Comparison of Marketing Mix of IKEA in Four Countries

2014
INTERNATIONAL
MARKETING
6/10/2014
IKEA MARKETING MIX

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.

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

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

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

 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

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.

 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

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.

 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

£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.

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.

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

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.

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

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

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

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

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.

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

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

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

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

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

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.

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.

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

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

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.
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

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.
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

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

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.

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.

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

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.

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.

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.

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

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.

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.

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:

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

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.

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

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

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.

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

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.

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.

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.

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

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)

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

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

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

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

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

Comparison of Marketing Mix of IKEA in Four Countries

Comparison of Marketing Mix of IKEA in Four Countries

More Related Content

What's hot

Viewers also liked

Similar to Comparison of Marketing Mix of IKEA in Four Countries

More from Fatima Arshad

Recently uploaded

Comparison of Marketing Mix of IKEA in Four Countries