IKEA 1

IKEA

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Table of Contents
Introduction......................................................................................................................................... 3
Micro Environment Analysis......................................................................................................... 3
Consumers....................................................................................................................................... 3
Major Competitors of IKEA............................................................................................................ 4
Target Company................................................................................................................................. 5
Segmentation, Targeting and Positioning of IKEA................................................................6
Segmentation.................................................................................................................................. 6
Based on Geographies:........................................................................................................... 6
Based on Income:..................................................................................................................... 6
Based on Culture:..................................................................................................................... 7
Targeting.......................................................................................................................................... 7
Poisoning.......................................................................................................................................... 7
IKEA’s Marketing Mix Analysis..................................................................................................... 8
Products............................................................................................................................................ 8
Price................................................................................................................................................... 8
Promotion........................................................................................................................................ 8
Place................................................................................................................................................... 9
People................................................................................................................................................ 9
Process.............................................................................................................................................. 9
Physical evidence....................................................................................................................... 10
SWOT Analysis of IKEA................................................................................................................. 10
Strengths........................................................................................................................................ 10
Image of the brand................................................................................................................ 10
Management of Supply Chain........................................................................................... 11
Focus upon marketing......................................................................................................... 11
Weaknesses.................................................................................................................................. 11
High operating expenses.................................................................................................... 11
Overdependence on Peripheral Suppliers...................................................................11
Opportunities............................................................................................................................... 11
Engagement of Clients through Digital Marketing...................................................11
Backward integration.......................................................................................................... 11
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Threats........................................................................................................................................... 12
Competitive Pressure........................................................................................................... 12
Regulatory Pressures........................................................................................................... 12
High Raw Materials and Labour Cost............................................................................ 12
Key Issues and Implications....................................................................................................... 12
Conclusion......................................................................................................................................... 13
References.......................................................................................................................................... 14
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Introduction

IKEA was founded in 1943 by a 17-year-old Swedish boy. IKEA designs and sale
furniture and household appliances. The company has been named the largest
furniture retailer in the world since 2008. The business is run by a private company
founded by Ingvar Kamprad. This company is known for its modern interior design
and simplicity of its environment. We have also reduced product prices. This
organization aims to be a positive climate organization in the course of IKEA business
development (AYODELE, no date). The company's most effective strategy is to
recognize costs. The aim is to create the best opportunity to pay for a beautiful and
functional home. This strategy follows the business idea of making a variety of well-
designed household items at low prices and making them affordable for everyone. The
company's ideas and strategies are very strong, but they face a number of obstacles
and problems, problems relating to the cost of raw materials, employee compensation,
utilities, and other costs. Implementing this strategy can be a complex and challenging
task and it can affect the company's reputation, growth, and sustainability when the
idea of beautiful and affordable furniture for the home is repeated.

Micro Environment Analysis

Consumers
Who are the customers of IKAE? Clients from 20- 60 yaers

How customers can buy IKEA’s Online website and stores all over the
products? world

What are the needs of IKEA’s customers? Luxurious designs, high quality and
comfortable products

What are buying criteria of IKEA’s Luxurious designs, high comfort, social
customers? status

How often clients buy IKEA’s products? New arrivals, Seasonal and annual sales

What are characteristics of IKEA’s Social status, designs, offers, fashion

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products?

How extensive is their usage of the Other home appliances

products Furniturs

The best IKEA product in its class and suitable for everyone, buyers, especially those
aged between 18 and 30, prefer to buy products at IKEA. They usually buy the
products they need online or in stores. IKEA has an offline shop and an online shop so
customers can choose the method they think is most convenient for shopping
(Location3 Team2015). Online stores have a variety of customers all over the world
because they can offer products to areas where there is no physical store. Customers
buy products primarily for physical and psychological needs. Increase confidence and
personality and satisfy their desires by buying stylish products and accessories,
especially young people, who prefer to buy fashionable products from IKEA. Their
purchasing criteria are very good if the product is accurate and easy to use (Vahlne
and Jonsson, 2017). We also pay attention to whether it is elegant and the price is
right for you. Because IKEA always has a new product every season, they buy
equipment.

Major Competitors of IKEA

Strategy Element Competitor A CompetitorB

Wal-Mart Wayfair
Mission/vision Mission of Walmart Inc. The mission of Wayfair is
Company "Save money so "Make more houses that
they can live better." need safe homes and basic
household goods to help
build houses."

Offering Electronics Cinema and Wayfair is the chief site

Music Home Appliances where you can find most
and Furniture Household of the company's offers,
Appliances Shoes Jewelry from furniture to
Toys Health and Beauty equipment and saunas
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Pet Products Sports and attractive to those who

Fitness Equipment have gone viral..
Automatic Photo
Processing Equipment
Supermarket Party
Supplies.
Price Wal-Mart is relatively low Wayfair is more expensive
than its competitors. than its other brands.
Promotion Coupon code, pickup Frequent discounts range
discount from 25% to 70%,
coupons codes, promo
codes
Place Shopping mall Shopping mall

No. of Employees Around 2.2 million 12,124 employees

Physical appearance of The store is clean and More product styles, less
store organized stock

Wal-Mart and Wayfair are fast fashion brands of home furniture and appliances. Its
products, especially furniture, can be updated quickly and cheaply and in accordance
with fashion trends. Therefore, Wal-Mart and Wayfair are IKEA's two major rivals.
Wayfair strives to bring American casual style to the world in search of simple
relaxation styles, affordable prices and consumer products. Wayfair's product settings
make it easy for customers to find the perfect furniture. Wal-Mart is committed to
providing exclusive services to its customers by providing a new and faster rate of
change. Their product position is to create clothing that is fast and affordable (Hultén,
2012). Wayfair's design relies on how designers quickly copy trend elements from the
market and use hungry marketing techniques to make printed matter. This is similar to
IKEA. The pursuit of fashion can speed up product updates, reduce costs, and
increase profits, but this of course implies defects in quality and workmanship.
Compared to Wayfair with higher prices but lower quality, Walmart prices are
relatively lower, renewal rates during production are slower, and quality is tightly
controlled, and offers quality benefits. For promotions, discounts from both
competitors will be supported from time to time. In addition, Wal-Mart has
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encouraged celebrities to support their products, but there are no advertisements on

Wayfair (Wayfair.com, 2020).

Target Company

IKEA is an internationally identified home fixtures store. It has grown rapidly because
it becomes based in 1943. At present, it is the most important furniture retailer within
the global, acknowledged for its Scandinavian style. Most IKEA fixtures come in flat
packages that can be assembled by using customers. This reduces charges and
packaging. IKEA has nine, 500 merchandise, such as fixtures and home add-ons. This
variety of products is to be had in all IKEA stores, and clients can order most products
online from the IKEA website. To date, there are 20 shops within the United
Kingdom, the first to open in Warrington in 1987. In July 2009, IKEA opened its first
keep in Dublin, Ireland (IKEA, 2020). The IKEA keep has a eating place and cafe that
serves Swedish specialties. There is likewise a small grocery save that sells Swedish
food, from famous meatballs to jam. Shops are located everywhere in the
international. As of August 2008, the IKEA Group has 253 shops in 20 economies
around the world and thirty are affiliated with franchisees. This year he welcomed 556
million traffic and 4.Five billion visited the IKEA internet site. IKEA sales rose 10 in
keeping with cent in 2018 to twenty-five.3 billion dollars. The essential promoting
nations are Germany, the France, Sweden, United Kingdom and United States. IKEA
opened twenty stores in around twelve economies in 2018 and plans to open twenty
five different stores in 2019 as part of its method (Mochon, Norton and Ariely, 2012).

Segmentation, Targeting and Positioning of IKEA

IKEA concentrated on, focused on, and positioning include a consistent set of
advertising and marketing answers that form the premise of the company's advertising
approach. Segmentation is the division of population into corporations based on well-
known traits and characteristics. Targeting includes choosing sure groups that have
been recognized because the end results of segmentation as branded purchasers.
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Segmentation
Based on Geographies:
Customer segments by region, such as the United States. Household sizes and
people's choices vary in each country, such as the Latin America, United Kingdom,
US, Asia and Europe. No specific content is needed for each market (Jonsson and
Foss, 2011).

Based on Income:
Clients from diverse group of income have different choices of people, and their
buying habits and frequency of purchase also change.

Based on Culture:
Clinets from many cultures from all over the world have different shopping habits. It
also changes product and material options (Perchinunno and Schirone, 2012).

Targeting
IKEA's main goal is "Generation Y" or young city applicants who want to ornament
their houses with stylish and reasonably priced furniture. This generation has not used
the same furniture for decades. They throw away old furniture and look for new ones
when they reach different income levels or depend on trends. They offer these people
an elegant, unique and relatively inexpensive choice. Parents with children aged 3-6;
6-12 and15-24 months choose different options. They focus on the biggest middle
class market with good quality and affordable products. American customers want a
bigger bed and wardrobe, but Chinese apartments are smaller and require smaller
sizes (Schirone, 2012). Then, the project was modified accordingly. In developing
countries, IKEA targets urban residents. In China, they are not very interested in
furniture assembly. Asians might not like this either. Therefore, they will target young
people and urbanites with their products (Kristoffersson, 2014).
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Poisoning

In EU countries including the United States, IKEA has established itself as a brand
that sells furniture at low prices so that more people can buy it. Brands that offer
elegant and high-quality products at low prices are people's hearts. IKEA prices are
higher than discount stores like Aldi, but lower Bath & Beyond, than West Elm, and
Bed. This price has helped them build their position as a broad middle class brand
(Roberts, 2012). However, in developing countries like Asian economies, this position
initially confused buyers because local producers produce products at lower prices.
Therefore, in these countries, he positioned himself as an inspirational brand that
offers a Western style. However, he keeps prices low and stays true to his mission.

IKEA’s Marketing Mix Analysis

Products
The entire IKEA product range includes more than ten thousands products, and the
company updates its product line every year, releasing around three thousand new
products. The products of IKEA are developed by their designers and contract
designers. IKEA promotes democratic design ideas. Furniture manufacturers adhere to
five aspects of democratic design: foam, quality, functionality, environmental
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friendliness, and low prices (Lee and Carter, 2011). IKEA products are simple and
easy to care for in a cost leadership business strategy.

Price
IKEA has professional clients who are committed to providing the best products and
experiences. All IKEA products are recognized for sustainable product enhancements
that guarantee innovation and exceptional performance. The IKEA pricing strategy in
the marketing mix aims to provide high quality and competitive prices (Abrahamian,
2013). The main goal is to adjust the product to the customer's wishes. However, the
price of IKEA products is already high because the quality of the material used is too
high.

Promotion

IKEA sells its merchandise via diverse channels. However, the principle tool used for
advertising and marketing conversation is the catalog. Publish and percentage unique
catalogs in unique markets. This listing is likewise on the Internet and may be
accessed from the utility. In addition, IKEA uses different channels, consisting of
conventional and digital, to promote its logo. Social networking is also an important
tool utilized by IKEA to put it up for sale manufacturers and merchandise. From time
to time he also uses ad campaigns to get advertisements and growth recognition.
However, virtual channels are now widely used for promotions and commercials. In
2019, they reached around 2.5 billion visits to their internet site and 1.1 billion visits
to their catalog and alertness shops.

Place
IKEA offers products in the arena through a variety of distribution channels, including
franchises, mass produced goods, power stores, and online stores (such as one of the
e-commerce structures). All this shows a broad approach to global reach and
marketing (FENTON, no date).

People
At IKEA, people, clients and employees are the most important. IKEA employees
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believe in the simplicity and passion of home decor. The employee culture is based on
unity, enthusiasm, and pleasure. Customer satisfaction is the basis of value. 116,000
work in retail, 18,000 in manufacturing, and 22 thousands in 2018 (Taylor, no date).
This is not racial, ethnic or religious discrimination. In 2019, IKEA staff increased to
2 million people around the globe.

Process
IKEA has numerous enterprise strategies. There are forty four production devices in
greater than 10 countries. IKEA manufactures its very own wooden with sawn
wooden and produces high high-quality furnishings. We have domestic manufacturing
equipment with superior era. Clean surroundings are our motto. IKEA has the
maximum extraordinary deliver chain and stock control approach. Their designs vary
in charge. We buy merchandise from almost thousand suppliers (Harapiak, 2013).
IKEA provides manufacturers with a code of ethics that sets policies and tips that
assist lessen environmental management. In addition, finished products are supplied
in portions for clients to acquire, as a result saving prices.

Physical evidence
IKEA has more than four hundred stores in around 50 economies all over the world.
IKEA physical evidence is a great design that offers more than just a shopping
experience. A special route layout will appear in the shop, with arrows in the guide to
help them to find the product they want. The shop also has a restaurant for soft drinks
and nannies. In addition, there are plenty of parking spaces, because most shops are
located in large areas outside the city. Most stores have areas where used, returned, or
damaged products are sold at significant discounts (Jonsson, Rudberg and Holmberg,
2013). One of the biggest stores is located in Sydney and Montreal.

SWOT Analysis of IKEA

Strengths Weaknesses Opportunities Threats

1 Image of the High operations Involvement of High

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brand cost clients with competition

digital marketing
2 Supply chain Over-dependence Rear integration Regulatory
management on peripheral pressure
suppliers
3 Focus on High labor cost
marketing and raw
material cost

Strengths

Image of the brand

IKEA is a well-known brand with strong footwear. Focusing on innovation, product
quality, style and marketing, IKEA has built a strong image and won the trust of
customers.

Management of Supply Chain

IKEA supply chain management is another important tool of the brand. Brands need
sustainable quality materials to produce products to sell. To get raw materials, shoes
and clothing must be made (Jonsson and Foss, 2011). The organization receives
supplies from suppliers throughout the world. They are responsible for managing
global supply chains.

Focus upon marketing

In the past few years, IKEA has grown rapidly and demonstrated one of the most
important and rapidly developing marketing features. IKEA is the closest competitor
and also known for its strong marketing orientation. IKEA has also tested more
specific and offensive tactics in the field of brand marketing (Hellström and Nilsson,
2011).

Weaknesses

High operating expenses

IKEA operating costs continue to increase due to rising raw material costs and labor
prices. IKEA's revenue has increased, but operating costs have also increased (Chen,
Yang and Zhang, 2013). The organization increases its marketing investment, which is
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reflected in higher operating costs.

Overdependence on Peripheral Suppliers

IKEA is totally dependent on external partners to produce products for sale. Almost
all products are outsourced, including to many other economies in Asia and the world.

Opportunities

Engagement of Clients through Digital Marketing

The growth of digital technology can bring attractive marketing opportunities for
fashion and shoe brands, attract more customers, and increase sales through digital
marketing and customer acquisition. IKEA focuses on digitalization.

Backward integration
Rear integration reduces IKEA operating costs. At present, the brand forwards almost
all products to third parties (Dahlvig, 2011). Try integration again. This allows the
brand to reduce production time and bring the latest developments to the market
faster. Product innovation can also be accelerated by backward integration.

Threats

Competitive Pressure
Competitive pressure in the footwear industry continues to increase. Not only IKEA
but also competing brands are actively investing in marketing and R&D to increase
sales and revenue. Increasing competitive pressures also reduce revenue through
higher operating costs (Norton, Mochon and Ariely, 2012).

Regulatory Pressures
Regulatory pressures exacerbate the challenges of furniture brands. These companies
are under huge pressure for market expansion and compliance.

High Raw Materials and Labour Cost

Raw material costs have also increased from year to year, which increases the
operating costs of shoe brands. High labor costs other than raw materials increase
operating costs.
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Key Issues and Implications

The commitment of IKEA has been diminished by unique idea to manage with less
money and public enthusiasm, as explained by Camprad. Problems and ideas seem
separate. The leader sometimes says "it means negative, sometimes shows total cost
awareness." Some authors believe that Ingbar Kamprad is obsessed with ideals, and
self-realization is only possible thanks to his work. Another problem that may appear
on the IKEA map is the significant difference from the international market. This
means that IKEA purchases only five per cent in North US and around 85 per cent in
EU. Moreover, Asia is only ten per cent. IKEA wants to make its customers shop a
simple environment where they can buy luxury homes at reasonable prices. In the past
12 months, IKEA has opened 20 new stores and renovated three. Most of these shops
are in EU and US. The problem they might face in the future is that if someone sets
up a company like IKEA in EU in the near future, he will have at least some control
over the US. IKEA always needs to plan ahead, know market conditions and move
forward to avoid unnecessary costs (Daunfeldt et al., 2017). They need to come up
with a strong strategy so that other competitors can beat the market. They believe that
the quality of their products is so high that our competitors cannot compete with
IKEA, but they cannot, because they cannot predict or belittle competitors. IKEA
must always be ready or successful. IKEA also needs to advertise its products,
organize many events and make brands more popular in the community. IKEA must
offer charity, sports, and everything else to many sponsors to attract customers.

Conclusion

IKEA has made great progress in the past few decades and is currently positioned as
the biggest and most popular player in the UAE industry. At present, all companies in
this industry are trying to reduce production costs by shifting production to the Asian
market. IKEA will strengthen the complex market after integration. This is the right
strategy to compete with competitors and grow through expansion into emerging
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markets like Asia and the UK. I encourage IKEA to focus on its core business and
engage in aggressive marketing and branding.
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References

Abrahamian, K. (2013) Global Marketing through Local Cultural Strategies: A Case

Study of IKEA.
AYODELE, A. (no date) ‘A SITUATIONAL AND STRATEGIC ANALYSIS OF
IKEA AND THE FUTURE’.
Chen, X., Yang, L. and Zhang, J. (2013) The Future of IKEA: watch your expansion
steps.
Dahlvig, A. (2011) The IKEA edge: building global growth and social good at the
world’s most iconic home store. McGraw Hill Professional.
Daunfeldt, S.-O., Mihaescu, O., Nilsson, H. and Rudholm, N. (2017) ‘What happens
when IKEA comes to town?’, Regional studies. Routledge, 51(2), pp. 313–323.
FENTON, E. (no date) ‘IKEA IN CHINA’.
Harapiak, C. (2013) ‘IKEA’s International Expansion’.
Hellström, D. and Nilsson, F. (2011) ‘Logistics‐driven packaging innovation: a case
study at IKEA’, International Journal of Retail & Distribution Management. Emerald
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Kristoffersson, S. (2014) Design by IKEA: a cultural history. Bloomsbury Publishing.
Lee, K. and Carter, S. (2011) ‘Global marketing management’, Strategic Direction.
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Mochon, D., Norton, M. I. and Ariely, D. (2012) ‘Bolstering and restoring feelings of
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