MARKETING MANAGEMENT

CASE STUDY: IKEA INVADES AMERICA

SECTION: A SUBMITTED TO
GROUP : 8 Dr. KAPIL CHATURVEDI

GROUP DETAILS
1. ABHIJEET TOLA (201811001)
2. AYUSHI GUPTA (201811008)
3. DAMINI RAJ (201811013)
4. HITESH JOSHI (201811020)
5. SHIVANUJ SRICHANDAN DAS (201811043)
Q.1. What is the visionary’s vision for IKEA?

Ans.) Vision of IKEA:

“At IKEA our vision is to create a better everyday life for the many
people. Our business idea supports this vision by offering 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.”
People at IKEA believes to serve customers with beautifully designed, affordable home
furnishings throughout the world. The company is known for its modernist designs for
various types of appliances and furniture, and its interior design work is often associated
with an eco-friendly simplicity. Except ideas, they will scrimp and save in every direction
in lieu for finding simple solutions with different approach. Cost control, affordability and
durability are embedded in its vision. Their business idea is based on a partnership with
the customer. Customer involvement is a big part of Ikea's vision and culture.
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Q2. What is the founder’s value system at IKEA?
Ans.) Founder’s value system for IKEA’s culture is based on a strong set of values that
steer and support its vision.
 One of the ways IKEA finds out about the needs of its customers is by
undertaking home visits. Every year thousands of homes are visited so that IKEA
can gain feedback and ideas on what sort of products its customers are looking
for, these ideas are then used as the starting point of the design process. For
Marcus Engman, Design Manager “Meeting people in their homes is the best
way for us to learn more about their needs, dreams and living situations. And that
helps us create even better living solutions. Home visits aren’t only important for
developing IKEA products, they also help us create solutions that are relevant on
a local level.”
For starting operations in India also, Ikea Has already done 800 home visits, as
part of its research strategy.

 Togetherness and enthusiasm – IKEA believes that by working together, its co-
workers have the power to solve seemingly unsolvable problems. For example,
from the early stages of the design phase, IKEA product developers and
designer’s work with a diverse team of technicians, manufacturers and
specialists.

 Cost-consciousness – this value is about maintaining products at low prices

through keeping costs low.
Q.3. What is the Business Model of IKEA?
Ans.) The IKEA business idea is to offer a wide range of home furnishings with good
design and function at prices so low that as many people as possible will be able
to afford them.

 The Company’s corporate slogan – “LOW PRICE WITH MEANING”

communicates its business model. IKEA has maintained its Principle of
sustaining profitability through a low-cost business model.

 The Company constantly worked on saving costs on labour also keeping an eye
on opportunities to build Supplier relations in developing countries. It worked with
1800 suppliers in more than 50 countries seeking to balance cost- efficient labour
with the company’s product quality standards.

 To create low cost savings IKEA uses a flat packing process that allows more
merchandise to be shipped and stored between distribution centres. The
company wants customers to understand that their role is not to consume value,
but to create it.

 It redesigned the product multiple times, with a single intention in mind, to

maximize the number of products that could be squeezed onto the shipping pallet
to save costs.

 At Ikea, the new product development was overseen by a product- strategy

council, which consisted of a group of senior managers who established priorities
for Ikea's product line-up. These priorities are based on consumer trends, which
are revised from time to time.

 Ikea know their core competencies, i.e., they are unique in giving Scandinavian
design to their customers. But, still they strive to give products as per market
requirements.

 IKEA despises any waste regarding their resources. Thus, employees and
managers had to switch their roles as and when required, IKEA stressed their
employee to travel in coaches and buses rather than taxi.
Q.4. What is the shopping experience at Ikea like?
Ans.) Shopping experience at IKEA is different from what people has experienced. It
includes the following:
 For IKEA customers, shopping at IKEA requires preparation. They expect the
customer to make lists of things they may need at home, take measurement of
spaces where they need to fill it with furniture and make sure that there's room in
the car for transportation of the furniture.

 They provide pencils, maps and giant shopping bags at the store entrance, to
plan the journey through the store. They could jot down the item no. of the items
they want to buy and they can bring those items from the IKEA warehouses.

 Self Service trolleys are available to help customers carry their purchases from
the ware house to the checkout counter to the car.

 Customers are not only expected to carry their purchases to home, they are also
expected to assemble their purchases on their own. This results in higher
customer involvement.

 Now pre-booking is allowed via using online platform.

 Their outlets include restaurants and child care facilities which help them improve
their customer engagement.

 For assistance with shopping sales representative are provided but in limited
numbers with respect to customers.

 Flat packaging ensures that the purchased item can easily be moved and
transported via the customer's vehicle.

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Q.5.What is going to be Ikea’s Product Strategy in India?
Ans. IKEA’s Product strategy in India is as follows:
 The first priority is to build the brand in India through large-format stores as it is
important for companies that place a huge emphasis on the so-called touch-and-
feel aspect of retailing.

 The next step will be e-commerce.

 The third step will be to experiment with new formats.

 They want to bring in significant product variety which is not common in India as
well as have products that focus on space and storage needs.

 Price is a major factor, which IKEA wants to keep a check on in order to create a
strong market for itself in a price sensitive country like India.

 In India, Ikea will look to sell what it thinks the local market needs, offering
pressure cookers and Indian pans (Tawa) alongside its iconic Billy bookcases. It
is also thinking about tailoring stores to cities. The one in Hyderabad, for
instance, could present products differently (and also offer different products)
from the one in Mumbai because average home sizes in the two cities are vastly
different

 Ikea says it has conducted extensive research on how its products will be
received in India, with its executives visiting over 500 homes across the country.
According to the company, it has tested products ranging from couches and
mattresses to kitchens and bathroom accessories to see how they withstand the
weather, especially humidity.

 Ikea is also hoping its restaurants (attached to its stores) will be a draw in India.
The company’s popular meatballs will be on the menu but contain only chicken.
The 1,000-seater restaurant at the Hyderabad store will offer a mix of Swedish
and local cuisines (Biryani and samosas are on the menu).

 First Store to be launched in Hyderabad before the end of this year. They
proposed Rs.10,500 crores investment in India in 2012. They Plan to open 25
stores throughout India. They are pursuing for large parcels of land on outskirts
of large cities in India, Also, their focus is on laying solid foundation for the
upcoming market properly rather than on speed (i.e., opening stores as soon as
possible).

 Certain additional features like on time delivery, product assembly for consumer
are also to be provided by the company. Already, IKEA has been engaged in a
tie up with UrbanClap, where UrbanClap will be the furniture assembly partner.
As part of this collaboration, IKEA will contribute in the training of the carpenters
on UrbanClap’s platform, thereby, skilling them to become professional IKEA
assemblers.

THANK YOU