A case study on IKEA giving a brief description of its marketing strategy

2. IKEA’s Business
IKEA is an international home product
company that designs and sells ready to
assemble furniture appliances and home
accessories

3. IKEA’s Founded
Furniture Introduction
Furniture Catalogue
196519581957195619551953194719431926 1951
IKEA designs its own
Furniture
IKEA introduces Flat
packages IKEA stores open at
• Almhult
• Stockholm
IKEA’s Timeline
IKEA’s Company History*
*Source: www.ikea.com

4. MARKETING ANALYSIS
SWOT, PEST and the Marketing Mix

5. INTERNALEXAM
EXTERNALEXAM
SWOT
W
O
T
S
STRENGTHS
• Wide range of products and styles
• Cheap and affordable
• One stop shop
• Easy shipping and transportation
• Eco friendly and recycling of
products
• Functional design of products
• Appealing shopping experience
OPPORTUNITIES
• Untapped markets like middle east
and Asian countries
• Better advertisements
• Online sales
• Demand for greener and
environment friendly products
WEAKNESSES
• Assembly of furniture
• Yet to invade upcoming global
markets
• Products don’t last long
• Product dimensions unsuitable for
global markets
• Advertisements in the form of
catalogues mostly
THREATS
• Organized sectors like Wal Mart,
Office Depot, Staples, etc.
• Unorganized sectors like local
manufacturers and carpentry stores
• Competitors opting for similar
designs with a contemporary twist to
cater to upper class
POSITIVE INFLUENCES
NEGATIVE INFLUENCES

6. • FDI Policies
• Labor laws
• Taxes and duties
• Environmental LawsFurniture
Market
Political
P
• Recession reduces
disposable income and
hence the demand (Low
prices advantage)
• Enjoys economies of scale
• High barriers of entry for
competitors due to low
prices offered to consumers
EconomicE
• Lesser carbon footprints
• Ecologically sustainable
• Recyclable products
• Online tips on reducing
environmental impact (CSR)
Social S
• Flat sized packaging
• Innovative designs
Technological
T
PEST Analysis

7. 4P's Marketing Mix
Marketing
Mix
Product
Price

8. Product Price Mix
STYLE
PRICE
RANGE
Scandinavi
an (Sleek
Wood)
Modern
(Minimali
st)
Country
(Neo-
traditiona
l)
Young
Swede
(bare
bones
High
Medium
Low
IKEA's Product Price Matrix

9. Finding Smarter ways to make
Furniture
Strategy followed by IKEA
Price
Quality

10. Implementation Steps
Establish Retail Price
Select Manufacturer
Determine the material
used
Design Process

11. Step 1: Establish Retail Price
• Using the matrix, IKEA would set the
price range.
• It would survey the competition to
establish a benchmark and then sets
its own price point 30-50% lower than
rivals.

12. Step 2: Select Manufacturer
• More than 1800 manufacturers in more
than 50 countries
• Build long term relationships
• IKEA circulates a description of proposed
product's specifications and target cost
and encouraged them to compete for the
production package
• Sometimes it might have different
product component from different
supplier

13. Step 3: Determine the material used
• Done by IKEA engineers
• Focus on cost efficiency
• Using different types of wood for a
single wooden product
• Using high quality materials on
furniture surfaces that were visible
and most likely undergo stress
• Using low quality material on surfaces
that were low stress and less visible to
the customer

14. Step 4: Design Phase
• Use internal competition to select a
designer
• Flat packaged boxes to make it easier
for consumers to transport the
furniture home + save shipping costs

15. 4P's Marketing Mix
Marketing
Mix
Product
Price Placement

16. Customer Experience at IKEA
• Bright and inviting experience for
customers
• Resembles Modern Theme park with
childcare centers
• Restaurants serving various delicacies

17. IKEA for kids:
You shop, kids play
• IKEA provides clean feeding and
changing rooms for small children
• Restaurant has a special menu just for
kids

19. 4P's Marketing Mix
Marketing
Mix
Product
Promotion
Price Placement

20. Communication Strategy
for America

21. Perceptual Map

22. Segmentation

23. Video 1

25. Video 2

27. Video 3

29. IKEA INVADES AMERICA
2002200120001999199819971985 Mid 1990’s
First store
Company’s fortune
changes
Revenues double ($600 mn
to $1.27 bn)
3rd largest
store

30. PROMOTION STRATEGIES
•Commitment-free approach to furniture – “Unboring”
advertisement
•Web site advertisement
•The Law of Candor : When you admit a negative, the
prospect will give you a positive
•The Law of the Category: If you can’t be the first in a
category, set up a new category that you can be first in
•Additional Customer facilities: child-care, restaurants and
help desk

31. INDIAN FURNITURE MARKET
•As of 2006, the Indian furniture market is estimated to be
worth US$ 7.9 billion
Source: http://www.ibef.org/download/Furniture_170708.pdf

32. PROBLEMS FACED BY INDIAN
FURNITURE INDUSTRY

33. Source:
http://online.wsj.com/news/articles/SB100014241278873242669045784
58840277908564
IKEA INVADES INDIA

34. Market Development Diversification
Market Penetration Product Development
Products & Services
Markets
Existing New
ExistingNew

35. IKEA’S INITIAL COMMUNICATION
STRATEGY IN INDIA
Integrated Communications Strategy

39. IKEA’s communication strategy*
• Media Channels covered
– TVC
– Print
– Digital
• Pull Strategy
• CSR initiatives
Source:
http://www.livemint.com/Money/jI27GvmsK5stzTn61yyWUN/Ikeas-
consumer-challenge-in-India.html