and figure out how best to approach them. In the case of IKEA, the

company has a broad target market as it intends to provide a solution across people of

different ages and socio-economic factors such as income, education and occupation,

all who have affordability and quality as a major consideration in their

purchases[ CITATION Abo \l 1033 ]. However, in Egypt as with most of the Arab region,

it’s a different case as the company targets customers that are in the middle and upper

class of the country, both in terms of their designs and their prices, recently the prices of

the furniture were found to have increased by 100%-120%, while another recent survey

found that the company’s prices in Egypt were among the highest in their stores

worldwide[ CITATION Mek17 \l 1033 ]. In terms of approach, IKEA Egypt also focuses

on opening their stores in relatively high-income neighbourhoods in the country, such as

the IKEA branch in Cairo Festival City.

Page 14 of 42
5.4 Competitor analysis

Competitive analysis is the process of identifying a business’s competitors and

assessing its current strategies as well as predicting its future strategies [ CITATION

Hoo12 \l 1033 ]. Nowadays, the technology, internet in specific, made competition

fierce, which means that customers can easily compare price, quality, designs and

everything (Mohamed M., personal communication, November 2018). This leads to an

intense competition between the companies, specially,

the furniture market as it has strong competitors for

instance, Home center, Amr Helmy designs, Ashely’s,

Selvada and In and out, in addition to the local sellers

(including Damietta products) (Mohamed M., personal

communication, November 2018). On the other hand, IKEA did

differentiate itself from its competitors by “democratic design”

which means it matches between good quality and lower price.

Also, it differentiates itself through offering modern and stylish

products, utilization of renewable energy and R&D [ CITATION Ike182 \l 1033 ].

However, the competition is highly

intense, as Amr Helmy developed a

website in order to enable customers

to design their own kitchen with an

online planner. In addition to, Selvada

made many strategies to offer

Page 15 of 42
products with lower price in order to match the customer expectations (Mohamed M.,

personal communication, November 2018).

5.5 Organization Competitive Advantage

The competitive advantage of any organization or business can be simply defined

as that which gives a company leverage or superiority over its competition and allows

the company to perform better than others in the market[ CITATION Gar13 \l 1033 ].

There are different factors that can lead to competitive advantage in the market, some

of which include product quality, logistics or distribution methods and network, cost

structure and so on. IKEA in its furniture retailing industry has been able to create

significant competitive advantages over its competitors, such as its in-house ready to

assemble designs that allow customization of furniture products by the consumers,

another advantage is the efficient supply chain system, the company has established

long term relationships and commitments with its suppliers which allows IKEA to lower

prices further when it needs to, the ability to stock and display inventories in their large

warehouse stores has also given the company an added advantage of keeping costs

low and making it much more convenient for its consumers (Mohamed M., personal

communication, November 2018). In Egypt, IKEA has a major advantage in that it can

afford to use modern machinery to quickly and efficiently produce the goods in needs to

get to the market, while other companies are limited by the amount of resources that are

available to them, another benefit in the Egyptian market has been in the form of the

Swedish designs that the company uses on their products and the image that comes

with that, whereas other companies are seen to have a lower quality due to them using

Page 16 of 42
what is perceived to be local substandard design and quality (Mohamed M., personal

communication, November 2018).

6. Marketing strategy

6.1 Marketing Objectives:

As any other successful organization, the Swedish company had set several

marketing objectives through which their marketing mix plan would achieve. IKEA

wanted to serve its potential customers a wide variety of options for modern home

furnishing however with a cost-effective price [ CITATION The181 \l 1033 ]. On the

contrary of the concept that low prices means low quality, IKEA provides its products

with high quality relevant to the price. IKEA believes that good quality does not cost

anything it is the mistakes that cost the company [CITATION HAN16 \l 1033 ]. The

company wanted to fulfil each and every need of a family. Moreover, the company

contributes in making the world a better place by providing environmentally friendly

products [ CITATION Sus18 \l 1033 ]. The company wanted to combine uniqueness,

features, price, design putting in mind renewable sources [ CITATION The181 \l 1033 ].

In addition, IKEA cares about reaching out for their customers and that is why

they have marketing departments in all their retailing countries [ CITATION Mar18 \l

1033 ]. IKEA holds that this helps in building brand image and positioning. IKEA wanted

to reach its customers through innovative ways as the catalogues, websites,

advertisements or brochures through which they can reach more potential customers

[ CITATION Mar18 \l 1033 ]. Their catalogue is designed in a way that helps the reader

or customer to have a vision of how their dream house would look like [CITATION

Page 17 of 42
Placeholder2 \l 1033 ]. Moreover, IKEA found that reaching out for their customers in

different parts of the world is a challenge that is why it had found a way of solving out

this problem through franchising [ CITATION The181 \l 1033 ]. Having stores that are

very large and convened in a way to ease customers’ shopping experience [ CITATION

The181 \l 1033 ]. The Swedish company now has over 300 stores over the world

[ CITATION IKE181 \l 1033 ].

[ CITATION Hig14 \l 1033 ]

Page 18 of 42
6.2 Segmentation, positioning and targeting:

Market Segmentation is a process that seeks to divide the customers into groups

according to their common traits and characteristics[CITATION Gra17 \p 218-230 \l

1033 ]. Moreover, organizations have to define how the market will be segmented, thus,

management’s decision can be based on two things; products or services offered, or

markets served. Thus, IKEA follows the markets served strategy of segmenting as

dividing the market into several categories according to price-oriented people, quality

oriented, and so forth. Second step in segmenting is determining the market segment

attractiveness[ CITATION Gra17 \l 1033 ]. Thus, IKEA uses the demographic,

psychographic and geographic segmentation as to segment the market as to go with

the changes in the market of home furnishing, kitchenware and appliance industry

[CITATION 20117 \l 1033 ].

Additionally, Targeting is about breaking the market into small segments as to

concentrate your efforts on one or a few key segments, specifically customers who has

a need or a desire that can be fulfilled by your product or service offerings [CITATION

Are17 \p 188-192 \l 1033 ]. Thus, the target market for IKEA is mainly concerned about

young consumers who seeks modern lifestyle and space saving (Mohamed M.,

personal communication, November 2018). Thus, the first type of consumers are the

young people who is searching for a new apartment, second is about low-income

consumers which are students who are searching for products looks easy to use and

practical. The final target market are the older customers, who are looking for small and

light products as they tend to move to a smaller apartment, so they need more comfy

and secure products. Therefore, IKEA uses a differentiated targeting strategy as to

Page 19 of 42
satisfy the needs and wants of consumers who is searching for value for money

furnishing solutions.

Furthermore, Positioning is the place in consumer’s mind that a specific brand

occupies and how it is distinguishes its products from those of competitors[CITATION

Gra17 \p 227-230 \l 1033 ]. Nevertheless, IKEA to position its brand, it has to highlight

the features that distinguishes the brand from others. Therefore, IKEA designed each

product in a way that focuses on the needs of each customer as to place the brand in

their minds (Mohamed M., personal communication, November 2018). IKEA’s approach

is not to offer the highest quality products but to offer simple products that can last for a

long time. Moreover, by the use of technology in its stores that facilitates the buying

process for consumers and assists them to see the final results of how those products

will look when combined together. Technology is one of main approaches that apples to

IKEA’s target market. Hence, IKEA has transformed itself from being a product-based

company to positioning itself as a value-based company.

Page 20 of 42
6.3 Product Plans:

Product refers to services or goods that the company have that will serve and

satisfy customers’ needs [CITATION Gar13 \l 1033 ]. Product is the core offer through

which the company presents itself to the market and customers.

For the Swedish company, it has created variety of products that would satisfy

customers in the furniture industry by offering solutions for every room in the house

[ CITATION Abo18 \l 1033 ]. For bedrooms, a variety for mattresses with guarantees to

beds, storage spaces and bedroom accessories [ CITATION Bed18 \l 1033 ]. For

bathrooms, providing everything from taps, showers, washing stands to accessories as

towels lightings and mirrors [CITATION Bat18 \l 1033 ]. IKEA believes that living room is

where you spend most of your time, so it provides lots of comfortable seating from

sofas, rugs to tv stands and tables [ CITATION Liv18 \l 1033 ]. Moreover, IKEA provides

children’s furniture starting from beds, toys, toys’ storage spaces, children’s mirrors and

safety products [ CITATION CHI18 \l 1033 ]. Ending with kitchen, where IKEA offers the

service of measuring and planning the kitchen with freedom of choice from cabinets,

dining tables, wall storage, taps and sinks [ CITATION Kit18 \l 1033 ].

Since IKEA cares about the environment, it had invented LED lighting systems

which is considered to be cost effective [ CITATION Sus18 \l 1033 ]. Not only that, they

also designed kitchen and showering taps that help in reducing water consumption by

over 30% [ CITATION Sus18 \l 1033 ]. IKEA also developed a way of using their wastes

in recycling into laundry baskets and bins [ CITATION Sus18 \l 1033 ]. It has confidence

that it can turn an egg cartoon into something useful [ CITATION Sus18 \l 1033 ]. All of

IKEA’s products are atom-based products whereas products are displayed in the store

Page 21 of 42
however people can purchase the product over the internet and will be shipped to

purchasers.

[ CITATION Sus18 \l 1033 ].

Furthermore, IKEA restaurant is a service that was developed inside of each

store where they serve people meals with good prices [CITATION IKE18 \l 1033 ]. From

Swedish dishes to local food as falafel [CITATION IKE18 \l 1033 ]. Alongside the

grocery store and the bistro which also serves a “taste of Sweden” [CITATION IKE18 \l

1033 ].

Page 22 of 42
 [ CITATION Che16 \l 1033 ] [ CITATION IKE16 \l 1033 ]

IKEA furtherly provides intangible products as IKEA services which ranges from

installation, delivery, assembly, measuring, sewing, and planning rooms services with

additional charges for each [ CITATION Abo181 \l 1033 ].

6.4 Pricing Plans:

The multinational company had a business idea of trying to serve customers with

a functional, well designed products with the lowest prices as possible for everyone to

be able to afford [CITATION Abo \l 1033 ]. IKEA is considered to have a cost leadership

plan as it is trying to keep its prices as low as possible. IKEA’s strategy is the do it

yourself strategy whereby purchasers are the ones who assemble products by

themselves. “We do our part, you do your part, together we save money” is their

Page 23 of 42
catchphrase for this strategy [ CITATION The18 \l 1033 ]. Having customers picking up

the items, carrying them to the car and assembling them by oneself is why IKEA’s

prices are low. Moreover, In production process, IKEA develops the price tag first and

then creates products upon price range by maximizing production and using basic

material efficiently and in an innovative way to create the best product [ CITATION

Abo \l 1033 ]. As mentioned in the above, IKEA depends on recycling for their

production process and this helps in offering products with lower prices [ CITATION

Sus18 \l 1033 ].

It can be concluded that IKEA had followed pricing considerations which are the

production cost, economic value, competitor price, desired positioning and company’s

objectives [ CITATION Gra17 \l 1033 ]. IKEA furtherly follow a cost-plus pricing method

as its price products upon production cost as mentioned earlier with a percentage of a

mark-up. For promotional pricing, IKEA follows a number of methods. To elaborate,

IKEA had used special events method which involves unique deals that makes it hard

for customers to turn down “Black Friday” is an example for special event that IKEA

does. IKEA also follows cash rebates through IKEA Family which is a membership card

offering customers who join special discounts as a way of appreciation for joining

[ CITATION IKE182 \l 1033 ]. It had been noticed that it follows psychological pricing as

IKEA prices items beneth the psychological barrier for example a sofa that is priced

8,995 instead of 9,000 [ CITATION Liv18 \l 1033 ].

Page 24 of 42
6.5 Distribution plan:

Each business has its own way of delivering goods they sell to customers or to

other businesses. A Distribution plan differs from one organization to another and it

depends on several factors. Moreover, Ikea as one of the largest retail stores that sells

furniture and many other minor products, chose New Cairo exactly at Cairo Festival City

Mall (CFC) to locate their store when opening in Egypt. The reason of choosing this

place as Mr. Mohamed explained is that Ikea is for value-oriented people as its products

is not that high in price, but it lives for a long time, thus New Cairo is a destination for

high class people who seeks value and buying from a famous brand name. Moreover,

New Cairo is an easy destination to most places in Cairo as CFC is located on the NA

road which makes it easier for people to reach it. Ikea chose to sell its product in their

own stores only as to gain credibility and loyalty with customers. Furthermore, Ikea

focuses on its website by providing a detailed catalog of each and every product they

sell and also, they offer a service where you can design your own room online as to

make it easier for you when visiting the store[ CITATION IKEA18 \l 1033 ].

Nevertheless, Ikea Egypt does not have ordering online till now, but you can check the

Page 25 of 42
products online then go to the store and purchase what is needed, and it can be

delivered to your door step (Mohamed M., personal communication, November 2018).

Thus, Ikea offers several services regarding delivery as they have normal delivery that

takes several days, and they have the express delivery that takes only 24 hours to be

delivered[ CITATION IKEA18 \l 1033 ].

Page 26 of 42
6.6 Promotion:

Brands when trying to attract customers the first thing to do after offering its

products and selecting the perfect price that suits the product, is to promote your

product[ CITATION Gra17 \l 1033 ]. Promotions is about giving the consumer a reason

to buy your product no other competitors.

For example, making discounts, buy one

get one, buy now pay later, etc. IKEA was

always unique in its offer, thinking in a

different way to attract people to its

products. Thus, whenever you visit IKEA

you will find sale on most of the products

(Mohamed M., personal communication, November 2018). It is exchanged between

categories depending on the season and the demand. Second thing is the IKEA

FAMILY card that IKEA invented as to

gain a brand loyalty[ CITATION

IKEA2018 \l 1033 ]. The card is said to

be “a loyalty program designed for

people who love their homes, and love to shop at IKEA [ CITATION IKEA2018 \l 1033 ].

Product discounts, special offers, ideas and inspiration, and more. And best of all… it’s

free to join.” Thus, this increases the loyalty to the brand and increases the sale for

sure.

Page 27 of 42
 The third promotion technique IKEA follows is the offer on food. IKEA believes that

feeling home and comfy during your shopping will make you more satisfied and of

course you are going to buy more. Thus, IKEA made some offers on the morning

breakfast before 11 am, as to make consumers come IKEA from the beginning of the

day and spend the rest of the day

there[CITATION IKE18 \l 1033 ]. As they also offer lunch and drinks, this will make you

come with all the family member as to spend the day at IKEA not only for shopping but

also for having fun, and that is because they go for activities for children and adults all

day long [CITATION IKE18 \l 1033 ].

IKEA Egypt every month makes an “offer of the month” that makes customer waiting for

it from one month to the other. It can be a big discount or free product [CITATION IKE18

\l 1033 ]. Sometimes IKEA offer a promotion when you buy for example by more than

1000 EGP.

The last thing is the “buy now, pay later” offer, which about buying furniture or any

other product but more than 1000 EGP and install the rest on 3 to 24 months with 0%

interest. By following some rules and regulations that is so easy to make and

consumers can know them easily through their website [CITATION IKE18 \l 1033 ].

Page 28 of 42
(for additional information about the extended marketing mix, refer to Appendix)

Page 29 of 42
7. Conclusion and recommendation:

This paper researched the strategic marketing plan of IKEA, with a focus on the

Egyptian market and industry the company operates it and also the general marketing

plans of the company. IKEA is one of the world leaders in the furniture retailing industry

and the company’s main aim is to sell high quality products at a low price, while

operating in Egypt the company has faced different challenges such as the recent

floatation of the Egyptian currency, governmental bureaucratic delays and rising

inflation rates, however the company has also greatly benefited from the Egyptian

market in terms of the an increasing population leading to higher rate of consumers and

a culture that appreciates foreign products. In Egypt, Ikea is viewed as relatively middle

to higher income store and most of its stiff competitors are on the high end such as

Ashley’s furniture’s, Home center, and Amr Helmy designs, Ikea Egypt tries to

differentiate through its minimal designs and quality of service to gain an upper hand. In

terms of achieving its marketing objectives, Ikea has marketing departments in every

country it operates in and specifically uses only large stores to make it convenient for

consumers, the company also provides a wide range of various furniture products at a

price that the market would consider fair, this could differ within regions. An important

part of Ikea’s strategy is its supply chain network, which serves to ensure products are

produced and stocked in the store as efficiently as possible, Ikea also does various

product promotions on special occasions or specific the time of the year, all these have

combined to give Ikea the standing it now has in the furniture retailing world.

Page 30 of 42
 - Recommendations

A few recommendations could be given to IKEA regarding their marketing strategy plan,

these include:

 Focus on better pricing in the Egyptian market, so as to increase the number of

middle-income consumers.

 New product designs that are more appealing to the Egyptian market.

 More aggressive marketing campaigns to lure away customers from competitors.

Page 31 of 42
Bibliography

About Ikea. (2018). Retrieved from IKEA:

https://www.ikea.com/ms/en_JP/about_ikea/the_ikea_way/our_business_idea/ou
r_low_prices.html

About IKEA. (2018). Retrieved from IKEA:

https://www.ikea.com/ms/en_JP/about_ikea/the_ikea_way/our_business_idea/ou
r_product_range.html

About Service. (2018). Retrieved from IKEA:

https://www.ikea.com/ms/en_EG/customer-service/about-services/index.html

Arens, W. F., & Weigold, M. F. (2017). Contemporary Advertising and integrated

marketing communication (15 ed.). Mc Graw Hill.

Armstrong, G., & Kotler, P. (2013). Marketing An Introduction (Global Edition 11 ed.).

Bathroom. (2018). Retrieved from IKEA:

https://www.ikea.com/eg/en/catalog/categories/departments/bathroom/

Bedroom Furniture. (2018). Retrieved from IKEA:

https://www.ikea.com/eg/en/catalog/categories/departments/bedroom/

Cheap eats at IKEA . (2016). Retrieved from You can Call Me Mochelle:
https://callmemochelle.com/2016/06/22/cheap-eats-at-ikea/

CHILDREN'S IKEA. (2018). Retrieved from IKEA:

https://www.ikea.com/eg/en/catalog/categories/departments/childrens_ikea/

Customer Service. (2018). Retrieved from IKEA Egypt:

https://www.ikea.com/ms/en_EG/customer-service/about-shopping/ways-to-
shop.html

David, F., & David, F. (2017). Strategic Management: A Competitive Advantage

Approach. Pearson.

Page 32 of 42
Enterprise. (2017, September). Enterprise -the state of nation-. Retrieved from
Enterprise.press: https://enterprise.press/stories/2017/09/24/ikea-plans-new-
investments-to-expand-operations-in-cairo-and-alexandria/

G. H., Piercy, N. F., B. N., & Rudd, J. M. (2017). Marketing Strategy & Competitive
Positioning (6 ed.).

Highlights from our year. (2014). Retrieved from IKEA 2014:

https://highlights.ikea.com/2014/story/ikea-stores-2014/

Hooley, G., Piercy, N., & Nicoulaud, B. (2012). Marketing Strategy & Compatitive
Positioning (Fifth Edition ed.). England: Pearson.

IKEA. (2017). IKEA Group Yearly Summary. Retrieved from IKEA:

https://www.ikea.com/ms/en_US/pdf/yearly_summary/IKEA_Group_Yearly_Sum
mary_2017.pdf

Ikea. (2017). Yearly summary FY17.

Ikea. (2018). Retrieved from https://www.ikea.com/eg/en/

IKEA. (2018). About Ikea. Retrieved from IKEA: https://www.ikea.com/gb/en/this-is-

ikea/about-the-ikea-group/vision-and-business-idea/

IKEA. (2018). Delivery Services. Retrieved from IKEA:

https://www.ikea.com/ms/en_US/service-offer/delivery.html?icid=iba|us|
skdelivery|201812071838415818_3

IKEA. (2018). Ikea Family offer. Retrieved from IKEA:

https://www.ikea.com/eg/en/campaigns/ikea-family-offers/index.html?
preferedui=desktop

IKEA. (2018). Ikea foundation. Retrieved from Ikea: https://www.ikeafoundation.org/

IKEA. (2018). IKEA Resturant. Retrieved from IKEA:

https://www.ikea.com/ms/en_EG/ikea_food/restaurant.html

Page 33 of 42
IKEA. (2018). PR launch the IKEA Catalog 2018. Retrieved from IKEA:
https://www.ikea.com/ms/en_US/media/pressroom/CAT_2018/2018-IKEA-
Catalog-Press-Kit.pdf

IKEA Family. (2018). Retrieved from IKEA Egypt: https://www.ikea.com/eg/en/ikea-

family/index.html

IKEA Group Stores. (2018). Retrieved from About IKEA:

https://www.ikea.com/ms/en_AU/about_ikea/facts_and_figures/ikea_group_store
s/index.html

IKEA Group Yearly Summary. (2017). Retrieved from IKEA:

https://www.ikea.com/ms/en_US/pdf/yearly_summary/IKEA_Group_Yearly_Sum
mary_2017.pdf

IKEA Resturant. (2016). Retrieved from

https://www.tripadvisor.com/Restaurant_Review-g187264-d9818247-Reviews-
IKEA-Grenoble_Isere_Auvergne_Rhone_Alpes.html

International Labour Organisation. (2016). Skills for Trade and Economic Diversification
(STED) in Egypt The case of the: Furniture Industry. Aid for Trade Initiatives for
the Arab States. Egypt: International Labour Organization 2016.

International Trade adminstration. (2017, July 27). Retrieved from

https://www.export.gov/article?id=Egypt-Import-Tariffs

Kitchen. (2018). Retrieved from IKEA:

https://www.ikea.com/eg/en/catalog/categories/departments/kitchen/

Living Room Furniture. (2018). Retrieved from IKEA:

https://www.ikea.com/eg/en/catalog/categories/departments/living_room/

Magnusson, H. (2016). IKEA highlights 2016. Retrieved from IKEA Quality:

https://www.ikea.com/ms/en_KR/this-is-ikea/ikea-highlights/Quality/index.html

Page 34 of 42
Marketing and Communications. (2018). Retrieved from The IKEA Story:
https://www.ikea.com/ms/en_US/the_ikea_story/working_at_ikea/work_areas_m
arketing_communications.html

Meky, S. (2017, February 22). Is IKEA becoming less affordable for Egyptians? .
Retrieved from Al-Arabiya English:
http://english.alarabiya.net/en/features/2017/02/22/Is-IKEA-becoming-less-
affordable-for-Egyptians-.html#

PR launch the Ikea catalog 2018. (2018). Retrieved from IKEA:

https://www.ikea.com/ms/en_US/media/pressroom/CAT_2018/2018-IKEA-
Catalog-Press-Kit.pdf

Sustainable life at home. (2018). Retrieved from IKEA People & Planet:
https://www.ikea.com/ms/en_SG/this-is-ikea/people-and-planet/sustainable-life-
at-home/

The IKEA Concept. (2018). Retrieved from IKEA: https://www.ikea.com/ms/en_ID/this-

is-ikea/the-ikea-concept/index.html

The IKEA Concept. (2018). Retrieved from IKEA: https://www.ikea.com/ms/en_ID/this-

is-ikea/the-ikea-concept/index.html

This is IKEA. (2018). Retrieved from IKEA: https://www.ikea.com/ms/en_EG/this-is-

ikea/working-at-the-ikea-group/index.html

WoodWelding Technology. (2013). Retrieved from

http://www.woodwelding.com/uploads/pdf/woodwelding_the%20process_en.pdf

Page 35 of 42
Appendix:

6.7 People:

IKEA shows care toward its employees as they are the ones who deal with

customers and thus, they help in building company’s perception. Therefore, IKEA have

a friendly working environment where employees feel motivated, through a fun and

spirited culture whilst precisely selecting who works there [ CITATION Thi18 \l 1033 ].

IKEA gives employees certain job description in order to focus and fully understand

what to do (Mohamed M., personal communication, November 2018). IKEA selects

employees after going through several interviews and test their abilities in doing the job

(Mohamed M., personal communication, November 2018).

IKEA offers its

employees several benefits to

keep them motivated at all

times and encourage them. It

offers workers with internal

trainings to make them

knowledgeable about the

company and how to deal with

customers and make them

feel “at home” [ CITATION Thi18 \l 1033 ]. Moreover, it does not restrict creativity for

employees, it encourages their co-workers who develop new ideas [ CITATION Thi18 \l

1033 ]. Furtherly, IKEA is mostly known for its low-priced items, however, for employees

Page 36 of 42
it is even cheaper as everyone who works their discounts are offered to them

[ CITATION Thi18 \l 1033 ]. Besides discounts, IKEA offers employees a loyalty

program called “Tack” which is described as a way of appreciation giving them financial

incentives [CITATION Placeholder1 \l 1033 ]. Additionally, IKEA offers its employees the

opportunity to work at any place in the world that IKEA operates in, offering such benefit

for its employees giving them a chance to learn from new cultures and develop new

ideas [ CITATION Thi18 \l 1033 ]. IKEA also rewards its highly motivated employees

who are energetic and are eager to work passionately [CITATION Placeholder1 \l

1033 ]. In addition, it cares about what employees think of, according to M. Mohamed

(personal communication, November 2018) asking employees to continuously give their

feedback about what they experience in the work place, if they find any difficulties, how

they feel, and what they are seeking (Mohamed M., personal communication,

November 2018).

Page 37 of 42
6.8 Physical Evidence:

IKEA as mentioned earlier offers its customers with variety of products that help

them in furnishing every part of their home. IKEA wanted to make customers to feel at

ease and at home. In order to do that, IKEA has built their stores in a way that help

customers in easily reaching for product by categorizing each department, it also added

in their stores a place that is completely furnished and looks like customers’ home

[ CITATION Cus18 \l 1033 ]. IKEA has also placed their lighting systems correctly in

each corner and every part that holds products so that customers will not feel annoyed.

Moreover, IKEA Egypt plays music in the stores that are somehow familiar to the target

market (Mohamed M., personal communication, November 2018). Stores are usually

established on places that are “out of town”, they are usually large in order to have

enough space for the products and the empty spaces help the company into creating

enough space for customers to walk in and not feel compressed. On the other side, for

the outer part of the store, it was designed in a way that customers could easily access

the store from parking their cars in a large parking area that is assigned for IKEA Store

to the entrance doors [ CITATION Cus18 \l 1033 ]. IKEA offers its customers with

superior delivery services that customers are charged for, the delivery fees depends on

the location that customers want items to be delivered to (Mohamed M., personal

communication, November 2018). IKEA took into consideration shipping, so it has

packaged the items in flat boxes in order not to have a much space and weight and that

also helped customers in picking up their selected items in case of assembling the

product by themselves [ CITATION Cus18 \l 1033 ].

Page 38 of 42
6.9 Process:

The process is the system that is involved in delivering the product or a

service[ CITATION Gra17 \l 1033 ]. Thus, IKEA’s delivery process starts by picking the

good from the warehouse yourself and then wait for the delivery of the product home by

a 3rd party delivery service at a cost as IKEA itself don’t deliver[ CITATION IKEA18 \l

1033 ]. Moreover, the systems and processes that is involved in delivering the good to

customers will not affect the attitude of staff towards customers, but it will affect the

judgment of customers on the service they receive (Mohamed M., personal

communication, November 2018). Thus, the staff have to be trained and given the right

tools to perform better, and this is by the customer relationship management (CRM)

(Mohamed M., personal communication, November 2018). CRM is the ways and

methods used to manage relationship with customers[ CITATION Gra17 \l 1033 ].

Hence, IKEA understood the importance of CRM and had made several changes in its

direct transactions as to have a superior customer service. First, IKEA added a new

service which is an automated phone service as to make you check from home whether

the item you want is in stock or not, as consumers complained about having to go to the

store and then realize that the thing that they are searching for is not

available[ CITATION 20117 \l 1033 ]. Another thing that views IKEA as a company that

has a good CRM is that when heading to the store and there is something that you want

purchase from the stock you do not have to search for the code of the good as IKEA’s

employees saw that the codes are not that obvious for customers. Thus, they facilitated

the process by asking you when purchasing about the page number of the product you

want in the catalog and the price of that product and then they confirm with you if is that

Page 39 of 42
is the thing you chose or not. This shows that IKEA cares about customers feedback on

the service they receive and tries to make it better.

Page 40 of 42