IKEA was founded in 1943 in Sweden and has grown to become the largest furniture retailer in the world. It achieves success through offering Scandinavian design at extremely low prices. IKEA visits consumers to understand local preferences and adapts products accordingly, such as adding deeper drawers for US wardrobes and more seating in California stores. While IKEA revolutionized furniture shopping through its self-assembly model and one-way store layout, drawbacks include potential quality issues and an overwhelming experience for some customers. IKEA continues to use market research and product differentiation to meet demands in local markets through a transnational strategy.

1. MALAYSIAN GRADUATE SCHOOL OF ENTERPERENEURSHIP
& BUSINESS
ANALYZING CONSUMER MARKETS
Case study on
submitted to :
Dr. Bidin Chee Bin Kifli
October 2015
Presented by: group 2
AZHAR NAIMA MUTLAK p14d487f
SHIVAN SALEEM KHALID p15d082f
WIJDAN IBRAHIM ABDULHAMEED p15d088f
KHALDOON FATHI p15d089f
AWS SALAH ABDULLAH p15d085f

3. Introduction:
Founded in 1943 by a 17-year-old Swedish named Ingvar Kamprad.
Company’s Mission is to provide value to consumers because they have
very thin wallets.
In the beginning they were sold pens, Christmas cards, seeds frame for
picture and later grew into a retail titan in home furnishings. Unique
selling proposition is of leading edge Scandinavian design at very low
prices.
It has evolved into a largest furniture retailer in the world with approx.
300 stores in 38 countries with revenues exceeding 21.5 billion euros in
2009. Its top countries in terms of sales include Germany-16%, United
states-11%, France-10%, United kingdom-7% and Italy-7%.

4. Q 1: What are some of the things IKEA is doing right to reach
consumers in different markets?
IKEA achieved this level of success by offering a unique value
proposition to consumers: leading-edge Scandinavian design at
extremely low prices. IKEA’s vision is “to create a better everyday life
for many people.” Its mission of providing value is predicated on
founder Kamprad’s statement that “People have very thin wallets. We
should take care of their interests.” IKEA’s stores are located a good
distance from most city centers, which helps keep land costs down
and taxes low. In China, it stocked 250,000 plastic placemats with
Year of the Rooster themes, which quickly sold out after the holiday.

5. When employees realized U.S. shoppers were buying vases as drinking
glasses because they considered IKEA’s regular glasses too small, the
company developed larger glasses.
What else could it be doing?
IKEA managers visited European and U.S. consumers in their homes and
learned that Europeans generally hang their clothes, whereas U.S.
shoppers prefer to store them folded. Therefore, wardrobes for the
U.S. market were designed with deeper drawers.
Visits to Hispanic households in California led IKEA to add seating and
dining space in its California stores, brighten the color palettes, and
hang more picture frames on the walls.

6. Q2: IKEA has essentially changed the way people shop for furniture.
Discuss the pros and cons of this strategy?
Pros:
Because of the wide variety of items displayed and the layout of the shop
designed in a one way format results in customers seeing everything
available. They might therefore end up buying even something that they
hadn't thought about Convenience for the customer because everything is
boxed and they do their own assembling. It easy to transport(on buying and
when people move) Also saving shelf space for other lKEA products and
reducing transport costs for the consumer hence resulting in the lower prices
Using unconventional names for their products that people can easily
remember(belief is that people remember names better than they do codes).

7. Cons:
The size and scale of IKEA sometimes affects the quality standards of
their products and therefore negatively affect the view that
customers has of them. As such customers will have to pay more
attention to the products they are buying The format of the
shop(everything i on floor) can be too overwhelming for the
customers such that they may not even know where to start from Not
maximizing on the growing technology available for marketing and
advertising, so consumers might end up going elsewhere The fact
that that people have to assemble their own items can be
problematic for people who are not good at fixing or assembling
items.

8. Recommendations :
IKEA needs to find more local suppliers to keep price lower. To
understand local culture and purchasing habit, the company should
carry out extensive market research. To attract more middleclass
consumer huge adaptation is necessary. Extensive training for the
employees and better supply chain management will solve customer
service and out-of-stock problems for IKEA.

9. Conclusion:
Therefore it is apparent that IKEA has managed to both
capitalize on its cost leadership and ensure they meet local demands
through differentiation of products thus using transnational strategy.
IKEA has chosen to mostly enter markets through wholly-owned
subsidiaries in order to maintain their brand image, although when
compelled, other methods such as joint ventures and franchising
has been made use of. This strategic decision has enabled IKEA to
maintain a competitive advantage, and earn above average returns
due to leadership in the market.