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Comparison of Marketing Mix of IKEA in Four Countries

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Report Contains Marketing Mix of IKEA. In this report there is comparison of 4Ps of IKEA in Four Countries i.e Sweden, UK, China and India.
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Comparison of Marketing Mix of IKEA in Four Countries

  1. 1. 2014 INTERNATIONAL MARKETING 6/10/2014 IKEA MARKETING MIX
  2. 2. INTRODUCTION IKEA is a Swedish company registered in the Netherlands which was founded in Sweden in 1943 by Ingvar Kamprad. that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. IKEA Since its inception, the IKEA company Vision has been “To Create A Better Everyday Life for the People” by offering a wide range of well-designed, functional home furnishings at prices so low that as many people as possible can afford them because IKEA believes that home is the most important place in the world. IKEA work hard to achieve quality at affordable prices for our customers through optimizing their entire value chain, by building long-term supplier relationships, investing in highly automated production and producing large volumes. Their vision also goes beyond home furnishing. They want to create a better every day for all people impacted by our business. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470 million visitors to IKEA's websites in the year from September 2007 to September 2008.The Company uses approximately 1% of the Earth's wood supply, making it one of the largest users of wood in the retail sector. As of January 2014, IKEA owns and operates 349 stores in 43 countries and and was visited by some 583 million shoppers.
  3. 3. IKEA also run a Foundation for Fighting Child Labor and Promoting Education. The IKEA Foundation (Stitching IKEA Foundation) is a charitable foundation that oversees IKEA’s global philanthropy to improve the lives of children living in extreme poverty. HISTORY IKEA was founded in Sweden in 1943 by 17-year-old Ingvar Kamprad, who began by peddling useful items to neighbors on his bicycle. The company's name is an acronym that consists of the initials of Ingvar Kamprad (the founder), Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, south Sweden). As of January 2008, the company is declared as the world's largest furniture retailer and Ingvar Kamprad was listed as one of the world's richest people in 2013. Ingvar Kamprad founded IKEA in 1943 as a mostly mail-order sales business. It began to sell furniture five years later. The first Möbel-IKÉA store was opened in Älmhult, Småland, in 1958, while the first stores outside Sweden were opened in Norway (1963) and Denmark (1969). The stores spread to other parts of Europe in the 1970s. As time passed IKEA expand its business in other countries as well. Now currently IKEA is covering Europe, North America, Asia Pacific and Middle East markets. The world's five largest IKEA stores are:  Stockholm Kungens Kurva, Sweden  Shanghai Baoshan, China  Shanghai Pudong Beicai, China  Wuxi, China  Ningbo, China The main financial principle of the IKEA Group is to grow by using their own resources. In other words, “We Earn Our Money Before We Spend It”. This makes it possible for them to make long-term investments for the future. They re-invest a majority of
  4. 4. their profits in existing and new IKEA stores, as well as in product development, sustainable solutions and by continuously lowering prices to their customers. The company is known for its modern architectural designs for various types of appliances and furniture, and its interior design work is often associated with an Eco- Friendly simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development, corporate attributes that allowed IKEA to lower its prices by an average of two to three percent over the decade to 2010 during a period of global expansion. IKEA Stores Layout IKEA stores are usually very large blue buildings with yellow accents (also Sweden's national colours) and few windows. They are often designed in a one-way layout, leading customers counter clockwise along what IKEA calls "the long natural way" designed to encourage the customer to see the store in its entirety (as opposed to a traditional retail store, which allows a customer to go directly to the section where the desired goods and services are displayed). Most stores of IKEA having the showroom upstairs with the marketplace and self-service warehouse downstairs. Most IKEA stores offer an "as-is" area at the end of the warehouse, just before the cash registers. Returned, damaged and formerly showcased products are displayed here and sold with a significant discount, but also with a no-returns policy. Most IKEA stores communicate the IKEA policy on environmental issues in this part of the store. Food markets are also available in IKEA stores. Every store includes a restaurant serving traditional Swedish food, including potatoes with Swedish meatballs, cream sauce and lingonberry jam, although there are variations. In restaurants IKEA provides
  5. 5. meals according to the tradition and culture of country like IKEA stores in Saudi Arabia, Kuwait, Qatar and the United Arab Emirates serve chicken shawarma at the exit café as well as beef hot dogs, while in United Kingdom, a Quorn hot dog is available in the exit café. Every store has a play area, named Småland (Swedish for small lands; it is also the Swedish province where Kamprad was born). Parents drop off their children at a gate to the playground, and pick them up after they arrive at another entrance. Marketing Mix of IKEA 1- PRODUCT Product range The IKEA product range is wide in several ways. First, it's wide in function: you'll find everything you need to furnish your home, from plants and living-room furnishings to toys and whole kitchens. Second it's wide in style. The romantic at heart will find just as much as the minimalist. And finally, by being coordinated, the range is wide in function and style at the same time, and at all times. No matter which style you prefer, there is something for everyone. Anybody can make a good-quality product for a high price, or a poor-quality product for a low price. But to make good products at low prices, you need to develop methods that are both cost-efficient and innovative. That is why at IKEA we approach things a little differently. Product Range including furniture and accessories that IKEA offers:  Bathroom  Bedroom  Children's IKEA
  6. 6.  Cooking  Dining Room  Eating & Drinking  Food  Garden  Hallway  Home Decoration  Home Office  Kitchens & Appliances  Laundry  Lighting  Living Room  Secondary Storage  Small Storage  Textiles Developing and Producing Product At IKEA we design the price tag first and then develop the product to suit that price. IKEA product developers and designers work directly with suppliers to ensure that creating the low prices starts on the factory floor. They consider maximizing production equipment, using raw materials efficiently and applying technical innovations and the best possible design. It is all about making the most of our production process, keeping
  7. 7. waste to an absolute minimum and considering flat-pack transportation and self- assembly. IKEA of Sweden in Älmhult, Sweden, develops the entire IKEA range. The Swedish approach to design is also the basis of the IKEA range, which to this day is developed in Sweden. The home furnishings are modern but not trendy, functional yet attractive, human-centred and child-friendly and represent the fresh, healthy Swedish lifestyle through their carefully chosen colours and materials. These ideas are closely linked to IKEA origins in Småland southern Sweden, where the people have a reputation for working hard, living on little and making the best possible use of the limited resources they have IKEA CATALOGUE It includes: Product range Product information in detail Product Price IKEA catalogue is the vital part of IKEA retailing since the first editiion was published in 1951. Today more than 100 million household around the world recives the catalogue, every year free of charge. IKEA SERVICES Shopping with IKEA always saves customers money and it can also save customer time and effort. IKEA offer a range of services to help customer with everything from putting it together to getting it home. Of course, the more customer do their self, the lower the price will be. And the more company do for customer, the more customer can sit back and relax.
  8. 8.  Deliveryservice Most of IKEA products are flat packed and designed in such a way that they are easy for customer to take home himself. However, if customer prefer company can deliver the same day/next day for you within the store delivery area or company can also arrange delivery at customer home on selected date. In this condition customer has to pay the delivery charges.  Pickingservice If customer love to buy IKEA products but are not so keen on taking them from the shelves himself then by just paying a small fee company helper boy will pick the furniture for customer, while customer can continue his shopping in the Store or enjoy a meal in the restaurant. At an agreed time customer picked order will be ready and waiting to collect and take to the till for payment.  Pickingwithdelivery If customer want company will pick selected furniture and have it delivered to customer at home, IKEA offer a combined in-store picking and delivery service. Simply place order with one of our co-workers and they will arrange the delivery for customer.  Furniturerecycling IKEA is happy to take existing bed, mattress, sofa or appliance away for customer, when company deliver customer new purchase for a non-profit fee. Company have partnered with a number of charity organizations who will try to give their old furniture a new life
  9. 9. with local families in need of some support. In the case that any item is not reusable, it will be disassembled and recycled with the lowest environmental impact.  Assemblyservice Most IKEA products are designed in such a way that they can easily be assembled by customer so that customer can get the very best value. However, if customer prefer, customer can leave the assembly of his purchase to IKEA professional, independent partners in customer area for a standard basic charge of £25 plus 20% of the full retail purchase price. This service includes 1 year workmanship guarantee and disposal of packaging in an environmentally friendly way.  Kitchenplanning IKEA provide customer with everything they needs to design their own dream home and IKEA specialist kitchen co-workers can help them to plan new kitchen in IKEA stores using or company online planning tools. However, if customer prefers company can arrange for one of company approved planning representatives to come to customer and plan new kitchen in the comfort of customer own home. During the appointment they will take an accurate measurement of the kitchen area and discuss with customer how to optimise the space so that they can plan the perfect kitchen to suit everyday needs.
  10. 10.  Kitchen&bathroominstallation IKEA fully coordinated installation service can save customer valuable time, especially when it comes to the trickier jobs like fitting sinks, taps, worktops and appliances. IKEA installers uphold the highest standards of trust, quality and craftsmanship and they are committed to getting the job done professionally and efficiently. Therefore you can feel confident that your kitchen and bathroom will be installed to the highest industry standards.  Curtainmakingandalterationservice If you are in love with our textiles, but not do handy with a sewing machine we offer* a curtain making and alteration service to help you bring new life into your home.  Financeservice If customer found the solutions to create their dream home, but need some help spreading the cost, IKEA can offer a range of finance options to help customer make dream a reality.  IKEA personal loan With an IKEA personal loan customer can borrow between £150 and £1,500 and spread the cost over 12 to 60 months with affordable, fixed payments of £10, £25 or
  11. 11. £40 per month. There are no hidden set-up, arrangement or early settlement fees, so customr know exactly what he will repay  Interest free credit We offer interest free credit (representative APR 0%) on our kitchens, including kitchen installation. Take advantage of our 12 month interest free credit option when you spend £1,500 or more on kitchens and accessories, or our 24 month option when you spend £3,000 or more. For more information please speak to one of our co- workers.  Vanhire 24/7 Van hire service IKEA has teamed up with Hertz 24/7 to offer you a convenient hourly van rental service to take your purchase home. Company charge the fee as rent on hourly, overnighta and daily basis . So you could be driving your van home.
  12. 12. PRODUCT STRATEGY OF IKEA IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. International marketing literature, argue convincingly for the more adaptation (to different markets) in different national markets. But IKEA mostly used standardized marketing strategies that are why IKEA is offering almost similar product range with little adaptation in all the countries where IKEA is running its operations. IKEA, the Swedish home furnishing retailer is present in foreign markets since 1973 (Switzerland) The company have today stores in 43 countries and are expanding on many markets, Overall, IKEA follows a quite traditional pattern of internationalizing to neighboring countries and markets with similar language before venturing into more exotic markets. IKEA marketing strategy are either fairly old or are often done from a very general perspective with little emphasis on marketing activities in specific countries and also with lacking understanding of what standardization and adaptation might mean in a retail perspective. This is something that works in Europe and the US but IKEA, like other retailers, adjusted their strategies to the very demanding and different Asia markets. Like in Sweden IKEA has been operated since 1953 (the first store in 1958), the UK since 1987 and China since 1998. Markets we have chosen to compare differ very much in terms of cultural and institutional setting, where Sweden and the UK are more or less ‘home’ in these terms, with similar consumer behavior and business traditions. China and is of course different in this respect so IKEA took slight changes in their strategies while working in China.
  13. 13. SWEDEN Product Related Laws in Sweden According to the Swedish furniture industry the share of materials used in furniture production should be consists of 70w%2 wood (-based material), 15w% padding materials (mainly polyurethane and polyester foam), 10w% metals and 5w% other materials (plastics, textiles, glass, etc.) Sweden authority encourage the use of recycled plastic, to reduce production-related mpacts, as well as the use of renewable resources. Ensure recyclability and separability of packaging materials and furniture parts .  IKEA in SWEDEN In the beginning Ingvar Kamprad sold pens, wallets, picture frames, table runners, watches, jewelry and nylon stockings or any product where there was a need and could be filled at a reduced price. His products were now distributed via the county milk van and delivered to the nearby train station. Furniture produced by local manufacturers was first introduced into the IKEA product line in 1947, the response was positive and offerings were expanded. In 1951 the first IKEA furniture catalogue was published and with this success the opportunity of becoming a furniture provider on a larger scale became a possibility. Mr. Kamprad now made the decision to discontinue all other products and focus exclusively on low-priced furniture, and the IKEA that we know today was born. 1953 IKEA found itself in a price war with its main competitor. As both companies lowered prices quality was also at risk. To counter this, the company opened its first furniture showroom in Älmhult thus presenting their products in three dimensions
  14. 14. function, quality and low price. Customers did just what IKEA had hoped, they wisely chose the products with the best value for the money and for the first time it was possible to see and touch the product before ordering. By 1955 IKEA began designing their own furniture as pressure from competitors caused suppliers to boycott the successful firm. This move leads to a more innovative design, and function and even quality product at lower prices. Later IKEA focused on functionality and innovative ideas and started selling simple, innovative designing furniture at low pricing. After the success of furniture IKEA focus on other product categories which are used in home interior like textile, lightning, laundry, kitchen and appliances, cooking utensils, gardening, etc. the IKEA assortment is around 10 000 products that the stores can choose from. In Sweden the stores are fairly small and carry only 6-7 000 of the available products in the general assortment. After extending the product range IKEA decided Sewdish name for every product. Now all products of IKEA in the world have Swedish names. The IKEA product range are modern but not trendy, functional yet attractive, people-focussed and child-friendly - carries on these Swedish home furnishing traditions. Many people associate Sweden with a fresh, healthy way of life. This Swedish lifestyle is reflected in the IKEA product range. United Kingdom Product related laws in UK According to UK Authority If you have been given a date for delivery, the trader must deliver your goods by that date. If they don't, the trader has broken their agreement with you and you may be entitled to ask for compensation.
  15. 15. The Furniture and Furnishings (Fire) (Safety) Regulations 1988 (amended 1989, 1993 and 2010) are UK law and are designed to ensure that upholstery components and composites used for furniture supplied in the UK meet specified ignition resistance levels. There are six main elements contained within the Regulations:  Filling materials must meet specified ignition requirements  Upholstery composites must be cigarette resistant  Covers must be match resistant  A permanent label must be fitted to every item of new furniture (with the exception of mattresses and bed-bases)  A display label must be fitted to every item of new furniture at the point of sale (with the exception of mattresses, bed-bases, pillows, scatter cushions, seat pads, loose covers sold separately from the furniture and stretch covers)  The first supplier of domestic upholstered furniture in the UK must maintain records for five years to prove compliance. IKEA in UK IKEA has a fairly long history in the UK, having entered the market in 1987 and now has 17 stores in the UK. Expansion plans include a further 7 stores in the near future. The UK is one of IKEA’s major markets, the second to third one in size after Germany and the USA. The target group is mainly women in families aged 25-45 and middle-class. This then varies with different products and product groups. Overall the assortment in UK stores is not different from anywhere else in the IKEA world. The beds sold at IKEA are bigger than the normal UK size but that is something that IKEA tries to make a point of (so no adjustment has been made here). IKEA implemented its standardize strategy in UK. Adjustment of electrical products is, of course, made but in general there is no adjustment in the merchandise sold in the UK. All the normal supply chain is used and larger products are sourced in Europe while accessories are sourced in other parts of the
  16. 16. world. IKEA in the UK also has a low price image and promise to the consumer, this is very important in the marketing: low prices but good quality. In recent years, as elsewhere in the IKEA world, one of the premier marketing focuses has been on cutting prices. Allegedly prices has been cut by more than 20% over the last 8 years. CHINA IKEA in China For IKEA the step into the Chinese market was a big step. Initially IKEA implemented its standardize strategies in China as IKEA implemented in Europe, as a result IKEA faced drastic problems in China. For instance, IKEA is used to be perceived as having low prices in Europe and U.S, this also one of the competitive cornerstones of the whole concept of IKEA there. But this is not the case in China; here the perception is a fairly exclusive western retailer, a store of expensive products for the higher middle class. Because of it IKEA was facing the problem of Coping in China as many Chinese shoppers in IKEA were drawing pictures of the furniture and scribbling down descriptions of the products but not necessarily buying them. Initially IKEA offer entire range of products in China but Company observed that country most customers buy what IKEA call market-hall products, i.e., everything but furniture. Another problem is that Chinese see IKEA products as innovative and not traditional. Square tables are for example not traditional (round tables are tradition) and many of the colors used are not traditional to the Chinese. After facing a lot of problems, IKEA decided to change their strategies in China by considering Chinese culture and Chinese consumer Behavior. Then IKEA targets different group of people in China than in countries later in the IKEA ‘life cycle’ (i.e., life cycle based on how long IKEA has been on a market). The main target group is female
  17. 17. customers – 65 % of all customers. Women, (age30-45) according to IKEA, stand for change in China and they welcome change. Men are also part of the target group but more indirectly as women are the ones in the family having home furnishing interest and making the actual decisions. Many from IKEA’s target group are What in China is known as ‘the little emperors’: the generation born into the One Child Policy. While IKEA has accepted that to some extent, the main strategy has been to cut more prices. IKEA tries to position itself as a company with an unique competence when it comes to interior design. Helping customers with this is the basic message, rather than selling individual products at low prices but at affordable prices. Many Chinese live in small apartments and IKEA can help with smart solutions of for storage that makes life easier e.g in China beds sold are shorter (190cm) than standard-sized beds (200cm). Chinese live in apartments with balconies and this space of the apartment is very important to the Chinese. IKEA has added settings in the store that show how Chinese can furnish your balcony and a special balcony section in the stores. So, IKEA offer Products having cultural and traditional essence of Chinese like chopsticks, wok with a lid and a cleaver, a special set of tea cups, small beds etc. INDIA IKEA in INDIA
  18. 18. Swedish furniture giant IKEA’s impending entry into the Indian market has awakened scores of international furniture companies to the potential here. Before it Indians purchased IKEA product from online sites like Alibaba.com, OLX.com etc. Those who were either dilly-dallying over investing in India, or who were lying low in the Indian market, are stepping up operations and investing in marketing to brace themselves for competition once IKEA arrives. For instance, German company Nobilia, which used to market its products through Indian retailer H&R Johnson under the Johnson Kitchens brand, now wants to sell the products under its own name and establish its brand. Once IKEA comes in, it might be too late for companies to start marketing their brands. IKEA is intended to invest Rs 500 crore in India over the next five years to set up manufacturing facilities and for training and research and development. According to Indian chief of Swedish giant IKEA chain is willing to wait years to find the right location to open its first Indian store and want to open 5o new stores in india uptill 2015. He thought thar 'Green Sweden and giant India need each other. The Indian government approved IKEA’s 105-billion rupees ($1.95-billion) and permits them to open only 25 of its trademark blue-and-yellow stores in India as part of a wider push into emerging markets to increase sales. IKEA has already planned to take a long- term approach in India by proposing to open 10 stores in the first decade phase of store launches followed by 15 outlets in the second phase. IKEA already sources many products from India and plays a major role in India’s exports; the company is responsible for 20% of all rug exports from India and in future Ikea might use more of its Indian vendors for its global needs. In Russia for example 40% of all Ikea products sold are produced in Russia. More then 50% of the units sold in China are produced in China. Hence, Ikea’s India operation will probably source much more than the required 30% in the long run
  19. 19. Though India is not rich in natural wood, Ikea could help develop new non- wood categories like outdoor patio furniture, etc. A large number of these vendors will be small and medium sized enterprises and therefore help create manufacturing. IKEA entry into India will meet with five important customer needs: 1. Fantastic value for money (design, function, quality at low prices) 2. Exclusive products (Scandinavian design sold only at Ikea, plenty of options) 3. Inspiration and ideas (solutions for your home) 4. Ease of shopping (everything in one place, take home direct, big parking space) 5. Fun (a day out, eat at the restaurant inside the store, leave children at the children play ground etc.) We are looking to cater to the real middle-class in India," aiming to offer "good quality home furnishing products and solutions at affordable prices. 2- PRICE Quality home furnishing products at affordable prices: Low prices are the cornerstone of the IKEA vision, business idea and concept. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone. After all, our vision is to create a better everyday life for everwhere. We are constantly trying to do everything a little better, a little simpler, more efficiently and always cost-effectively. All IKEA units play an important part in creating our low prices which we are then able to offer our customers.
  20. 20. Seeing things differently One IKEA product developer decided to use a door as a tabletop when he toured a door factory that used board-on-frame construction - a layering of sheets of wood over a honeycomb core that gives a strong, lightweight structure with a minimal wood content. This type of construction is cost-effective and environmentally friendly and is used today in IKEA products such as the LACK table from 1980. Developing and producing our product range At IKEA we design the price tag first and then develop the product to suit that price. IKEA product developers and designers work directly with suppliers to ensure that creating the low prices starts on the factory floor. They consider maximizing production equipment, using raw materials efficiently and applying technical innovations and the best possible design. It is all about making the most of our production process, keeping waste to an absolute minimum and considering flat-pack transportation and self- assembly. IKEA of Sweden in Älmhult, Sweden, develops the entire IKEA range. 10 Keys to IKEA's Low Prices Just how does IKEA manage to offer such consistently low prices? Many people think that it's because the furniture is made cheaply, which isn't exactly true. Read on to find
  21. 21. out about some of IKEA's less obvious cost-saving strategies. 1.Recycling The Recovery Department (of which, the AS-IS room is part) is responsible for sorting and recycling all recyclable materials, including packaging broken down in-store as well as materials collected from customers at recycling donation bins where available. 2.AS-IS Products not suitable for sale at the full retail price (floor samples, returns, items damaged in shipment, etc.) are placed for sale in AS-IS, generating revenues that might otherwise be lost to waste. The Recovery department also recoups parts from damaged items, making spares available to customers who need them. 3.Waste Reduction IKEA's designers and engineers strive to reduce the amount of material used and wasted in production. Additionally, many waste products are then used to make new products, further reducing overall costs both to the pocketbook as well as to the environment. 4.Automatic-selling Despite the showrooms showcasing IKEA furniture in real living arrangements (typically located upstairs), IKEA is a warehouse store designed to maximize customer self-sufficiency with minimal reliance on staff assistance. Cost savings stem from reduced wages, training costs and lower design, maintenance and outfitting costs associated with the marketplace and warehouse areas of the stores. 5.Thriftiness Frugality is a value highly prized by IKEA's founder, Ingvar Kamprad. Though listed as one of the world's richest men, he continues to fly economy as do IKEA's top-level managers when on business travel. Stores encourage employees to turn out lights in offices, turn off computers and reduce overall energy consumption by using compact
  22. 22. fluorescent light bulbs. 6.In-house design Virtually all of IKEA's products are designed by IKEA's staff of in-house designers who are well versed in creating trend-setting designs while working from a set pricepoint. In-house design also means there are no large design commissions to be paid. 7.Economies of Scale IKEA utilizes it's massive economies of scale to secure long-term contracts with manufacturers and to reduce costs of raw materials through bulk-buying. Because of their sheer size, they can demand lower prices for materials which suppliers can afford to give if they have a steady income. 8.Transportation All transportation of IKEA products is by cargo container - either via cargo carrier for overseas transportation or via tractor-trailer for ground transport rather than by more expensive air transport. Transportation costs are also minimized by carefully locating distribution centers and stores for optimum travel efficiency (see below). 9.Strategic Placement IKEA Stores are strategically placed in high-density areas to guarantee store traffic and along highway/interstate routes to maximize visibility. Expansion plans take into account not only the proximity to a highway, but also the distance from a distribution warehouse - this minimizes the expenses associated with stocking the warehouses. 10.Minimal packaging The ubiquitous plain brown corrugated cardboard is the packaging material of choice for a reason - it's cheap, easy to recycle and can be made to fit around almost any product. Small labels on the boxes identify the products within. Printing wordless instruction materials also saves money by eliminating the need to translate the written word to the
  23. 23. native languages of the many nations in which IKEA retails. IKEA is constantly seeking ways to reduce costs as it is in integral part of the corporate culture. With IKEA, you're not getting reduced prices on previously overpriced products; you're getting real honest to goodness value. And that's something worthwhile. GLOBAL PRICING STRATEGY In order to maintain cost leadership in the market, internal production efficiencies must be greater than that of competitors. Under Ikea's global strategy, suppliers are usually located in low-cost nations, with close proximity to raw-materials and reliable access to distribution channels. These suppliers produce highly standardized products intended for the global market, which size provides the firm with the opportunity take the advantage of economies of scale factors. Ikea's role is not only to globally integrate operations and centrally design products, but also to find an effective combination of low-cost, standardization, technology, and quality. In the case of Ikea, a standardized product strategy does not mean complete cultural insensitivity. The company is rather responding to globally emerging consumer tastes and preferences. Retail outlets all over the world carry the basic product range which is universally accepted, but also places great emphasis on the product lines that appeal to local customer preferences
  24. 24. Pricing laws in countries: SWEDEN Sweden is the origin of Ikea. And the low cost strategy strategy started from Sweden. In 1956 the Restrictive Trade Practices Act was supplemented by two new laws; the Compulsory Notifications Act empowered the relevant agency to request information from companies on prices and competition, and the General Price Control Act provided an option to introduce a price freeze and other kinds of price control when the general price level was at risk. These two laws were to be applied by a new agency, the Price and Cartel Office (PCO). The reasoning behind these reforms saw the final abolition of remaining permanent price controls as possible on three conditions: (i) a permanent price monitoring in order to assess whether competition would be sufficiently effective as price regulator, (ii) information on prices in order to strengthen consumers‘ knowledge and awareness, and (iii) enhanced powers to act against restrictive business practices. UNITED KINGDOM Almost all fixed term prices are prohibited by competition law; it is an offence to conduct any of the following:  form price agreements with competitors  slash prices beneath cost to force a lesser competitor out of the market  limit production to raise prices, or share market bids  agree a purchase price with competitors regarding offers to suppliers  enforce a minimum price on other distributors i.e. shops Not only are formal agreements covered in this section of the law but additionally activities with a price-fixing effect; i.e. discussing pricing plans with competitors, only to
  25. 25. raise prices to sway competition. As with any law to ensure all circumstances are taken into account. There are of course some exemptions, with some agreements not prohibited by competition legislation, specifically between smaller companies with insignificant market shares. These instances are rare with particularly few occasions regarding authorized agreements in price-fixing. CHINA 1. To fix prices that are subject to market regulation; 2. To fix prices within the guided range as set by the government; 3. To fix prices for new products which are subject to government-set or guided prices, except special products for trial sales IKEA aims its target group on young low to middle income family. So it always try to keep cost between manufacturers and customers down, which is the basis IKEA used to be successful in its target market. According to what the IKEA China manager Ian Duffy said, IKEA will still remain the low price strategy to make the products more affordable for more customers. The IKEA’s product price did decreased by about 12 percent in 2002 in China, which attracted more customers to choose it. In present days, IKEA launches a new strategy called “The Lowest Price in Beijing”. According to the new strategy, the price is going to be 20% cheaper than other home furnishings stores. The Chinese are famous for their reluctance to spend their money. Due to this reason, IKEA launches the low price strategy when entering the Chinese market while other western retailers always set 20% to 30% higher price than local markets in China. The IKEA’s low pricing strategy in China’s market does make a great effect on attracting customers and helps it expands market share successfully. It also helps the brand be differential from its competitors.
  26. 26. INDIA Low Price strategy It is a prerequisite for the IKEA concept to realize the IKEA vision: “TO create a better everyday life for the many people”. As IKEA aims to reach many people, IKEA product range bears low prices in which IKEA designs play a major role by using production capabilities from other areas in unique and unimagined ways. The product target retail price in INDIA will be estimated through “the matrix” which consists of 3 basic product ranges. Within each price range the company would survey the competition to establish a benchmark and then set its own price point 30-50% lower than that of its rivals.
  27. 27. 3- PLACE The Place or distribution Place is concerned with making available the products at a place where (s) he demands. Thus, it is concerned with the store where the goods shall be displayed and sold, the channels of distribution and logistics management through which goods will flow from marketer to consumers. Chain or path or route in the channels may be marketer to consumer or marketer to retailer to consumer, or marketer to wholesaler (also referred to as distributors) to retailer to consumer, or agent to wholesaler to retailer to consumer. The organizations between the marketer and the consumers are known as intermediaries. Each one of them has an important role to play. SWEDEN IKEA in Sweden IKEA’s first store in Sweden, the first in the world, was opened in 1959 in Älmhult, in Småland. IKEA today has 17 stores in Sweden and IKEA is a big part of home decoration
  28. 28. in Sweden – and has been so for many years. IKEA is well-known in Sweden, i.e., Swedes have knowledge about IKEA products, stores and the company, many Swedes have had IKEA furniture for generations. Location and store formats In Sweden IKEA stores are located as in much of the IKEA world: outside city centers, with a focus on consumers using their own cars to travel to and from IKEA stores. For IKEA, establishing an IKEA store in Sweden if fairly easy, IKEA gets many propositions from different areas and towns in Sweden wanting an IKEA store. One of the recent and much publicized openings of IKEA stores in Sweden was the store in Haparanda Tornio. Haparanda Tornio is in the far north of Sweden (on the border to Finland) and launch of the store there has been a big success not only for IKEA but forth whole community (which is an area where depopulation is a major problem). However, even though it is easy to find places to establish IKEA stores in Sweden, there is still (also for IKEA) competition about the good places to locate a store. As mentioned above, IKEA stores in Sweden has been fairly small, in the lower rim of square meters and number of articles stored. There are plans to refurbish stores and make them bigger, and new stores are always bigger than the older ones. Otherwise the format of the store follows the IKEA standard layout with parking lot outside the store and a two floor store. Some new stores, like the new store in Malmö, is planned to be build on pylons and have the car park under the store
  29. 29. UNITED KINGDOM IKEA in the UK IKEA has a fairly long history in the UK, having entered the market in 1987 and now has 17 stores in the UK. Expansion plans include a further 7 stores in the near future. The UK is one of IKEA’s major markets, the second to third one in size after Germany and the USA. Location and store formats The fact that the UK has 17 stores and around 60 million inhabitants, Sweden has 17 stores and 9 million inhabitants tells us that UK retail planning laws are very strict and difficult for big block out of town retailers like IKEA. The lack of new established stores has been a major concern for IKEA UK for many years and that also forced some new thinking concerning the layout of an IKEA store. Normally it would be big parking space and two stores but starting in the UK, IKEA has started thinking differently on how an IKEA store is set up. This has lead to an adjusted concept store in Coventry with three levels and a closer to city centre location. Whether that is now the solution for IKEA UK to set up more stores or not is not clear. Most of the stores in the UK are set up the standard way and has an out of town location, encouraging customers to use their own cars to access the store. CHINA IKEA in China
  30. 30. For IKEA the step into the Chinese market was a big step, maybe as big at the first step abroad to Switzerland and the first store on foreign soil in 1973. It meant entering China and its gigantic – at least potentially –consumer market. IKEA’s customers are also well educated, living in big cities in China. With increasing salaries of the target group, the target group for IKEA increases every year. The customer in China buys less when they visit the store than the IKEA average customer. But in Shanghai for example, the core customers visit IKEA more often than anywhere in the world: 33% come every month. This means – among other things – that there is a need for a lot of change in the store. The Shanghai store rearranges room settings at least seven times a year, for new product or just for different holidays and campaigns etc. IKEA’s offer is to supply affordable solutions to Chinese customers, but the overall image is another one forcing IKEA to offer other values to their Chinese customers. IKEA compares different countries by using a typical IKEA basket of goods. The Swiss only have to work 2 months to buy the basket while the Chinese will have to work 1 year and 6 months. Location and store formats The big-box IKEA format is unusual in China were shopping traditionally is done locally and with specialist stores. IKEA stores in China are located closer to city centre than what is the case in other parts of the world were IKEA stores are usually located well outside city centre and suburbs. In China the location is closer to some type of city centre while the location is not exactly down town. A location well outside the city would not have been ideal in China as consumers do not have access to cars like European and US customers have. Here the stores have to be where public transportation can take people, and where there is some kind of hub where many people pass through. A good example is the Shanghai store which is very close to several bus lines and one of the metro lines in Shanghai. However, as the Shanghai stores have 700 parking places under the store, IKEA is expecting Chinese shopping patterns to change in the future. Public transportation to the store is a contributing factor to the service level: home sending services are more common and more used here (while they are available also in other parts of the IKEA world). Also, outside the store in Shanghai (and outside other
  31. 31. IKEA stores in China) you will see entrepreneurs setting up to transport home for people and also following that with actually putting the furniture together for IKEA consumers in their homes. In the new Beijing store – the large IKEA store outside Sweden interesting adjustments have been made to the store format. The store here have wider aisles to cater for the fact that IKEA stores in China have up to three times more visitors than IKEA store elsewhere in the world. INDIA IKEA in India Location and store formats Swedish furniture retailer IKEA, which is scouting for the right location for its India stores, is reportedly in talks with the Uttar Pradesh government to open its first store in Greater Noida. Even though the Samajwadi Party-led state government is against FDI in multi-brand retail, it has reportedly welcomed Ikea's single-brand investment with open arms and is ready to provide land at Greater Noida for IKEA with the necessary infrastructure to build on. According to a report in Indian Express, officials of IKEA India met state principal secretary for infrastructure and industrial development, Surya Pratap Singh on Wednesday to set up their "first integrated unit for furniture manufacturing and selling,". The company officials are expected to visit Noida and Greater Noida early next month to see evaluate the infrastructure and identify an appropriate site. IKEA said it has been sourcing from India for more than 25 years. For each store the company plans to acquire around 12-17 acres of land. The outlets will include a showroom, a market hall, a self-service warehouse along with a restaurant, the report added. However, the company is expected to take at least three years to open a store from the time of identifying a location. So, the first IKEA outlet in India is not expected before the end of 2016. Currently, the biggest priority for IKEA is to find the right location for its stores at the right price in major cities, with easy access to public
  32. 32. transport (metro) and good road network. In August, IKEA CEO Michael Olsson had informed Union Minister for Commerce & Industry Anand Sharma that the Swedish furniture major has identified four states - Haryana, Andhra Pradesh, Maharashtra and Karnataka - to set up its stores. The firm has proposed setting up 10 furnishing and home ware stores as well as allied infrastructure in over 10 years in India. Subsequently, it plans to open 15 more stores. The government had allowed IKEA to run cafes and restaurants within its single brand stores in India, but it cannot sell packed food items. It can sell food and beverages at its restaurants or cafes located within its stores. 4- PROMOTION Advertising Advertising is the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media.”-Bovee Promotional activities of various countries and their Advertising Laws Advertising Regulation: Advertising regulation refers to the laws and rules defining the ways in which products can be advertised in a particular region. Rules can define a wide number of different aspects, such as placement, timing, and content. In the United States, false advertising and health-related ads are regulated the most. Many communities have their own rules, particularly for outdoor advertising. Sweden and Norway prohibit domestic advertising that targets children.
  33. 33. IKEA Promotional Strategies IKEA's advertising campaigns were based on unique marketing conditions and cultural sensibilities of each country, which varied significantly across markets. For example, European advertisements, especially in the UK, were more straight-forward than those in North America, which were generally more witty. IKEA was present in some countries such as Canada, Australia and Germany for over twenty five years while in countries such as the US, Britain and Italy, it had been around for only a little more than a decade. Over the years, IKEA had worked with different advertising agencies to bring out some of the most creative and unconventional television spots across the globe. For these reasons, an IKEA account was considered a choice catch as it allowed the agency the freedom to explore some interesting and unexplored ideas IKEA’s HOME LAND Sweden Sweden Promotional laws There is an act known as Swedish Marketing Practices Act (MPA), which regulates most aspects of advertising and promotional activities in Sweden done by companies residing in Sweden. These include: 1- Marketing must never be misleading; therefore a sufficient and clear information regarding the offer the marketing concerns must be provided to the buyers. 2- Offering that display free gifts are generally allowed, “free” gifts must however really be free, otherwise the advertising may be judged misleading. Sweepstakes, lotteries and contest where chance influences the outcome to an appreciable extent require a license. Licenses are usually only given to state-owned gambling companies. Licenses are never given to lotteries/sweepstakes arranged for marketing purposes.
  34. 34. 3- There are special rules on the marketing of alcohol, tobacco and pharmaceuticals. 4- If a promotion is open to persons in their capacity as employees, it must be designed with care. Otherwise it risks coming into conflict with the rules on bribery. According to Swedish law it is a criminal offence to offer an employee (public or private) a bribe or other undue compensation for the exercise of his/her duties. A bribe is any offering that is objectively intended to influence an employee’s exercise of his/her duties. 5- According to Swedish court precedence gifts, study tours and dinner offers are examples of activities that are considered to be bribes. Special precautions must be observed when offering such activities to public employees. 6- There are no such formal disclosure requirements according to Swedish law. There are however rules regarding information. A marketing message must be designed and presented so that it is clear that it is marketing. It must also be clear who is responsible for the marketing Sweden's promotion policy Promoting Sweden's economic interests and the image of Sweden is a core task of the entire Foreign Service. Trade, investment and promotion of Sweden are closely linked with the Government's efforts to establish better rules in the EU internal market and to increase free trade globally. Sweden is a trade-dependent country and a strong supporter of free trade. All the parties represented in the Riksdag support the free trade line. Sweden's image Two thirds of exports go through just 100 or so companies. This makes Sweden dependent on the success of these companies. Expanding the export base - both encouraging more companies to export and exporting to more markets - is completely essential for Sweden. Achieving this requires promotion of Sweden's image, Swedish exports and investments in Sweden. Initiatives to strengthen Sweden's image - Sweden
  35. 35. as a 'brand' - create knowledge, interest and confidence in what Sweden and its partners have to offer. One of the most important tasks of missions abroad is to provide support and advice to companies that are active internationally. Promotion carried out by missions abroad has several obvious strengths: access to decision-makers, practical help to Swedish companies on-site and dealing with trade barriers. Trade barriers Trade barriers are a considerable problem for many companies. This may involve problems for export companies trying to gain entry into markets as well as obstacles to Swedish companies starting up abroad. The MFA has produced a handbook as part of the efforts to identify and combat trade barriers. It is intended to provide support in the day-to-day work of assisting companies. If a company experiences trade barriers within the EU/EEA, it should contact SOLVIT, which is a European network for handling trade-related problems. The National Board of Trade is Sweden's SOLVIT representative. Purpose of Promotional activities in Sweden Trade and investment promotion aims at encouraging growth, full employment and development in Sweden by promoting exports, imports and foreign investment in Sweden. Creating a strong image of Sweden abroad is another means of promoting Sweden. The purpose is to reflect Swedish innovation and creativity, and also our Swedish values. Promotion is about creating favorable conditions for Swedish interests and raising Sweden's profile. The Sweden's embassies and consulates work together with government agencies such as the Swedish Trade Council and Invest Sweden, and also with private companies, to make it easier for the Swedish business sector to compete in international markets and to contribute to increased Swedish trade and more foreign investments in Sweden. To built up level of cooperation and long-term relations with other countries through exchanges in culture, education and science.
  36. 36. Advertising and promotion 1- Catalogue: In Sweden the catalogue is the most important promotion tool. It makes IKEA unique, is a source of inspiration and is the most important printed marketing tool IKEA has. In Sweden the launch of the new catalogue is a major thing, something that all major newspapers have lengthy reports about and that is a major PR thing. 2- IKEA Family was first launched in Sweden 3- First loyalty cards and clubs: in Sweden. Today it is still one of the bigger ones with 1,7 million members and is still a very important marketing tool for IKEA in Sweden. 4- Internet: The web is also important for IKEA Sweden, maybe especially for new groups of customers (for example younger customers) and because it is a good way to make customers prepare for the store visit and it is also there IKEA can make accessible different planning tools like for instance the kitchen planning tool.
  37. 37. 5- Target market: IKEA’s approach to the Swedes in advertising and promotion is intended to be youthful and different, fun and surprising, emphasizing that nothing is impossible but that the company also is very honest and human. 6- Re launch campaign: At the moment IKEA in Sweden is in a period of‘re-launch’. While being well known (as IKEA is in Sweden) is often an advantage, it can also be a disadvantage. Consumers get used to the company and the rebellious attitude and image is hard to keep when penetration – in many age groups – is very high. Compared to many other IKEA countries, IKEA in Sweden is in another part of the IKEA lifecycle where consumers have homes filled with IKEA furniture and accessories, IKEA is the market leader for kitchen in Sweden etc. How do IKEA make the Swedes still find it exiting and new? The line for 2008 is ‘Decorate the home as you want to live’ and ‘long live diversity’. Examples of IKEA campaigns points to the diversity of the Swedes in terms of ethnicity, showing different ethnic groups in Sweden as customers. One of the more well known and longest running campaigns is the one with the slogan ‘Not for the rich but for the wise’ emphasizing that IKEA has high quality for low prices and that wise customers realize that.
  38. 38. 7- Store outlook The stores are the main marketing tool of IKEA in Sweden, this is where the customer comes and this is where they can see what it is all about. As indicated above, IKEA stores have been fairly small in Sweden. The stores in Sweden are set up in a fairly standard way. PROMOTIONAL ACTIVITIES Regulation IN UK United Kingdom In the United Kingdom, advertising content regulation is governed by the Advertising Standards Authority. In UK most forms of outdoor advertising such as the display of billboards is usually regulated by the UK Town and County Planning system. Currently the display of an advertisement without consent from the Planning Authority is a criminal offence liable to a fine of £2500 per offence. All of the major outdoor billboard companies in the UK have convictions of this nature. The Advertising Standards Authority (ASA) is the self-regulatory organization (SRO) of the advertising industry in the United Kingdom. The ASA is a non-statutory organization and so cannot interpret or enforce legislation. However, its code of advertising practice broadly reflects legislation in many instances. The ASA is not funded by the British government, but by a levy on the advertising industry. Its role is to "regulate the content of advertisements, sales promotions and direct marketing in the UK" by investigating "complaints made about ads, sales promotions or direct marketing", and deciding whether such advertising complies with its advertising standards codes. These codes stipulate that "before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective
  39. 39. substantiation" and that "no marketing communication should mislead, or be likely to mislead, by inaccuracy, ambiguity, exaggeration, omission or otherwise All marketing and advertising should exhibit: An accurate description of the product or service, legal, decent, truthful, honest, socially responsible (not encouraging illegal, unsafe or anti-social behavior). There are regulations that restrict what advertisers can and can’t do. As well as the regulations, there are 2 advertising codes of practice that help companies advertise legally. You must describe your product or service accurately. Data protection Law If you’re gathering, storing or using information about customers or potential customers, you must also protect their data. Advertising to consumers The Consumer Protection from Unfair Trading Regulations means company can’t mislead or harass consumers by, for example: including false or deceptive messages, leaving out important information, using aggressive sales techniques Advertising to businesses Advertising to businesses is covered by the Business Protection from Misleading Marketing Regulations. As well as being accurate and honest, you must not make misleading comparisons with competitors, that includes: using a competitor’s logo or trademark, or something very similar, comparing your product with a competitor’s product that’s not the same Penalties If you break the regulations, you could be reported to either a local Trading Standards office or the Competition and Markets Authority (CMA). You could be fined, prosecuted or imprisoned.
  40. 40. Advertising codes of practice There are 2 advertising codes of practice that describe how businesses should advertise. They cover all kinds of promotional communications, depending where the advert or promotion will appear. Non-broadcast media The Committee of Advertising Practice code has rules that cover non-broadcast advertising (eg print, online), sales promotion and direct marketing (eg telesales and email). The code specifies standards for accuracy and honesty that businesses must stick to, including specific conditions, eg: advertising to children, causing offence, political advertising, Broadcast media (e.g TV, radio). You must follow broadcast codes that cover issues including taste, decency and product placement. Enforcing the rules The rules are enforced by the Advertising Standards Authority (ASA). Anyone who thinks advertising rules have been broken can complain to the ASA within 3 months of the advert appearing. If an advert breaks the rules, it may be withdrawn. If the product doesn’t match the description or the advert breaks the law, you could be prosecuted. Describing your product You must describe your product accurately. This means if you make a claim about your product, you must be able to prove what you say. Prices Your adverts must describe the actual cost accurately, including any ongoing or associated costs (eg subscription fees) and taxes (eg VAT). Example: A customer pays £50 a product, without being told the price doesn’t include VATS. This was not explained in the advert, so the advert is misleading.
  41. 41. Direct marketing You must check if customers want to be contacted by fax, phone, post or email, and give them the chance to object. When you collect customer details, you must get their permission if you want to send them other offers or promotions. You must also ask for their permission if you want to share their information with another organization. Telesales and fax marketing You must say who you are when you make a telesales call, and give your address or phone number if you’re asked for it. The number for customers to call must be a free phone number. You’re not allowed to send marketing faxes to individuals unless you’ve received their prior permission, but you can send unsolicited faxes to companies. You must check that you’re not contacting anyone who’s asked not to receive these calls or faxes, using the: Telephone Preference Service, Fax Preference Service. It’s illegal to phone or fax someone registered with these services if you don’t have their permission. You can be fined £5,000 for each unsolicited phone call. Automated calls If you want to make automated calls - with pre-recorded phone messages - you must get the permission of the individual or business first. Direct mail Check that your mailing lists don’t include anyone who’s asked not to receive direct mailing, using the Mail Preference Service. UK IKEA Campaigns 1. Digital catalogs:
  42. 42. IKEA, the world's largest home furnishing retailer, is one of the early adopters of the digital mode of marketing and has made maximum use of the social media clubbed with massive emphasis on its digital catalogue which forms the core of the retailer's marketing strategy. With 345 operational stores across the world, IKEA's digital marketing strategy remains almost uniform - extensive use of social media with separate country pages for respective markets and an ever increasing stress on digital catalogue applications which can be downloaded on app stores such as Google Play and the Apple store. "The 2013 edition of the IKEA catalogue application was downloaded almost 10 million times IKEA informs. "Ever since 1951 the IKEA catalogue has been a source of inspiration, a reference for home furnishing knowledge; even as it (the catalogue) continues to evolve and improve” 2- Internet
  43. 43. Facebook: There are a minimum of 1.5 lakh fans on each of IKEA's country pages. It has quiet a huge fan following. The retailer's social teams pose questions, links to photo albums and post YouTube clips to increase engagement Twitter: IKEA has separate twitter feeds for all its country-specific twitter pages. Ikea makes these pages engaging by fascinating its followers to indulge in campaigns such as celebrating the 'Bring your Own Friends Day (BYOF) Pinterest: This is an obvious choice for a retailer which deals in home furnishings, as this claims to be the official 'visual discovery tool'. Making best use of Pinterest, IKEA visually presents its merchandise to local markets in the UK and other countries.
  44. 44. Google +: IKEA's Uk page entered Google + only recently (January, 2014) and has the lowest following out of all of its pages. The retailer has apparently not been able to make much use of this platform even as the main page was launched in December 2011 Outdoor Campaigns: While promotion of its catalogue through online mode constitutes almost 70 percent of its annual marketing spend, IKEA also makes judicious use of OOH (Out of home) by creating high engagement outdoor campaigns - one being in Paris (around the Gare Saint Lazare) where the furnishing retailer, based on the fact that half of the French people live in places with bathrooms smaller than 8sqm, installed a life sized bathroom on one side and a laundry room on the other. To add interaction to the 3D panel, IKEA deployed two actors (at peak commuting times in the morning and the evening) to stand on the panel pretending to perform everyday bathroom activities such as showering or shaving. Indoor Garden, London: Besides outdoor bathrooms in Paris, IKEA also created indoor gardens in London. IKEA with the help of the JCCaux (world's largest outdoor advertising agency) took to the indoor environments of Waterloo and Liverpool rail
  45. 45. stations in the UK, to show to commuters that they could 'make more of their outdoor spaces'. A pop-up shop invited commuters to sit down and observe the wide range of outdoor solutions available in the IKEA store that could help them transform their outdoor space. Price tags were also part of the wrap, making each column look like an actual product display. CHINA China’s Promotion laws
  46. 46. Advertising in China is regulated by the 1994 Advertising Law. The law’s Article 3 stipulates that advertising “must comply with the requirements of the construction of socialist spiritual civilization.” Article 7 adds that it must “uphold public morality and professional ethics, protect national dignity and interest” and that it must not “hinder social stability”, “not harm the public interest of society”, “neither impede the public order of society and violate good social customs”, and in particular must not “have obscene, superstitious, terroristic, violent, or ugly content.” While this is mainly a regulatory body for the advertising business rather than for the content of advertisements, it has a Department of Advertisement Supervision, whose functions include “guiding the work of advertising approval bodies; setting up a complete system of advertising censors,” and “organize administrative responses to cases of illegal advertising activity.” But who the “advertising approval bodies” are remains unexplained, and as of mid-2006, the only document of a regulatory nature issued by this department that was available on its website concerned the banning of advertising of text messaging and telephone services with a sexual content. Later in the year, it was the General Administration of Press and Publications – the body that is normally in charge of approving publications – that, together with the State Administration of Industry and Commerce, issued a ban on print advertising of abortions and for treatments for eleven different diseases including AIDS, cancer, syphilis and epilepsy. Every visitor to China will see innumerable slogans and posters put up to exhort citizens. To one study by Jiang Zemin’s “Three things Represents Important thought before displaying an ad in china; not to spit, to be filial, or to be patriotic. These slogans not only just appear on walls: they are also aired, for example, as advertising inserts in between episodes of popular kungfu movies shown on long-distance buses, right next to mobile phone ads. Radio talk show hosts weave them creatively into their banter: for example, the hosts of a show I heard on Hangzhou’s Traffic Radio chatted about the local dialect and then concluded “we should care for the elderly, that’s a traditional Chinese virtue” and also one favoured by the Party. When slogans do appear on billboards, their design and background uses the same landscapes as the advertisements of travel agencies.
  47. 47. The slogans have multiplied, adapted to the times, and been harnessed by a variety of government bodies as well as by private advertisers. A pop-up Internet advertisement for Samsung’s new MP3/MP4 player – a product for teenagers – in 2006 used the selling line “The Chinese People’s Beloved Company, A Company Contributing to Chinese Society”. According to report, international advertising companies held 21% of China’s advertising market in 2005, including nearly all international brands and China’s largest advertising clients IKEA in China Ikea has been in the Chinese Market for more than 10 years. Its first store was opened in Beijing in 1998. Currently, Ikea has stores in 8 main Chinese cities on their Central Business District (CBD) include Beijing, Chengdu, Dalian, Guangzhou, Nanjing, Shanghai Shenzhen, Shenyang. IKEA is known globally for its low prices and innovatively designed furniture. In China, however, it faced peculiar problems. Its low- price strategy created confusion among aspirational Chinese consumers while local competitors copied its designs. We focus on how IKEA adapted its strategies to expand and become profitable in China. It also assesses some lessons the company learnt in China that might be useful in India, where it plans to open its first store by 2014 and 25 stores in 10 to 15 years. Basically, Ikea implemented its global strategy including its product, promotion, pricing and service strategy in China. However, these strategies did not fit the Chinese market because the low purchasing power of the majority of Chinese consumers, as well as cultural paradigms. In China to meet local laws, it formed a joint venture. The venture served as a good platform to test the market, understand local needs, and adapt its strategies accordingly. IKEA also had to tweak its marketing strategy as it has to do with its pricing strategy. In most markets, the company uses its product catalogue as a major marketing tool. In China, however, the catalogue provided opportunities for competitors to imitate the company's products. Local competitors copied IKEA's designs and then offered similar products at lower prices. IKEA decided not to react, as it realized Chinese laws were not
  48. 48. strong enough to deter such activities. Instead, the company is using Chinese social media and micro-blogging website Weibo to target the urban youth. IKEA also adjusted its store location strategy. In Europe and the US, where most customers use personal vehicles, IKEA stores are usually located in the suburbs. In China, however, most customers use public transportation. So the company set up its outlets on the outskirts of cities which are connected by rail and metro networks. IKEA has been working on becoming more eco-friendly. It has been charging for plastic bags, asking suppliers for green products, and increasing the use of renewable energy in its stores. All this proved difficult to implement in China. Price-sensitive Chinese consumers seem to be annoyed when asked to pay extra for plastic bags and they did not want to bring their own shopping bags. Also, a majority of suppliers in China did not have the necessary technologies to provide green products that met IKEA's standards. Helping them adopt new technologies meant higher cost, which would hurt business. IKEA decided to stick with low prices to remain in business. Advertising and promotion by IKEA in CHINA 1- CATALOGUE vs. BROUCHURES: One of the big differences when it comes to communication with the consumer in China compared to the rest of the world is the reliance on the catalogue. Here it is impossible – cost and reach wise – to distribute it like in many other countries. The catalogue is distributed in the store and in some of the primary market area but here the reliance is more on smaller brochures that are sent out several times during the year. These brochures are produced by the same people in Älmhult in Sweden that produces the catalogue, in order to make sure that the brochures have the same layout and IKEA ‘feel’ as the catalogue itself.
  49. 49. 2- PR ACTIVITIES PR activities are also important involves taking Chinese journalists to Sweden and Älmhult, teaching them about Sweden and IKEA and the roots of the company. 3- OUT OF BOX APPORACH IKEA is known for its ‘out of box’ thinking when it comes to creating interest for IKEA and its products.IKEA start a TV-show in which viewers were offered lessons in home decorating IKEA have run many different ads in China, in TV, newspapers and in print. Themes in campaigns are the same as everywhere in the world but with the Chinese twist (be different, break tradition). Maybe the IKEA advertising line in China is a little ‘softer’ than in other places like in the UK. More humble advertising, do not stand out very much, friendly, home furnishing solutions, educate the consumer, offer partnership for the future in new home furnishing solutions. The ad featured below is typical: The message of the ad is ‘Small changes, a refreshing new life’. Life can be made better, easier and nicer with small means. Small changes are the key word in IKEA ads and in- store. Other ads that IKEA have run have the theme of “do not be like your parents”, a theme that seems to speak directly to IKEA’s target group of young women 25-35 years old (Lewis, 2005). 4- Internet The websites of the different stores in China is also argued to be important: the Internet is a common source of information for the target group, the younger middle class. Also, this source is used as a way to educate customers before coming to the IKEA stores.
  50. 50. 5- IKEA Family IKEA Family was introduced in China in 2007 that work well to attract Chinese customers. 6- Room setting While the products available in the Chinese stores are basically the same as in any IKEA store in the world, the stores do not look the same inside. What IKEA tries to do is to build the room settings not like in the US, not like in the UK or Sweden but in a way that feels relevant to Chinese customers with sizes of rooms and kitchens that are realistic by China standards. So even with the same products, the aim is to make the store in Shanghai look very different from the one in Malmö by the set-up of rooms. Thus: basically the same product range – but adaptation in the store: presentation of goods and home solutions offered. In China the store layouts reflect the layout of many Chinese apartments. One can find people in the Shanghai store that seem to sleep in the beds and sofas, those that read a book with the feet on one of the tables in the room settings, take a nap – but IKEA try to put up with this as they hope that these people will later return as customers.
  51. 51. 7- IKEA Home delivery Ikea provides home delivery – long and short distance – as well as assembly service for a low fee. IKEA has also created delivery drivers that also help assemble your IKEA furniture. These pick-up trucks with drivers are lined up outside the stores. INDIA
  52. 52. India’s Promotional laws At present in India, there is no central statutory agency or uniform legislation regulating the advertising industry. The Indian advertising market as a whole is regulated and controlled by a non-statutory body, the Advertising Standards Council of India (ASCI). In the absence of uniform integrated legislation, it is necessary for advertisers to ensure that an advertisement is in compliance will all local and national advertisement laws. Role of the Advertising Standards Council of India (ASCI) ASCI is a voluntary self-regulatory council established in 1985 to promote responsible advertising and to enhance public confidence in advertisements. The council's objectives are: 1. To ensure the truthfulness and honesty of representations and claims made by advertisements 2. To ensure that advertisements are not offensive to generally accepted standards of public decency 3. To safeguard against the indiscriminate use of advertising for the promotion of products regarded as hazardous to society or to individuals. 4. To ensure that advertisements observe fairness in competition so as to inform the consumer on choices in the marketplace while observing the canons of generally accepted competitive behavior in business ASCI consist of a Board of Governors and a Consumer Complaints Council. The Board of Governors comprises four members from each of the four sections connected with the advertising industry: Advertisers, Advertising Agencies, Media (owners of press, television, radio etc.), related sectors (e.g. outdoor agencies, PR, market researchers, ad producers, business schools)
  53. 53. IKEA IN INDIA IKEA have not yet entered into India but it has made several marketing strategies both traditional and non- traditional which it will use to make Ikea entrance into new market like India a success just as it is successful in other parts of the world. Promotional activities by IKEA in India Traditional Marketing: If we talk about Traditional Marketing. Ikea is planning to use magazines like India’s Times Magazine, Billboards to various major cities of India, TV advertisements in which it is planning to endorse various Indian celebrities and Product placement. Non-Traditional marketing: Here Ikea has planned to take the help of Digital marketing, social media campaign and organizing special events in which all major celebrities, politicians, news editors will be invited from all around india
  54. 54. Purpose of Traditional and non- traditional strategies: These activities will surely lead to the increase in brand awareness, communicate the value proposition of Ikea, educate people about the quality product in a low price and finally attract customers to the store. How can IKEA succeed in India: The good thing to be notice about this company is that before entering into any country it first gives a look at all the possible perspectives that will influence the operations of its business in some way or the other and same is the case with India. Ikea before making a rushy entrance into India it is covering all the major aspects like its target market, its location, Promotional activities planning through conducting professional surveys and using other qualitative and quantitative techniques Promotion analysis 1. In India, Ikea will promote itself as a fashion brand for homes
  55. 55. 2. All media channels will be covered: TV/Print/Digital 3. Initially pull strategy will be executed so that the customers themselves pull out the product from the shop CONCLUSION During initial stages of entry into new markets, IKEA has well gone through a phase of trial-and-error learning before it could hit the bull's eye. For instance, when the retailer entered USA, it had to transform its traditional moose and advertising slogan, "IKEA: The impossible furniture store from Sweden," to "It's a big country. Someone's got to furnish it," because the former was projecting a wrong image of the retailer. Quite naturally, India is another unique market that is waiting in the wings for the home
  56. 56. furnishing retailer to explore. What remains to be seen is how IKEA would adapt to the Indian market and, will it be able to successfully engage Indian consumers with similar innovative marketing tactics that have established the retailer as a marketing success? There is no formula for success that fits all marketing strategies when a global brand decides to try a new market, except perhaps unconditional acceptance and responsiveness to changes. The greatest challenge is to adapt constantly. It's essential for successful marketing campaigns to take into consideration the local approach versus the global/regional desire for standardization. One size-fits-all approach is a rare reality. A consistent global brand promise is a desirable asset but what makes a real difference is to be brave and ready to change the target audience and build a differentiating promise. IKEA made all necessary adjustments to make sure there was no mismatch in its growth ambitions and brand promise. Becoming an inspirational brand which is blogging with the Chinese middle-class youth is an unexpected twist in its brand proposition. IKEA demonstrated courage to get the most relevant changes. By courage I mean all big corporations are ready to shift production, work with local sources, overcome legal requirements but not too many of them are ready to adapt a brand proposition that suits the level of development the market and consumer perception require. IKEA is a strong brand that understands that growing globally requires sacrifices and innovation from global teams, and they are ready to listen, respect and learn from the local environment. The European headquarters' excitement to enter new markets with proven best practices is something of the past, proving that the real shift in the global mindset is to recognize that local versus global can bring optimum results. Yelena Zubareva, Regional Marketing Manager
  57. 57. References 1- https://www.gov.uk/ 2- http://en.wikipedia.org/wiki/Main_Page 3- http://www.asa.org.uk/ 4- http://www.ikea.com/us/en/ 5- http://www.samsungplay.com.cn/k5site/index.htm[2]http://www.saic.gov.cn/flfg/flfg_ detail.asp?flfgid=742&keyword=广告法 6- http://ggs.saic.gov.cn/ggs/ggs.asp 7- http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/our_business_idea/our_ product_range.html 8- http://timesofindia.indiatimes.com/business/india-business/Furniture-brands- brace-for-Ikea/articleshow/26542904.cms 9- http://www.thelocal.se/20130516/47936 10- http://www.eurobrandsindia.com/blog/2012/07/01/ikea-in-india-finally/ 11- http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/swedish_heritage/index. html 12- http://ec.europa.eu/environment/gpp/pdf/toolkit/furniture_GPP_background_report .pdf 13- http://www.leics.gov.uk/fira_furniture_guide

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