Case Study Ikea Invades America Marketing Essay

Case Study Ikea Invades America Marketing EssayIKEA has achieverfully gr take in in the headquarters furnishings retail mart place as a conduct of its primary philosophy of greet-leadership, wide variety of up-to-date and concrete ingatherings, and its great power to maintain low cost and pass the savings onto the customer. In addition to this, IKEA has also implemented some real important details into their oer wholly merged dodge that affects the shop attend of the customer. They exact reinforced their chic-style and sophisticated environment by pass gourmet meals in their stores (offering smoked salmon and otherwise Swedish delicacies), implementing the availability of a child day-c be field of force rendering adults cease to shop, and by focusing on self-service shopping/self-guided tours through fully furnished staging atomic matter 18as.In addition to the experience that customers regard as convenient and even fun, IKEA stop attribute the success of their organization to their very well balanced corporate scheme. They follow a specific process that allows them to conception and contract the manu particularuring of medium to high theatrical role (relative to price) fundament furnishings and also permits the unique shipping, distribution, display and final point of change of these intersection points in a very methodical manner.The everywhereall success of the friendship comes from its strategy to produce attractive yet simplistic figs that ar make from inexpensive yet reasonably well-constructed comp nonp areilnts. These unfinished crossroads are then shipped in a disassembled fashion (flat-packed), sold directly to the customer in a warehouse type store, and then taken by the customer to their home where the final assembly takes place all in return for a price that is 30-50% less expensive than competitors.What do you echo of the companys product strategy and product range?For the limited niche market that IKEA operates within, the companys product downslope is substantially sizabler than any of its competitors. This could come as a result of the flexibility of its products designs. A single product such(prenominal) as a table or a bookshelf can be demanded and buyd as a component of a larger set or as an private product, however due to the interchangeable nature of the product follows, it could also be implemented in a itinerary that complements a nonher set of furnishings from a various design set. This advantage allows for the minimization of design costs. The advantages of the product strategy are clear enlarged cost savings that are translated into debase prices for the customer, while still marketing your brand as a voguish option for home furnishings Low Price with Meaning. IKEA delivers the customer with the freedom to select their own furnishings, designs, and combinations while providing them with as very much assistance as they can to streamline the purchasing process. Fro m the show direction examples that display fully furnished home scenarios to the availability of user- poreed items such as tape-measures and vehicle cargo racks, IKEA is implementing its self-service (for customers) philosophy. some other advantage of the product strategy comes from the understanding that is inherent between the customer and the manufacturer the costs are lower because they are simplistic, medium quality, gubbins designs where assembly is required without exception. This flat-packed strategy saves on construction and shipping space. The governing body is dual- profit since the consumer can see the savings of self-assembly. This balance between quality, product line and price comes about through a very closely monitored process. The disadvantages of the product strategy and the product range are fairly evident as well. The idea of the transient use of medium-quality, self-constructed, Scandinavian-styled furniture naturally stub outs a large portion of the popu lation as a target market for the products. any the total combination of these details or each of them individually potentially causes concern among certain consumer demographics. The niche market in which IKEA resides does not offer up a size of itable product line for those that are not smell for the overall type of furniture that they provide. In addition to this, the western mastermind regarding home furnishings is one that IKEA hesitated in reacting to. It conducted market research and found that its product line was not aligned with traditional demand, especially due to the faltering of Americans to adopt a Scandinavian style of home furnishings.Despite its success, thither are many downsides to shopping at IKEA. What are some of these downsides? IKEAs hallucination Statement (in Figure C of the case) describes how the company seeks to build a coalition with its customers. What do you think of this vision statement?The disadvantages of shopping at IKEA are almost as in trinsic to the environment as the advantages. Due to the crystal clear size and layout of the stores, the ability for consumers to quickly locate and select a piffling number of products and vacate the premises is very difficult. It seems that to keep a by the bye and good traffic flow the second level of the store is knowing along a path that leads the consumers through a display of all the different product lines throughout the separate segments (kitchen, bath, bedroom, etc.) In order for a consumer to locate the product they are seeking, they whitethorn experience some clog navigating through IKEAs 10,000 other products. In addition to this, the scarcity of store locations limits the ability of the consumer who is ordering from a catalog to physically experience the product prior(prenominal) to purchase and delivery.The vision statement is logical in its delivery, but potentially flawed in its practicality and how it pertains to IKEA. first-class honours degree and foremo st, the company states the pauperization for a supercede to expensive furniture. They seem to make the cite that never before has thither been a company to provide this to the consumer, however, local furniture stores have been offering low-priced, fully assembled furniture prior to the introduction of IKEA. Furtherto a greater extent, they claim that they are manufacturing beautiful, perpetual furniture these claims cannot be quantified and are therefore merely a way out of opinion. One consumer could experience IKEA furniture and regard it as the best design and manufacturing initiative to have ever been implemented in the home furnishing market another could experience the very aforesaid(prenominal) furniture pieces and be totally aghast and appalled by the very idea that these products were regarded as all beautiful or durable. Moreover, they claim to be responding to the home-furnishing accepts of those all over the world those who have different styles, tastes, and b udgets. This is partially false due to the very nature of their marketing. They are not responding to the individual needs of the world, rather they are addressing the various home furnishing needs with the Scandinavian-answer. They are marketing their limited furniture blueprints, styles and designs in an attempt to convince their target markets to change the way they think about furnishings (ephemeral vs permanent, minimalist vs elaborate). They are claiming to be the panacea for those who exist in a world without affordable, high-quality furnishings they claim to side with the masses. They create a wiz of class-warfare and claim that they cant accomplish their noble goal without the help of the consumer. So they propose this seemingly harmless bond between IKEA and customer, because evidently one of the most profitable corporations in the world whom holds some of the most brawny brand recognition ever, couldnt run to offer low prices if they had to build their own furniture. I t seems slightly ridiculous when you dissect the advertizing logically. There is no discredit that forcing the customer to build their own furniture translates into cost savings, but to what achievement do the consumers actually get to enjoy those benefits? Nonetheless, they continue to lower prices and growing market share, so their strategy seems to be working very well.The fact that IKEA hopes to have fifty stores in operation in the Unites States by 2013 is an extension of how optimistic the company is about the viability of its determine proposition in this country. Do you think IKEA is being overly optimistic in its process plans? How would you rectify IKEAs value proposition to make it even more attractive to American consumers?IKEA leave behind most probably attain its goal of having fifty stores in operation in the U.S. by 2013. However, it will be a challenge task to accomplish without applying significant changes to the overall approach IKEA has taken regarding the U.S. First, they need to perform market research regarding the purchasing trends of not only their online customer demographics, but more importantly, the demographics of the customers that they are not attracting. Secondly, they need to inform themselves with the distinct and separate styles to which Americans are attracted. The ability to transpose the traditional (American) way of thinking regarding interior design with a more European (Scandinavian) establish fashion whitethorn not be advantageous for IKEA. Additionally, the products that IKEA offers are as well limited in their usability in different regions of the country. Just as different parts of the world appreciate different styles, different regions of the U.S. do as well. The U.S. is unique that it encompasses all the different ethnicities of the world in a free market, the ability of IKEA to convince every separate ethnic groups individual preferences may not be realistic each.The capacity for adaptive change wi ll be the key to IKEAs continued existence and prosperity. It is a win-win for every ships company involved If IKEA performs research to fructify what they need to change to be self-made in America they a.) will continuously attract their loyal customers with newer design releases, b.) may capture new market segments of consumers that never considered IKEA an option (through advertising their upgraded and boom outed product line) and c.) could recapture discouraged consumers that tested the products, but are no longer interested in the IKEA brand.To achieve the kind of growth that IKEA is hoping for, should the company change its product strategy? If so, in what way(s)? What about its product range-are there limitations to the matrix approach? Should the company expand its product poster to include a greater number of styles and price points? In what other ways should the company consider changing its product lineup?It should expand its belief that the whole world can be convin ced to let in the Scandinavian design is the universal taste in furniture. Most importantly, they need to implement three progressive features to their business model (especially in U.S. market).First they need to adopt a higher quality brand pattern of their limited product line than they currently possess. After a much needed expansion of their product line, they need to market the increased quality and expand selection. If they are going to increase the number of stores, then an expanded product line is necessary to attain customers in these new geographic areas. They have the image of simple, functional, stylish furnishings, however price can determine quality and certain consumers have a high aversion to companies that claim that their products are high-quality, but not meant to last a long magazine or that their products are beautiful and stylish, but cheap at the same time. These paradoxes are detrimental to the attainment of consumers that are actually affluent.Secondly, t hey need to objurgate to the market in which they are advertising. If they are operating in western U.S., then after performing market research they need to further the products that appeal to that locations population the most. Third, they need to increase the availability of services in their stores, such as delivery for those who cannot transport the number of furnishings they need to carriage their home, financing for large purchases, and company assistance with the assembly of their products. All of these could be acquired at a premium if the consumer chooses to do so. The availability of these offers could further eliminate the consumers that dont consider IKEA an option.IKEA claims to market to the predominantly low-middle income, young, urban and suburban, educated, professionals but at the same time they claim that their typical consumer is sophisticated enough to appreciate picturesque wine and okay food, participates in international travel with their frequent neb miles, etc. This paradox is illogical in and of itself as well. The ability of a young, educated, low-income, urban dweller to spend their limited disposable income on fine wine, food, and international travel (all the while doing so by saving money on their affordable, yet chic home furnishings) is highly unlikely. The more likely scenario is that this image of the IKEA consumer is the representation that they wish to project in hopes of attracting consumers who wished to be viewed as this depiction as well. It is doubtful that a successful individual with fashionable tastes will spend their income on temporary, particle board furniture. That is the equivalent of considering a McDonalds sophisticated, urban dining just because it happens to be located in the center of downtown in a metropolitan area.If you had to predict, what do you think IKEAs value proposition and product lineup will look like in ten years?IKEA will most likely use the size and strength of its organization wise ly to expand its product line drastically, increase the availability of corporate offers in order to make its products even more attainable for the consumers, and will implement a locality philosophy to provide certain geographic areas with the styles the local population demands. It will also have a high probability of implementing a massive marketing exhort so as to expose other potential markets to its innovative and efficient designs prior to expanding, thus increasing future demand in locations that may eventually receive an IKEA store. IKEA will most likely also continue its approach to manufacturing by using outsourced manufacturing locations in order to avoid supernumerary costs. IKEA has a high probability of surviving and prospering due to its distinction/low-cost strategy.Some industry observers have suggested that IKEA should open a number of smaller, satellite stores across the United States (e.g., in shopping malls, strip malls, etc.). By offering a limited range of IKEA products, these IKEA Lite shops would presumably go past consumers who do not otherwise have access to a big IKEA the opportunity to experience the brand. In addition, consumers who do live near a full-size IKEA would be able to use these mini-outlets to make minor purchases (e.g., purchase a set of mugs, as opposed to an entire living room set). Do you agree with this idea? Why or why not?No, I dont believe that this is in the best interest of IKEAs overall corporate strategy. They have carved a niche in the home furnishings market by doing exactly what they have determined to be the more powerful manner of cost-reduction (based on market research). Smaller home furnishings can be attained and purchased through their business-to-customer internet portal through the company website. Usually, consumers are more comfortable purchasing small, inexpensive items over the internet over large, costly items. If IKEA was to implement smaller IKEA-lite stores, they would then be comp eting with stores such as Bed, Bath Beyond and Pier 1. Their differentiation strategy of self-shopping and self-assembly would be rendered either unavailable or no longer a competitive advantage. Furthermore, the cost incurred to operate and ship small items to these satellite stores would increase the overall costs of the items.The profitability of IKEA comes from the savings of selling large home furnishings to consumers that are will to assemble the products themselves. The sale of smaller, tier 2 and tier 3 items such as towels, mugs and cups, and storage containers are profitable due to the fact that the consumer is in the main facility looking for large home items. The sale of indirect items is available to complement the larger items. The implementation of smaller, IKEA-lite stores would not be recommended as it conflicts with their current corporate strategy and there is no discernible benefit in changing the methodology at this point in time.