IKEAs Business

IKEA is an international home product

company that designs and sells ready
to assemble furniture appliances and
home accessories

IKEAs Company History*

1926

1943

1947

1951

1953

1955

1956

1957

1958

1965

IKEAs Founded
Furniture Introduction
Furniture Catalogue
IKEA designs its own
Furniture
IKEA introduces Flat
packages

IKEAs Timeline

Source: www.ikea.com

IKEA stores open at

Almhult
Stockholm

SWOT, PEST and the Marketing Mix

MARKETING ANALYSIS

POSITIVE INFLUENCES
OPPORTUNITIES

STRENGTHS

Untapped markets like middle

east and Asian countries
Better advertisements
Online sales
Demand for greener and
environment friendly products

SWOT
THREATS

Organized sectors like Wal

Mart, Office Depot, Staples,
etc.
Unorganized sectors like local
manufacturers and carpentry
stores
Competitors opting for similar
designs with a contemporary
twist to cater to upper class

NEGATIVE INFLUENCES

EXTERNAL EXAM

INTERNAL EXAM

Wide range of products and

styles
Cheap and affordable
One stop shop
Easy shipping and
transportation
Eco friendly and recycling ofS
products
Functional design of
products
Appealing shopping
experience
WEAKNESSES
Assembly of furniture
W
Yet to invade upcoming
global markets
Products dont last long
Product dimensions
unsuitable for global
markets
Advertisements in the form
of catalogues mostly

Technological

PEST Analysis

Flat sized packaging

Innovative designs

Social

Lesser carbon
footprints
Ecologically
sustainable
Recyclable products
Online tips on reducing
environmental impact
(CSR)

Political

T
Furnitu
re
Market

FDI Policies
Labor laws
Taxes and duties
Environmental Laws

Economic

Recession reduces
disposable income
and hence the
demand (Low prices
advantage)
Enjoys economies of
scale
High barriers of entry
for competitors due to
low prices offered to
consumers

4P's Marketing Mix

Produc
t

Price

Marketin
g Mix

IKEA's Product Price

Matrix
Product Price Mix
STYLE

PRICE
RANGE High
Mediu
m
Low

Scandin
avian
(Sleek
Wood)

Modern Country
(Minima (Neolist)
traditio
nal)

Young
Swede
(bare
bones

Finding Smarter ways

to make Furniture
Strategy followed by IKEA

Price

Qualit
y

Implementation
Steps
Establish Retail Price

Select Manufacturer

Determine the
material used

Design Process

Step 1: Establish Retail Price

Using the matrix, IKEA would

set the price range.
It would survey the competition
to establish a benchmark and
then sets its own price point
30-50% lower than rivals.

Step 2: Select Manufacturer

More than 1800 manufacturers in
more than 50 countries
Build long term relationships
IKEA circulates a description of
proposed product's specifications and
target cost and encouraged them to
compete for the production package
Sometimes it might have different
product component from different
supplier

Step 3: Determine the

material used
Done by IKEA engineers
Focus on cost efficiency
Using different types of wood
for a single wooden product
Using high quality materials on
furniture surfaces that were
visible and most likely undergo
stress
Using low quality material on
surfaces that were low stress
and less visible to the customer

Step 4: Design Phase

Use internal competition to
select a designer
Flat packaged boxes to make it
easier for consumers to
transport the furniture home +
save shipping costs

4P's Marketing Mix

Produc
t

Price

Marketin
g Mix

Placeme
nt

Customer Experience
at IKEA
Bright and inviting experience for
customers
Resembles Modern Theme park with
childcare centers
Restaurants serving various delicacies

IKEA for kids:

You shop, kids play

IKEA provides clean feeding

and changing rooms for small
children
Restaurant has a special menu
just for kids

4P's Marketing Mix

Produc
t

Price

Marketin
g Mix

Promoti
on

Placeme
nt

Communication
Strategy for
America

Perceptual Map

Segmentation

Video 1

Video 2

Video 3

IKEA INVADES AMERICA

1985

Mid 1990s

1997

1998

1999

2000

2001

2002

First store
Companys fortune
changes
Revenues double
($600 mn to $1.27
bn)
3rd largest
store

PROMOTION STRATEGIES
Commitment-free approach to furniture
Unboring
advertisement
Web site advertisement
The Law of Candor : When you admit a
negative, the prospect will give you a positive
The Law of the Category: If you cant be the
first in a category, set up a new category that
you can be first in
Additional Customer facilities: child-care,
restaurants and help desk

INDIAN FURNITURE
As of 2006, the Indian furniture market is estimated to be
MARKET
worth US$ 7.9 billion

Source: http://www.ibef.org/download/Furniture_170708.pdf

PROBLEMS FACED BY
INDIAN FURNITURE
INDUSTRY

IKEA INVADES INDIA

Source: http
://online.wsj.com/news/articles/SB100014241278873242
66904578458840277908564

New

Diversification

Existing

Markets
Markets

Market
Development

Market
Penetration

Product
Development

Existing
New
Products & Services

Integrated Communications Strategy

IKEAS INITIAL
COMMUNICATION
STRATEGY IN INDIA

IKEAs communication
strategy*

Media Channels covered

TVC
Print
Digital

Pull Strategy
CSR initiatives

Source:
http://www.livemint.com/Money/jI27GvmsK5stzTn61yyWUN/I
keas-consumer-challenge-in-India.html